5/7/2025–|Last update: 13:15 (Mecca time)
At a time when the American economy breathed a sigh of sigh after a wave of panic that followed President Donald Trump’s imposition of customs duties under the title “Liberation Day” last April, the Economist magazine launched a clear warning in a recent report, that the “Beautiful Great Law” draft that was approved in the Senate and Representatives Council early this month, does not preach to prosperity, but rather threatens to blow up the rules on which it is built on it Modern American economy.
Financial deficit reminds the World War II
The most prominent in the “beautiful big law” is the extension of the tax cuts approved by Trump in his first term, which was supposed to end soon.
Although the Republicans are promoting this step as “maintaining the status quo”, Economist confirms that “the status quo is not completely continuous.”
Official figures indicate that the deficit in the American budget reached 6.7% of the gross domestic product during the past 12 months, and with the application of the new law, it is expected that this high percentage will continue, so that the American debt will exceed 106% of the output in just two years, which is equivalent to the highest level of record after World War II.
Despite the revenues resulting from customs duties, it is not sufficient to stop the escalation of religion, which means that “slipping towards a financial crisis will continue without brakes,” as the magazine said.
Reducing the weak
While most developed countries are heading to raise the retirement age to confront the aging of the population, the new American law chooses the opposite direction: tax cuts for the category of retirees, in exchange for reducing the financing of “Medicid”, which is the health insurance program for the poor.
Official estimates expected this to deprive about 12 million Americans of health insurance, in a country that is supposed to be the richest global.
It has also been introduced by complex work conditions for some aid, which are conditions that the magazine described as “a bureaucratic maze that does not achieve actual results in raising the operating rate.”
Hanin for fossil fuel
Among the most prominent of what is included in the “Beautiful Great Law” also, the abolition of the tax incentives approved by former President Joe Biden in favor of clean energy projects, under the pretext that these incentives were conditional on protectionist policies such as “Municipalities in America”.
But Economist warns that this step “in practice means the absence of any clear federal policy to reduce carbon emissions”, which will increase the total greenhouse gas emissions and harm America’s ability to fight the artificial intelligence race, which is partially dependent on the abundance of electricity.
“Return to fossil fuels are not only short -sighted, but America’s future position in the fields of technology and energy is weakened,” the magazine wrote.
A legislative democratic crisis
The magazine did not lose sight of criticizing the way the law was approved, noting that its passing through what is known as the “collective vote” mechanism within the Senate, revealed “a fundamental imbalance in the ability of the American legislative system to scrutinize and reform.”
She stated that “the ruling parties do not have the same opportunity per year to pass a tax or agreement by only 51 votes, which drives them to accumulate everything in one project, regardless of quality and content.”
Economic growth without foundations
Although the Trump administration expects 5% growth over the next four years, Economist believes that these expectations are “misleadingly optimistic”. With the high interest rates to 3 times what they were at the previous discounts, the current limited tax incentives will not occur, especially since many new exemptions are merely an “electoral trick”, such as exemptions on tumors and additional work.
Goldman Sachs Bank estimates that if America is late in financial reform another 10 years, it will then have to reduce spending or increase taxes at a rate of 5.5% of the GDP annually, a austerity level that exceeds what the European Union witnessed in its sovereign crisis during the 2010 contract.
Despite the recovery of indicators in the American market, other indicators vow with a long -term slide: the dollar has declined by 11% since the beginning of the year, in reference to “real risks that are increasing in the long term.”
The magazine warns that Trump’s repeated attacks on the federal reserve, reducing it to finance scientific research, and threatening the rule of law, are all factors “make the investment climate in America more volatile and dangerous.”
Economist concluded its report with a dark diagnosis, stressing that “the American economy is on its way to a silent explosion crisis, as the visible positives hide a deep fragility in policies and financial structures.”
“Trump not only attacks his opponents, but also attacks the columns that made America a great economy country. If this approach continues, the question will not be when America grows, but when it collapses,” the magazine wrote.
