Trump’s task of cleaning up the finances will not be easy

President Trump was sworn in amid fanfare and celebration, then took office on Monday. He started by suspending government employment restrictions and imposing legislation as part of a series of executive orders, but fixing America’s fiscal situation could be a challenge.

“The biggest problem is probably a huge debt and a very bad budget, a lot of which consists of spending. Money that hasn’t been spent yet but is still expected to go out the door. You know, it’s promising. So that’s going to be a big problem,” EJ Antoni, Research Associate at The Heritage Foundation, he told FOX Business before Trump took office.

The national debt — which measures what the US owes its creditors — sits at more than $36 trillion and growing, as tracked by the US Treasury Department.

PRESIDENT TRUMP’S FINANCIAL RESTRICTIONS

Regarding the budget, last Friday, the nonpartisan Congressional Budget Office (CBO) released its latest 10-year budget and economic outlook that showed the federal government is on track to break the debt record set nearly 80 years ago.

MELANIA TRUMP IS ATTACKING AMERICAN PEOPLE

“From 2025 to 2035, debt rises as spending on Social Security, Medicare and interest payments outpaces income growth,” CBO Director Phillip Swagel told reporters.

The federal government is expected to spend $1.9 trillion in the 2025 fiscal year. This deficit is expected to decline briefly over the next two years before rising again. The short-term decline is related to the expiration of parts of Trump’s Tax Cuts and Jobs Act of 2017, which expires at the end of this year. However, Trump Treasury pick Scott Bessent vows not to let that happen. Bessent is expected to sail through the confirmation process.

SCOTT BESSENT VOWS TO MAKE 2017 TAX CUT A REALITY

UNITED STATES – JANUARY 16: Scott Bessent, President-elect Donald Trump’s nominee for Treasury secretary, testifies during a Senate Finance Committee hearing in the Dirksen building on Thursday, January 16, 2025. (Tom Williams/CQ-Roll Call, Inc via Getty Images/Getty Images)

“We must make permanent the Tax Cuts and Jobs Act of 2017 and implement new pro-growth policies to reduce the tax burden on American manufacturers, service workers and seniors,” Besent told the Senate Finance Committee during his confirmation hearing. “President Trump was the first president in modern times to recognize the need to change our trade policy and stand up for American workers.”

US President Donald Trump reviews troops during his inauguration ceremony at the Emancipation Hall of the US Capitol in Washington, DC, on January 20, 2025. (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 figures.

Another devil in disguise; a tapering cycle by the Federal Reserve that aims to deal with inflation. Policymakers cut rates three times in 2024, a cut of 50 basis points, followed by two moves of 0.25 basis points. Still, the 10-year Treasury yield, which measures several lending metrics including mortgage rates, remains above 4%. Mortgage rates recently topped 7%, according to Freddie Mac, rising for the fifth week in a row.

Investors have been celebrating the latest consumer price index reading, which did not come with any surprises. The core rate, which excludes volatile food and energy, rose 3.2% in December on an annualized basis, less than the 3.3% economists had expected. At the first annual meeting of the Fed, on January 29, market participants do not expect a change, according to CME’s FedWatch tool.

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However, inflation remains a wild card. Nymex and Brent crude have gained more than 8% this year and gold is trading just below its all-time high of $2,788.50 an ounce.