Trump’s fiscal clean-up job won’t be easy

President Donald Trump is sworn in amid much fanfare and celebration, and went straight to work on Monday.He began with a federal hiring freeze and a regulator freeze as part of a series of executive orders, but easing the U.S. fiscal situation may be more difficult.

“The biggest headwind is probably the huge debt and the very, very bloated budget. That’s the money that’s not actually being spent right now. You know, they’re making promises of future spending about, so it’s going to be very, very problematic,” EJ Antony, a research fellow at The Heritage Foundation, told FOX Business before Trump took office.

President Donald Trump executes his second executive order at Capital One Arena during the inauguration parade on the inauguration day of his second term in Washington, D.C., Monday. (Reuters/Carlos Barria/Reuters)

State debt — which measures the U.S. debt to its creditors, is at $36 trillion and rising, as tracked by the U.S. Treasury Department.

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As for the budget, non-partisan Congressional Budget Office (CBO) released its latest 10-year budget and economic outlook on Friday, which showed that the federal government is on track to exceed the debt record set nearly 80 years ago.

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“Between 2025 and 2035, the debt rises as spending increases on Social Security, Medicare and interest payments outpace revenue growth,” CBO Director Philip Swagel told reporters.

The federal government is projected to be $1.9 trillion budget deficit In fiscal year 2025, the deficit is projected to decline briefly in the next two years before resuming growth, due to the end of parts of the Trump Tax Cuts and Jobs Act, which expires later this year : Scott Besant vows not to let that happen. Besant is expected to go through the confirmation process.

SCOTT BESSENT VOWS TO BECOME 2017

Scott Besant, President Donald Trump’s nominee for U.S. Treasury secretary, testified Thursday during a Senate Finance Committee confirmation hearing at the Dirksen Building in Washington, D.C. (Tom Williams/CQ-Roll Call, Inc via Getty Images/Getty Images)

“We have to make 2017 permanent Tax cuts and Jobs Act and introduces new pro-growth policies to reduce the tax burden on American manufacturers, service workers and seniors,” Besant told the Senate Finance Committee during his confirmation hearing. “President Trump was the first president in modern times to recognize the need. change our trade policies and protect American workers.”

President Donald Trump reviews troops during his inauguration ceremony in Emancipation Hall on the U.S. Capitol in Washington, D.C., Monday. (Greg Nash/Pool/AFP via Getty Images/Getty Images)

CBO’s analysis is based on current law, so changes in federal tax and spending policies could change those numbers.

Another devil in disguise. The Federal Reserve’s easing cycle is aimed at fighting inflation. Policymakers cut interest rates three times in 2024, followed by a two-quarter-point move. However, the 10-year Treasury yield, which sets rates for several benchmarks including mortgage interest rates remain above 4%.Mortgage rates have just reached 7%, according to Freddie Mac, rising for the fifth week in a row.

Investors did celebrate the latest consumer price index reading, which came as no surprise.The core interest rate, which excludes volatile food and energy, rose 3.2% year-on-year in December, less than the 3.3% expected in January Market participants expect no changes at the Fed’s first meeting of the year on the 29th, according to CME’s FedWatch tool.

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Still, inflation remains a wild card, with both the Nymex and Brent up more than 8% this year and gold trading just below its all-time high of $2,788.50 an ounce.