How debt could cripple Trump’s agenda

When House Republicans met behind closed doors at the Capitol last week to discuss their tax cut plans, Rep. David Schweikert, an Arizona Republican, sounded a note of caution.

The United States’ budget problems risk spiraling out of control, Schweikert told colleagues. He warned that Wall Street investors were starting to think twice about lending to the United States, which could lead to a loss of confidence in Washington’s tax and spending plans, which could ripple across the board. of the economy.

“This is not a game,” Mr. Schweikert, a member of the House Ways and Means Committee, said in an interview. “It needs to temper both the way we approach policy and the way we communicate that policy. »

Mr. Schweikert’s view, echoed by other lawmakers at the meeting, was an early sign of the major economic and political challenge that America’s $36 trillion debt will pose to President Trump.

Concerns about high interest rates and a growing deficit have bogged down Republican efforts to quickly pass Mr. Trump’s agenda. The imminent return of the debt ceiling risks triggering a default that could upend global financial markets, and investors and rating agencies are worried about the fiscal outlook.

“Categorically, the market is more focused and concerned about U.S. taxation and its implications on emissions and debt levels than it was a decade ago,” said Nathan Sheets, chief economist at Citigroup and former executive of the Treasury.