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Washington lawmakers are risking a “fiscal disaster” if a recession hits as they plow on with their package of sweeping tax cuts, according to Guggenheim Securities Co-Chair Jim Millstein.

“What today is 6.4% of GDP as a deficit, a $2.4 trillion deficit, could easily expand to $4 trillion if we had a recession,” Millstein said in an interview on Bloomberg Television. The cost estimates of the current GOP package “assume consistent economic growth. So imagine we have a recession. In the last five or six recessions, the budget deficit actually blows out because tax revenues go down and spending increases.”

A key House committee advanced President Donald Trump’s giant tax and spending package. The Joint Committee on Taxation had pegged the total cost of the bill at $3.8 trillion over the next decade, though the Committee for a Responsible Federal Budget analysis says the outcome will be more dire.

Long term Treasury yields have been rising this month in wake of investors fiscal concerns. Yields on the 30-year bond breached 5% Monday in the aftermath of Moody’s announcement on Friday it was downgrading the US to Aa1 from Aaa, reinforcing Wall Street’s growing worries over the nation’s fiscal outlook.

Ten-year yields are moving upward “because of the imbalance in the federal government’s finances and the huge amount of deficits they have to finance,” said Millstein, who worked in the Treasury Department’s financial-stability office under former President Barack Obama. There’s going to be “a huge supply of Treasuries coming to the market.”

Ten-year yields will probably rise further, and with it, it’s more likely for the key benchmark rate to stay in the 4.5%-to-5.5% range than fall back below 4% - barring a US recession, Millstein told Bloomberg News in a separate interview. And given the interest burden on the debt, he said, that is the US’s biggest problem.

Millstein recalled in the 1990s when it took the bond market pushing yields sharply higher to help convince US politicians to bring deficit down. He said if it took the same this time it would be worth it.

“Because there really is no check on them right now,” he said, referring to Washington politicians.

--With assistance from Sonali Basak and Matthew Miller.

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