Trump Proposes Policies That Would Increase the Soaring National Debt

Yomiuri Shimbun

a day ago

Tom Brenner/For The Washington Post
President Donald Trump and billionaire Elon Musk speak with reporters in the Oval Office on Friday.
President Donald Trump is pursuing an agenda that would add trillions of dollars to the soaring national debt, ignoring warnings from Wall Street, Republican deficit hawks and his outgoing cost-cutting champion.
Though Trump ran for office in part on pledges to slash the size of the federal government and rein in the debt, his record so far has been less fiscally disciplined.
His administration this week asked Congress to cancel a little more than $9 billion in spending in the current fiscal year – a fraction of a federal budget that has grown to nearly $7 trillion. The government has already spent nearly $170 billion more in the fiscal year that began in October than it did by this point in the previous year.
The tariffs that the White House has said would produce a gusher of new revenue face an uncertain future, challenged in court and subject to revision as Trump negotiates with foreign trading partners.
And while Trump has proposed cutting agency spending by $163 billion in the coming fiscal year, even that reduction in some programs would have little effect on overall spending, which is driven primarily by social safety net programs.
The national debt now sits at $36.2 trillion, after sharp increases under Trump and President Joe Biden. The nonpartisan Committee for a Responsible Federal Budget, which advocates for deficit reduction, estimates that Biden approved $4.7 trillion in new 10-year borrowing, while Trump approved $8.4 trillion during his first term, including $3.6 trillion in emergency pandemic relief.
Now Trump and congressional Republicans are racing to approve his One Big Beautiful Bill, which would extend his expensive 2017 tax cuts, end taxes on tips and overtime wages, increase deductions for state and local taxes, and increase spending on immigration enforcement.
'This debt wave coming looks almost insurmountable. I'm not sure why [the Trump administration] is pushing it,' said Chris Rupkey, the chief economist at FWD Bonds. 'They're trying to do too many things at the start of the administration when, with the deficit they inherited, there's just no room to increase it.'
The White House says those policies will usher in a 'golden age' of economic growth that will reduce the deficit despite the loss of tax revenue.
'This bill is a remedy to fiscal futility because we have historic reforms that are on the verge of being enacted at a size and a level that is historic,' White House budget director Russell Vought told reporters Wednesday. 'I think it is a response directly to the credit agencies saying and arguing that this town can produce nothing other than debt and deficits.'
But many independent economists find that projection implausible, arguing that a rising national debt threatens to dampen economic growth and crowd out private-sector investment.
On Wednesday, the nonpartisan Congressional Budget Office projected that the legislation would require $2.4 trillion in additional borrowing over the next decade. The measure's price tag has provoked increasing worry among some economists, investors, GOP lawmakers – even Elon Musk, the billionaire who until last week led the White House's cost-cutting effort, the U.S. DOGE Service.
Musk on Tuesday called Trump's bill 'a disgusting abomination' that would burden the country with 'crushingly unsustainable debt.' He later wrote on X, his social media platform, that 'a new spending bill should be drafted that doesn't massively grow the deficit' and complained that the measure would increase the legal cap on borrowing 'by 5 TRILLION DOLLARS.'
Musk is not alone. Wall Street bankers and executives have privately warned the Trump administration that their tax bill could stoke investor anxiety about rising deficits, push up U.S. borrowing costs and damage the broader economy. In late May, the CBO warned that the debt is spiraling toward dangerous levels: If annual discretionary spending and federal revenue remain at historical averages, the debt would exceed 250 percent of economic output by 2055, far outstripping the nation's record debt-to-GDP ratio from the aftermath of World War II.
Federal spending is mostly driven by social safety net programs, such as Social Security, Medicare, Medicaid and veteran care. The recent run-up in the debt is largely the result of those programs colliding with years of tax cuts. As increasing numbers of Americans retire, government revenue – mostly from income and payroll taxes – is far from enough to make good on benefits payments, forcing the government to borrow to make up the leftover cost. Democrats in Congress – and Trump – have pledged not to reduce benefits in many such programs, leaving little room to slow spending.
After the U.S. entered two wars in the Middle East and passed tax cuts under the Bush, Obama and Trump administrations, debt skyrocketed. As Trump ran against Biden for a second term during the worst price inflation in generations, he promised to reduce federal spending dramatically, ending trillions of dollars in spending on pandemic response and other economic stimulus measures.
Investors cautiously cheered Trump's election with the hope that widespread government deregulation – and tax cuts – would boost private-sector profits and lead to growth. But any expansion has been tempered, economists say, since the GOP has opted to finance the tax and spending policy by borrowing more – and Trump's tariffs have depressed consumer demand.
Financial markets have shown some jitters over the U.S. debt burden. Yields on 10- and 30-year Treasury bonds have neared alarming benchmarks, signaling investor anxiety over the country's financial health. Moody's, a leading credit rating firm, downgraded the federal government's rating last month, citing Washington's failure to tame growing deficits.
Some Republicans, too, are sounding the alarm. Reps. Thomas Massie (Kentucky) and Warren Davidson (Ohio) voted against the tax legislation last month because of fiscal concerns. It narrowly passed the House over objections from deficit hawks, many of whom ultimately backed the measure.
The Senate is now haggling over the legislation's price tag while hoping to pass it in time for Trump to sign it into law before Independence Day.
Sen. Ron Johnson (R-Wisconsin) has loudly opposed the measure, asserting that it does not do enough to reduce the deficit. He said he recently texted a chart to Trump showing how much average deficits have risen since President George W. Bush's administration and how much CBO projects they will rise in the future. He also showed him a copy in person Wednesday during a White House meeting with other Republicans on the Senate Finance Committee, he said.
Senate Majority Leader John Thune (R-South Dakota) told reporters after the meeting that there was 'quite a bit' of discussion on the deficit in the meeting.
Johnson said that he was 'not a real fan' of the CBO's estimates but that he was relying on its projections.
'We have to have some base numbers we agree on,' Johnson said.
Phillip Swagel, the CBO's director, wrote Wednesday in a letter to Senate Democrats that the budget office estimates that Trump's tariffs policies as of May 13 would cut the deficit by $2.8 trillion over 10 years. The estimate takes into account the CBO's finding that the tariffs would shrink the size of the economy – but it does not consider how much Trump and his successors are likely to revise the on-again, off-again tariffs over the next decade, or whether the courts will allow them to stand.
White House officials and Republican leaders in Congress have argued that Trump's bill will reduce deficits by encouraging economic growth. The legislation, economists have found, probably will spur market expansion, but far from enough to pay for the gargantuan cost of the package.
'All the modeling that we've seen suggests that the changes that are being made in the tax policy – particularly making permanent bonus depreciation, interest deductibility, R&D expensing – are going to lead to significant growth,' Thune told reporters. 'And you couple the growth with the biggest spending reduction in American history, and you will see a reduction, not an increase, in the deficit.'
Maya MacGuineas, president of the Committee for a Responsible Federal Budget, told The Washington Post that his outlook was 'like opposite day.'
'By all serious accounts, and under all credible dynamic growth estimates, this bill will add massively to the already out-of-control national debt,' she said.