President Donald Trump and Congressional Republicans are pushing for a significant fiscal package that includes tax cuts and increased spending, with a self-imposed deadline of July 4 for Senate approval.

However, the Congressional Budget Office and economists have raised alarms that the proposed legislation could increase the national debt burden, contributing to a downgrade in the U.S. credit rating by Moody's.

Moody's specifically cited the potential to raise the debt ceiling by $5 trillion as a significant factor in their decision to downgrade the U.S. credit rating.

Analysts at Capital Economics have warned that the current federal debt, which stands at $36.22 trillion, is on an unsustainable trajectory that could lead to higher inflation and negatively impact the economy.

Concerns about rising debt levels are already driving up Treasury yields, which could create a vicious cycle where higher borrowing costs exacerbate the deficit.

While the government can technically avoid bankruptcy by printing money, this strategy risks increasing inflation and crowding out private investment, ultimately harming economic performance.

Contention exists among lawmakers regarding necessary spending cuts and increases to fund the proposed tax relief, with contentious issues including cuts to Medicaid and clean energy tax incentives.

Despite these concerns, Trump and Congressional Republicans have dismissed arguments that the bill would worsen the deficit, with Senate Finance Committee Chairman Mike Crapo labeling such claims as 'absolutely wrong.'

The federal debt is approaching 100% of the U.S. gross domestic product (GDP), and if the budget shortfall remains at 6% of GDP, the debt-to-GDP ratio could increase to 120% within the next decade.

The proposed legislation aims to raise the U.S. debt ceiling by $5 trillion, a necessary step to prevent default, although some Republicans are downplaying the associated risks.

Elon Musk has publicly criticized the proposed $2.4 trillion legislation, calling it a 'disgusting abomination,' which has sparked a public dispute with Trump.

The House of Representatives has passed a version of the multi-trillion-dollar legislation, but the Senate must also approve it before it can be sent to Trump for signature.