How the Debt Could Hamstring Trump’s Agenda

Republicans are hunting for ways to pay for President Trump’s expensive plans while avoiding a freakout on Wall Street.

When House Republicans gathered behind closed doors on Capitol Hill last week to hash out their plans for cutting taxes, Representative David Schweikert, an Arizona Republican, sounded a note of caution.

The United States’ fiscal problems were at risk of spiraling out of control, Mr. Schweikert told his colleagues. He warned that investors on Wall Street were starting to think twice about lending to the United States, a potential loss of confidence in Washington’s tax and spending plans that could ripple across the economy.

“This ain’t a game,” Mr. Schweikert, a member of the House Ways and Means Committee, said in an interview. “This needs to temper both how we approach policy and how we communicate that policy.”

Mr. Schweikert’s view, echoed by other lawmakers at the meeting, was an early sign of the stark economic and political challenge that America’s $36 trillion debt will pose for President Trump.

Concerns about elevated interest rates and a growing deficit have bogged down Republican efforts to quickly pass Mr. Trump’s agenda into law. The impending return of the debt limit risks a default that could upend global financial markets, and investors and rating agencies are on edge about the fiscal outlook.

“Categorically, absolutely the market is more focused and concerned about U.S. fiscal and the implications for issuance and debt levels than was the case a decade ago,” said Nathan Sheets, the chief economist at Citigroup and a former Treasury official.