Are the bond markets finally turning on the US government?
Donald Trump has spent much of his second term probing the limits of presidential power. This week, he has discovered another means by which to test them: by promising every American adult $5,000 in the event Republicans retain both houses of Congress. The proposal would cost around $1.2 trillion: representing around 3 percent of America’s $40 trillion in national debt. Washington is likely to reject the idea, but even if they approve it, there is one constituency who is likely to ensure that it remains untenable. That constituency would be the people and institutions expected to lend the United States money. As a deficit mushrooms to a projected $1.9 trillion, there is still little appetite in Washington for any sort of fiscal course correction.
