FINANCE

Uncertain Times: Investors Worry as Spending Bill Looms

Washington DC, USATue May 20 2025
The stock market has been on a wild ride lately. The reason? A mix of President Trump's ongoing trade disputes and a massive spending bill that Republicans are pushing through Congress. This bill could add a whopping 3. 3 trillion dollars to the national debt over the next ten years. That's a lot of money, and it's making investors nervous. House Republicans are in a tight spot. They have a slim majority and are trying to pass this bill this week. The outcome is far from guaranteed. Trump is involved too. He's pushing for these tax cuts, and the bill's passage is crucial for his plans. He's even heading to Capitol Hill to rally support. Investors are keeping a close eye on the situation. The idea of a much larger federal deficit has made the usually stable market for U. S. government debt quite volatile. On Monday, there was a sudden sell-off of 30-year Treasury bonds. Yields shot up to their highest point since 2023. This happened right after Moody's downgraded America's credit rating. Things have calmed down a bit since then. As of Tuesday, the 30-year Treasury yield is at 4. 93 percent. But the pattern is clear. Foreign investors are becoming more cautious about U. S. assets. This includes the dollar, Treasury notes, and bonds. This trend started when Trump began his tariff fights and is speeding up as the vote on the Republican bill approaches. Why is this happening? It's all about risk. Investors are worried about the potential fiscal risk. A bigger deficit means more debt, and that can be a bad sign for the economy. It's a complex situation, and it's making the market unpredictable. But one thing is clear: investors are watching closely, and they're not happy about the uncertainty.

questions

    What alternative fiscal policies could the G.O.P. consider to avoid increasing the deficit?
    What are the potential economic consequences if the Republican tax-and-spending bill fails to pass?
    If the deficit grows by $3.3 trillion, will the government start issuing IOUs written on the back of dollar bills?

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