THE INTERVIEW: Can the U.S. grow its way out of debt? Economist skeptical of Trump's big bill

Yahoo

3 days ago

FOX 2 - The U.S. House of Representatives narrowly passed the so-called "Big Beautiful Bill," a sweeping fiscal package extending significant tax cuts, reducing federal spending, and promising to jumpstart economic growth. Now the bill will be considered in the U.S. Senate.
Republican Senator Ron Johnson and Elon Musk have emerged as two of the most forceful critics of the "Big Beautiful Bill," though from different vantage points.
Johnson, a staunch fiscal conservative, has rejected the current version of the bill, warning that it would skyrocket the deficit and lock in unsustainable spending levels. He's demanded a return to pre-pandemic spending and line-by-line budget cuts. Elon Musk has been even more incendiary, calling the bill a "disgusting abomination."
He warned it could trigger a recession, undermines fiscal efficiency, and represents everything he tried to reform during his involvement in government tech initiatives.
The national debt stands at more than $36 trillion, and interest payments alone topping $1 trillion last year, the question of whether America can grow its way out of debt has taken center stage.
Proponents, including House Speaker Mike Johnson, argue that the bill's tax cuts and pro-growth policies will unlock a surge in economic activity, allowing the U.S. to expand its way out of red ink. Johnson says the projections of the Congressional Budget Office are too low and insists the bill will unleash greater GDP growth than government estimates predict.
But Dr. Brian Marks, a senior lecturer of economics and business analytics at the University of New Haven, sees it differently.
"All I can say is hope springs eternal," Marks tells Hilary Golston. "To date, there is no evidence to suggest that the level of tax cuts … if we look back at Trump 1.0 and exclude Covid … produced extraordinary growth. The deficit increased by close to $2 trillion on that alone."
Marks questioned whether the current economic environment supports the optimistic growth projections Johnson and others have embraced.
"Based on the data before me, and the behavior of the past as maybe being a prologue for the future, I'm not as confident we're going to see the level of growth the Speaker is suggesting."
Adding to the skepticism are rising borrowing costs. The yield on the 10-year Treasury note now sits around 4.5%, a rate that may benefit investors but poses a significant burden for taxpayers.
"It's terrible for America because we are paying so much more on our debt," I noted to Marks during our conversation. "Our debt service in 2024 was a trillion dollars. Even in paying back the debt, America is behind."
Marks agrees that the impact will be felt most acutely by ordinary Americans.
"When it comes to the ordinary citizen, it's about how this hits day to day. Interest on credit cards, mortgages, auto loans… all going up. That's what's going to hit the consumer."
The bill's reliance on new tariffs to offset revenue losses is another flashpoint. While the administration has argued that tariffs will generate billions, Marks is doubtful.
"I'm not particularly confident. The estimate to suggest that tariffs will make up this shortfall in some sense is Pollyannaish," he said.
With the bill now heading to the Senate, the debate is far from over. For now, the question remains: Can America truly grow its way out of debt, or is the nation poised for an even larger fiscal reckoning?