Trump's $5 trillion tax gamble sparks GOP revolt, market jitters; and a rare rebuke from Elon Musk

Time of India

5 days ago

President Donald Trump is facing mounting resistance from Republican senators, financial markets, economists, and even Elon Musk, over his multitrillion-dollar tax cut plan, which critics say could explode the national debt and rattle an already wary economy.
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The House recently passed Trump's proposed tax and spending cuts, but analysts say they would add over $5 trillion to the national debt in the next decade if made permanent, according to the Committee for a Responsible Federal Budget. Investors, meanwhile, are reacting with skepticism: the interest rate on a 10-year Treasury note is now around 4.5%, a dramatic jump from the 2.5% rate when Trump's 2017 tax cuts became law.
Growth vs. Reality
The White House insists that economic growth will offset the tax cuts' cost. Stephen Miran, chair of the Council of Economic Advisers, said the economy would grow at an average of 3.2% annually — far above the Congressional Budget Office's 1.9% projection — and that tariffs would generate enough revenue to shrink the deficit.
'The deficit is a very significant concern for this administration,' Miran said.
But outside economists aren't convinced. Jason Furman, a former Obama adviser, said the plan is 'mostly not growth- and competitiveness-oriented tax cuts' and warned that high long-term interest rates could stunt economic growth.
Kent Smetters of the Penn Wharton Budget Model called the White House's forecasts 'a work of fiction,' while Yale economist Ernie Tedeschi said the tax cuts merely maintain existing breaks and won't deliver meaningful growth:
'It's treading water.'
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Musk: 'I was disappointed'
Even Elon Musk, who once served in Trump's now-defunct 'Department of Government Efficiency,' expressed disapproval.
'I was disappointed to see the massive spending bill, frankly, which increases the budget deficit… and undermines the work that the DOGE team is doing,' Musk told CBS News.
White House attacks critics
White House press secretary Karoline Leavitt tried to blunt the criticism, accusing the Congressional Budget Office of relying on 'shoddy assumptions.'
'The blatantly wrong claim that the 'One, Big, Beautiful Bill' increases the deficit is based on… scorekeepers who have historically been terrible at forecasting,' she said.
House Speaker Mike Johnson joined the offensive, saying the CBO 'always underestimates' the economic boost from tax cuts.
Still, Trump acknowledged that the lack of offsetting spending cuts was a political compromise:
'We have to get a lot of votes.
We can't be cutting.'
Senate resistance grows
But GOP senators aren't all on board. Senators Rand Paul and Ron Johnson have both raised red flags, and Paul warned Sunday that at least four Republican senators are ready to block the bill unless it is modified.
'The GOP will own the debt once they vote for this,' Paul said on CBS's Face the Nation.
That's a serious threat in a Senate where Republicans hold only a three-seat majority.
Debt at $36 trillion and climbing
The broader context adds urgency: the U.S. national debt has surpassed $36.1 trillion, and future pressures from Social Security and Medicare loom large. Brendan Duke of the Center on Budget and Policy Priorities said the timing couldn't be worse:
'Lawmakers would be dealing with Social Security, Medicare and expiring tax cuts at the same time.'
And while Trump says tariffs will help pay for the tax cuts, legal experts point to recent court rulings that cast doubt on his emergency declarations to impose sweeping import taxes.
'It's our turn to prosper,' Trump said in April. 'Use trillions and trillions of dollars to reduce our taxes and pay down our national debt, and it'll all happen very quickly.'
But with debt, interest rates, and internal GOP tension all rising, Trump's economic bet may face its toughest test yet.