US Treasury Secretary Janet Yellen cautioned that extending tax cuts from 2017 could exacerbate unsustainable deficits. In her remarks at the New York Association for Business Economics, she stated, "The projected fiscal path under current budgetary policies is simply not sustainable."
Yellen estimated that prolonging provisions of the Tax Cuts and Jobs Act could increase deficits by approximately $4 trillion through 2034. She highlighted concerns that such policies might undermine the country’s economic stability and provoke a future debt crisis.
As President-elect Donald Trump prepares to take office, he has pledged to extend tax reductions benefiting various income levels. However, Yellen warned that "misguided economic policymaking" would burden future generations.
In her speech, she also emphasized the necessity for the US government to prioritize fiscal sustainability in tax and spending decisions. Yellen defended the Biden administration's fiscal policies during the COVID-19 pandemic, asserting they helped save millions of jobs despite rising prices.
Yellen's comments come amid a record-breaking federal deficit of $711 billion for the first quarter of the fiscal year 2025 and a national debt of $36.17 trillion.