IMF slams Donald Trump's tax bill as $4 trillion threat to US economy
The legislation extends Trump's 2017 tax cuts while adding new breaks like tax-free tips and overtime pay. Despite some spending cuts, the plan would still add $3.4 trillion to the deficit before interest costs.
IMF spokesperson Julie Kozack stressed this "runs counter" to needed debt reduction, especially with US debt nearing 98% of GDP, up from 73% a decade ago.
Trump's team argues tax cuts will boost growth to 3%, offsetting losses through more tax revenue and tariff income. But economists overwhelmingly disagree.
Six Nobel Prize winners call the bill "shocking" for hurting low-income families while helping the wealthy.
The nonpartisan Congressional Budget Office predicts it would shrink household resources for the poorest Americans by 4% by 2033. Harvard economist Ken Rogoff notes similar past tax cuts 'led to soaring deficits rather than self-sustaining growth.'
This controversy hits as Moody's stripped America's last AAA credit rating, citing debt concerns.
The IMF also cut its 2025 US growth forecast to 1.8%, partly blaming policy uncertainty.
A dangerous clause (Section 899) lets the Treasury tax foreign investors 20% if their home countries impose "unfair" taxes, a move experts fear could spook global markets.
With the bill nearing a Senate vote, Treasury Secretary Scott Bessent dismisses critics, calling traditional forecasts 'lagging indicators.'
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