- Surging bond yields jeopardize Trump tax cut extension.
- Key Congressmen want spending cuts to offset the tax cuts as debt fears mount.
- Retirement funds can be shielded by moving into safe haven assets like physical gold and silver held in a Gold IRA.
Tax Cuts Jeopardized
Extending his 2017 tax cuts was a cornerstone of President Trump’s platform. Now a volatile U.S. bond market is challenging the possibility of fulfilling that promise. Rising bond yields reflect investor fears about the federal deficit and interest costs. They could derail plans to keep the tax breaks. And leave Americans facing higher taxes and a more uncertain financial future.
Bond Market Pressures Mount
In the years since the 2017 tax cuts, the U.S. national debt has ballooned to $36 trillion, with annual deficits exceeding $2 trillion. This surge in debt has caused a significant increase in interest payments. They are now the second-largest federal budget item after Social Security. Treasury yields, which underpin borrowing costs across the economy, are now at their highest levels since late 2023. For example, the 10-year Treasury yield recently rose to 4.79% before settling slightly lower.1
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These rising yields are a concern for lawmakers and investors alike. Rep. Ralph Norman (R-S.C.) noted, “The buyers of our bonds are getting nervous that we’re at the point that we cannot pay it back. That affects every one of us.” As interest rates climb, servicing the debt costs more. Further straining the government’s finances.3
The Challenges of Extending the Tax Cuts
Congress passed the Trump tax cuts, estimated to cost $4 trillion over the next decade, using budget reconciliation. This let Republicans bypass a Senate filibuster. However, to comply with these rules, the cuts to individual income taxes were set to expire at the end of 2025. Extending them now faces formidable obstacles.
Key Republican lawmakers want big spending cuts to offset the tax cuts. They warn that ignoring the deficit could raise interest rates. Rep. Andy Barr (R-Ky.) emphasized, “The bond market is telling Congress that if we don’t get our fiscal house in order, everybody’s mortgage rates, everybody’s credit card rates, everybody’s auto loan rates are going to continue to go up.”4
The bond market’s reaction underscores these concerns. Stephen Jen, CEO of Eurizon SLJ Capital, explained, “The bond market has begun to express their discomfort, and inflation being sticky is also a warning for Trump 2.0.”5
Political Divisions Add Complexity
Republican lawmakers face pressure from within their ranks to ensure fiscal discipline. Some conservatives, including Rep. Chip Roy (R-Texas), will not support tax cuts without spending cuts. “As we speak, interest rates are going up, our debt is getting refinanced at higher interest rates, and we have more debt,” Roy said, emphasizing the need for fiscal responsibility.6
What This Means for You
For the average American, the stakes are high. Higher Treasury yields mean higher interest rates on mortgages, credit cards, and auto loans. Putting even more strain on household budgets.
If the 2017 Trump tax cuts (Tax Cuts and Jobs Act or TCJA) expire at the end of 2025, taxes will rise significantly for many Americans. They will jump an average of 22%. Middle-income families, such as a household earning the median income of $80,610, could face a $1,695 hike. The standard deduction would shrink, the Child Tax Credit would halve for 40 million families, and the top marginal tax rate would rise to 39.6%. Small businesses may lose a vital deduction, and AMT filings could surge from 200,000 to 7.3 million, creating widespread financial strain.7
Rep. Barr highlighted the potential upside of addressing the deficit: “What we need to say to the American people is, look, this is not austerity. This is not painful cuts. This is about lowering your mortgage payment.” But achieving this balance will require tough political choices. It will also need significant bipartisan cooperation, a rare thing in Washington.8
Conclusion
Rising bond yields and fiscal pressures highlight the need to protect your assets in an uncertain economy. The Trump tax cuts’ fate will affect the economy and your personal finances. One cannot ignore their implications, whether they are extended or left to expire. To protect your portfolio, consider diversify with precious metals. Gold and silver, held in a Gold IRA, can offer long-term security against an increasingly uncertain economic future. To learn more, contact us today at 800-462-0071.
