A massive deficit will be President Donald Trump's legacy, financial strategists are warning as the U.S. budget is expected to rise to accommodate the government's spending plan.
"My view is that this fiscal expansion is probably the most foolhardy escapade in modern economic policy history," Albert Edwards, an ultra-bearish global strategist at Societe Generale, said in a client note Wednesday.
While agreeing that he felt U.S. corporate taxes were anomalously high, Edwards criticized the timing of the fiscal stimulus as "utterly ridiculous" and warns it "will only accelerate the collapse of U.S. financial markets as the Federal Reserve hikes rates even more quickly."
With the current growth picture in the U.S. — unemployment at a 17-year low and wages and company earnings steadily strengthening — a double-dose of fiscal stimulus is the last thing that is needed and threatens to seriously overheat the economy, numerous analysts and politicians are saying.
The Trump administration's proposed $1.5 trillion infrastructure plan, $200 billion of which is to be provided by the federal government, comes on top of a recently-passed spending budget of $300 billion over the next two years. That stimulus is in addition to the Republican-led Tax Cuts and Jobs Act passed in December, which is estimated to deliver $1.5 trillion in tax cuts over next decade. And interest payments will add $420 billion to the national debt over that same time frame, pushing the deficit above $2 trillion, according to the Committee for a Responsible Budget. The current budget deficit is $440 billion.