Higher US government borrowing ‘potentially dangerous’

Abu Dhabi

Increased federal borrowing under the latest US government budget is a “potentially dangerous” policy choice, former US Treasury Secretary Lawrence Summers said.

Speaking at a conference in Abu Dhabi on Wednesday, Summers said that moving to a major expansion in borrowing at a time of low unemployment levels seemed “bizarre.”

Under the budget deal passed by the Senate earlier this month, the federal budget deficit would climb, forcing the US to borrow more than $1 trillion this year, Bloomberg reported. The deal would add nearly $300 billion in government spending over two years.

Summers, a top economist who headed the Treasury Department under former President Bill Clinton, also discussed tax reforms announced by President Donald Trump.

“…The magnitude of the tax cuts contained in this tax reform, and the combination of those with more spending points to a potentially fairly toxic combination of borrowing and spending,” he said.

He added that would risk a less controlled macroeconomic situation where recession becomes more likely.