Wall Street Warns Trump Tax Bill Risks Bond Market Shock

Wall Street executives are sounding alarms over President Donald Trump's tax bill, cautioning that the GOP-led plan to extend 2017 tax cuts could destabilize the U.S. bond market and drive up borrowing costs, as concerns mount over ballooning federal deficits, The Washington Post reported.

Wall Street leaders privately caution the Trump administration that a Republican tax bill advancing through Congress could unsettle the bond market, increase U.S. borrowing costs, and jeopardize broader economic stability, according to more than a dozen sources familiar with the discussions.

The legislation, recently passed by House Republicans, is projected to add $2.3 trillion to the national debt over 10 years and more than $5 trillion, including interest and expected future extensions, according to the nonpartisan Committee for a Responsible Federal Budget. It also includes increased defense spending and immigration enforcement, Trump's top legislative priority.

Despite the growing financial sector unease, senior White House officials insist the risks are overstated. They argue that the economy can absorb the added debt and that Trump's tariffs will boost revenues enough to soften the fiscal impact.

"We are operating at really high levels of debt and deficits, and the bond market is increasingly worried about it," said one member of the private advisory panel to the Treasury Department. The official, speaking on condition of anonymity, called the legislation a "poisoned chalice," warning that interest payments may soon crowd out other government spending, requiring the U.S. to offer higher yields to attract investors.

Wall Street concerns center around the nearly $30 trillion Treasury bond market, which underpins the global financial system. A surge in federal borrowing could push interest rates higher across the board, including mortgages and corporate debt. Treasury yields have risen, with the 30-year bond surpassing five percent recently, a psychologically important level before retreating.

JPMorgan Chase CEO Jamie Dimon has publicly voiced support for the tax bill's growth potential but warned about looming risks. "You are going to see a crack in the bond market," Dimon said at the Reagan National Economic Forum. "I don't know if it's going to be a crisis in six months or six years."

Some economists suggest the bill's economic impact will depend on whether it drives growth. Robin Vince, CEO of BNY, said a $3 trillion bill that fails to spur growth would be "very poorly received," whereas one with economic benefits might ease investor anxiety.

Administration officials, including trade adviser Peter Navarro, have defended the bill. Navarro wrote in The Hill: "Pundits and portfolio managers alike insist the bond market vigilantes are delivering a decisive and unmistakable rebuke of President Trump's One Big Beautiful Bill Act and its tax cuts. Go a bit deeper, however, and it is clear that financial markets do not have complete information."

Sen. Rick Scott, R-Fla., plans to oppose the bill, citing market signals. "The bond market is telling us we have to get our fiscal house in order," Scott said. "They want inflation under control; they want lower mortgage rates."

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