US Set to Implement Significant Tax Increases in Effort to Close $1.4 Trillion Budget Gap, Ex-Treasury Secretary Reports
According to former Treasury Secretary Larry Summers, the US government is planning to implement “substantial” tax increases to address its $1.4 trillion deficit. In a recent speech reported by Bloomberg, Summers emphasizes that the combination of rising inflation and debt levels necessitates the continuation of tax hikes and a shift towards higher interest rates. He points out that reducing spending alone will not be sufficient to effectively tackle the problem given the enormity of the US debt. Summers states that the revenue from higher taxes will become crucial in addressing this challenge.
Moreover, he notes that previous interest rate increases by the Federal Reserve have not yielded the anticipated economic restraint. Therefore, he suggests that additional interest rate adjustments, whether in increments of 25 or 50 basis points, may be on the horizon. Summers remains optimistic about the future of the US dollar as the world’s reserve currency, as he believes that the euro, Japanese yen, and Chinese yuan face their own issues that prevent them from posing a serious challenge to USD’s dominance.
Clever Robot News Desk 6th June 2023