Washington (AP)-President Donald Trump is faced with the challenge of persuading Republican senators, global investors, voters and even Elon Musk that he will not bury the federal government in debt with his package for multi-term tax breaks.
The answer so far from the financial markets was skeptical, as Trump seems to be unable to reduce the deficit as promised.
“All this rhetoric for trillion dollars cuts has not reached anything-and the tax account codifies this,” says Michael Dent, director of economic policy at the American Institute for Enterprises, Right Trust. “There is a level of concern about the competence of Congress and this administration, and this makes the addition of a whole bunch of money to the deficit more fried.”
The White House has casually focused on anyone who has expressed concern about a snowball debt under Trump, although he did just that in his first term after a tax reduction in 2017.
White House Prescent Certificate Carolyn Levitus opened his briefing on Thursday, saying he wants to “dismantle some false claims” to reduce his taxes.
Levitt said that “the gross wrong claim that” one, a large, beautiful bill “increases the deficit, is based on the budget office of Congress and other goalscorers who use insolent assumptions and are historically terrible in the prediction of Democrats and Republican administrations.”
Trump himself, however, suggested that the lack of sufficient redundancies to compensate for his tax reductions has come out of the need to maintain the Republican Congress Coalition together.
“We have to get many votes,” Trump said last week. “We can’t cut.”
This left the administration betting on the hope that economic growth could make a trick, a belief that few outside Trump’s orbit is viable.
The technical billionaire Musk, who until recently was part of Trump’s internal sanctuary as the leader of the Ministry of Efficiency of the Government, told CBS News: “I was disappointed to see the large -scale cost bill, honestly, which increases the budget deficit, and not only decreases and undermines the work that turns to the team.
Federal debt continues to grow
The tax and costs that went to the House last month will add more than $ 5 trillion to national debt in the next decade, if they are all allowed to continue, according to the Committee on Responsible Financial Budget, Fiscal Monitoring Group.
In order to make the price of the bill look more, different parts of the legislation are intended to expire. The same tactics were used to reduce Trump’s taxes for 2017, and it created this year’s dilemma, in which many of the tax reduction in this greater package would sunset next year, unless the congress renewed them.
But debt is a much bigger problem now than eight years ago. Investors require the government to pay a higher premium to continue to borrow as total debt has passed $ 36.1 trillion. The interest rate of a 10-year-old helmet is about 4.5%, which is drastically out of approximately 2.5% interest when tax reduction for 2017 became a law.
The White House Economic Councilors Council claims that its policies will develop such a rapid growth that the annual budget deficit will shrink in size to the common economy, placing the US government on a fiscally sustainable road.
The Council claims that the economy will expand over the next four years with an average annual of about 3.2%, instead of the expected budget of congress 1.9%, and 7.4 million jobs will be created or saved. Most economists believe that non -partisan CBO is a fundamental standard for policy assessment, although it does not evaluate the cost of actions taken by the executive branch as Trump’s unilateral rates.
Council President Stephen Miran told reporters that when the growth predicted by the White House is combined with the expected revenue from the tariffs, the expected budget deficit will fall. Reducing taxes will increase the offering of money for investment, offering workers and offering internally produced goods – all of which, according to the logic of Mira, would cause faster growth without creating new inflation pressure.
“I want to assure everyone that the deficit is a very significant concern for this administration,” Mira told reporters recently.
The White House Budget Director Russell Water told reporters the idea that the bill is “in any way harmful to the debt and the deficit, is at the heart of incorrect.”
Economists doubt that Trump’s plan can cause enough growth to reduce deficits
Most external economists expect additional debt to maintain interest rates higher and will slow down overall economic growth, as the cost of occupying homes, cars, business and even college education will increase.
“It just adds to the problem that future politicians will encounter,” says Brandon Duke, a former assistant to the Biden administration, who is now at the Center for Budget and Politics Priority, Liberal Trust. Duke said that with the reduction of taxes in the bill, which will expire in 2028, MPs will “deal with social security, Medicare and expiring tax reductions at the same time.”
Kent Meters, the Faculty of Director of Penn Wharton’s Budget Model, said the growth forecasts by Trump’s economic team are the “work of fiction.” He said the bill would make some workers choose to work less hours to qualify for Medicaid.
“I do not know of any serious forecast that meaningfully raised their growth prognosis for this legislation,” said Harvard University professor Jason Furman, who chaired the Council of Economic Advisers in the Obama Administration. “These are not mostly oriented to growth and competitiveness, and in fact, higher long-term interest rates will go the other and harm growth.”
So far, the White House’s inability to reassure deficiency problems has caused a political blow to Trump, as tax and cost reductions approved by the Chamber are now moving to the Senate. Republican sensor Ron Johnson of Wisconsin and Rand Paul of Kentucky have expressed fears about the likely increases in deficit, with Johnson saying that there are enough senators to stop the bill until the deficit is considered.
“I think we have enough to stop the process until the president is serious about reducing costs and reducing the deficit,” Johnson said in CNN.
Trump Banking Revenue from Tariffs for Help
The White House is also concerned that tariff revenue will help to cover the additional deficits, although the latest court decisions question the legitimacy of Trump, which declares an economic emergency situation for imposing extensive import taxes.
When Trump announced his almost universal tariffs in April, he specifically stated that his policies would generate enough new revenue to start paying national debt. His comments are associated with the remarks of assistants, including Finance Minister Scott Bensten, that the annual budget deficit can be more than half.
“It is our turn to prosper, and in this way we use trillions and trillions of dollars to reduce our taxes and pay our national debt, and all this will happen very quickly,” Trump said two months ago as he talks about their import taxes and encouraged legislators to transfer the individual tax and spend cuts.
The Trump administration is right that growth can help reduce the pressure of the deficit, but it is not enough in itself to accomplish the task, according to new studies by economists Douglas Elmendorf, Glen Hubbard and Zahari Liskov.
Ernie Tedeski, Director of Economics at the Budget Laboratory at Yale University, said the additional “growth does not even bring us closer to where we should be.”
The government will need a $ 10 trillion reduction in deficit over the next 10 years, just to stabilize the debt, Tedeski said. And although the White House says that tax reduction will add to growth, the bigger part of the costs go to maintain existing tax breaks, so it is unlikely to increase the economy meaningfully.
“It steps water,” Tedeski said.