The US economy, having just caught a breath from tariff impacts, now confronts a potential "debt crisis." According to Wall Street Journal reporter Nick Timiraos, the mounting costs of government borrowing are becoming increasingly evident. Despite a series of tax cut initiatives pushed by congressional Republicans and the White House to support the economy and alleviate tariff-related negative effects, the immense costs of such measures could worsen the fiscal deficit and raise borrowing demands and rates further.

Following a poor performance in the 20-year bond auction and the House's passage of the Trump administration's tax and spending plan, the yield on 30-year US Treasury bonds surpassed 5.1% on Thursday (22nd), reaching a new high since 2007. While the market stabilized shortly thereafter, overall selling pressure in bonds remains, indicating that investors are on high alert regarding future borrowing costs.

Timiraos points out that if the tax bill further expands the fiscal deficit, the government will be forced to issue more national debt to cover spending gaps, leading to continued increases in borrowing rates.

US Treasury Secretary Brainerd has also stressed that maintaining the 10-year Treasury yield at lower levels is crucial since it impacts business and consumer loan costs. Experts warn: the deficit and high borrowing costs risk triggering new economic pressures. BCA Research's chief strategist Peter Berezin states that the market will assess whether the Trump administration and Congress are willing to adjust unsustainable fiscal policies.

According to the non-partisan Congressional Budget Office (CBO) estimates, the Republican tax plan will elevate US deficits to 7% of GDP. For an economy operating at low unemployment in peacetime, this represents an unprecedented level of borrowing. Moreover, the CBO anticipates the plan will release about $280 billion in economic stimulus next year (approximately 0.9% of GDP), primarily from tax cuts. While this may offset some short-term tariff impacts, long-term fiscal risks continue to expand.

However, Republican and White House officials contend that CBO forecasts overlook the positive revenue impacts of other economic policies such as tariffs and deregulation. They argue that economic growth will surpass tax revenue losses and that tax cuts will not lead to substantial deficit expansion.

Analysts warn: short-term fiscal consolidation is unlikely. Evercore ISI strategist Krishna Guha points out that the US is not likely to achieve effective fiscal consolidation in the short term. If faced with economic recession or unforeseen events, the deficit problem could worsen further. Policy research head at Piper Sandler, Andy Laperriere, adds that even if the 10-year Treasury yield surpasses 5%, Congress is unlikely to change its fiscal plans.

The Trump administration previously pledged to significantly cut spending and reduce deficits via the government efficiency division (DOGE) led by Musk, but the scale of that plan has been dramatically reduced, and actual savings may fall short of expectations.