US encounters fiscal downfall

(MENAFN) Billionaire Michael Bloomberg has warned that the US is heading toward a "fiscal breakdown" and called on Congress to urgently restore fiscal discipline rather than continue borrowing. In an article on his own media platform, Bloomberg cited projections from the Congressional Budget Office (CBO), which show that the US budget deficit and federal debt are set to grow, albeit at a slower pace than previously predicted.

He emphasized that the nation faces a "reckoning" unless Congress changes its approach. Currently, the US government spends around $7 trillion annually, while it only collects $5 trillion in taxes, resulting in a deficit over 6% of GDP—a troubling figure for an economy at near full employment.

Bloomberg criticized President Trump’s proposed tax cuts and tariffs, suggesting that the latter could negatively impact revenue by reducing commercial activity and job creation. He also questioned the effectiveness of cost-cutting measures, such as slashing the federal payroll, which have had minimal impact on reducing the deficit.

To tackle the growing deficit, Bloomberg advocates for a combination of moderate tax increases, prudent spending cuts, and pro-growth policies to ensure a substantial reduction in future deficits. He argued that fiscal control should be Congress's top priority and that gradual, balanced measures are necessary for long-term financial stability.

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