Latest news with #CRFB
Fox News
4 days ago
- Business
- Fox News
Senate weighs Trump's 'big, beautiful bill' as policy group backs CBO, projects $3 trillion debt increase
President Donald Trump's "big, beautiful bill" is projected to increase the debt by $3 trillion, with interest, or $5 trillion if made permanent, according to estimates. An estimate of the House-passed bill by the nonpartisan Congressional Budget Office (CBO) projects it would add more than $2.4 trillion to primary deficits before interest over 10 years, according to the Committee for a Responsible Federal Budget (CRFB), a nonprofit public policy organization. As of Wednesday, the national debt, which measures what the U.S. owes its creditors, was $36.2 trillion, and the national deficit, which occurs when the federal government's spending exceeds its revenues, was $1 trillion, according to the Treasury Department. The massive spending package being considered by a Republican-controlled Congress aims to address a number of issues, including tax policy, border security and immigration, defense, energy production, the debt limit, and adjustments to SNAP and Medicaid. "Based on CBO's estimate, the House-passed bill includes roughly $5.3 trillion of tax cuts and spending partially offset by $2.9 trillion of revenue increases and spending cuts," a CRFB statement said. "Most significantly, the policies put forward by the Ways & Means Committee would increase deficits by $3.8 trillion, on net, while the policies in the Energy & Commerce title would reduce deficits by $1.1 trillion. With interest, the bill would add nearly $3.0 trillion to the debt through 2034 – or $5.0 trillion if various temporary provisions are made permanent." "OBBBA (One Big Beautiful Bill Act) would add far too much to the debt as written and could lead to far more fiscal damage than reported if temporary provisions are extended as intended," the group said. It noted that the bill would boost near-term inflation, increase interest rates, add unnecessary complexity to the tax code as well as weaken market confidence and slow long-term economic growth. It urged the Senate to make the bill "more responsible." Despite the bill passing in the House, some lawmakers have voiced opposition to the legislation, most notably Sen. Rand Paul, R-Ky. "We have never raised the debt ceiling without actually meeting that target," Paul told reporters this week. "So you can say it doesn't directly add to the debt, but if you increase the ceiling $5 trillion, you'll meet that. And what it does is it puts it off the back burner. And then we won't discuss it for a year or two." Top Democrats recently said the bill would cause the deaths of an estimated 51,000 Americans due to changes to the federal healthcare system and the broader reconciliation legislation. Also against the bill is Elon Musk, Trump's former head of the Department of Government Efficiency. Fox News Digital has reached out to the White House.
Forbes
4 days ago
- Business
- Forbes
Can Artifical Intelligence Save America From Its Debt Spiral?
Jamie Dimon isn't one to cry wolf. So when the JPMorgan CEO says 'you are going to see a crack in the bond market,' it's worth listening. And he's not alone. Ray Dalio, Peter Orszag, and Paul Tudor Jones are all sounding the alarm on America's fiscal trajectory. The math is getting hard to ignore. Interest on the debt just crossed $1 trillion annually — more than the U.S. spends on defense, Medicaid, disability insurance, and food stamps combined. The One Big Beautiful Bill Act (OBBBA), if passed without offsets, could add $5 trillion to the debt over the next decade. According to the Committee for a Responsible Federal Budget, that pushes total public debt to nearly $57 trillion by 2034 — a number so large it's bordering on abstract. US Debt-to-GDP Ratio; Historical & projected If 10-year bond yields simply hold at today's ~4.4%, the CRFB estimates we add another $1.8 trillion in interest cost. And if rates rise further, a debt spiral isn't a tail risk — it's the baseline. But here's the problem: everyone agrees on the diagnosis. No one agrees on the cure. Raising taxes? Politically impossible. Cutting entitlements? Untouchable. Both parties have proven incapable of fiscal restraint — even in peacetime. So what's left? If the U.S. is going to escape its debt doom loop, we'll need to grow through it — not tighten into it. And the most credible engine for that growth isn't austerity. It's artificial intelligence. We are standing at the front end of a once-in-a-century platform shift. AI isn't just another tech cycle — it's a horizontal capability that will transform every sector of the economy, from finance and logistics to energy, healthcare, and defense. AI isn't just another tech cycle. It's a general-purpose capability that could rewire the productivity backbone of every sector — from private credit and logistics to defense, software, and healthcare. Already, we're seeing AI reduce due diligence cycles from weeks to hours, compress legal reviews by 80%, and deliver spreadsheet analysis with near-perfect accuracy. AI-powered copilots aren't replacing humans — they're multiplying the throughput of every knowledge worker. If this productivity surge lifts U.S. real GDP from ~2% to 3–4%, and inflation stays modest, we could see nominal GDP growth exceed 5% annually — fast enough to outgrow the debt even if rates remain elevated. That's not wishful thinking — it's historical precedent. After WWII, the U.S. carried debt loads above 100% of GDP. We didn't cut our way out. We grew — averaging nearly 4% real GDP growth for two decades through innovation, infrastructure, and industrial scaling. This isn't an argument to ignore the wolf. It's a call to outrun it. Yes, 3–4% real growth is aggressive. But it's not impossible. It happened before — and it could again if AI unlocks true economy-wide productivity gains. The U.S. has unique advantages: it leads the world in foundational models, semiconductors, cloud infrastructure, and startup formation (yes, we still need more energy to power this expansion). If AI is going to remake the modern economy, it will start here. Done right, AI can unleash the kind of broad-based productivity boom that defined the post-WWII economic miracle. Between 1947 and 1973, U.S. real GDP grew nearly 4% annually, driven by industrial innovation, global leadership, and a rising middle class. We've been chasing that growth rate ever since. And the numbers back it up. Vanguard projects that AI adoption could boost labor productivity by 20% by 2035, lifting U.S. GDP growth to 3%+ annually — the fastest pace since the 1990s. JPMorgan Private Bank sees productivity gains materializing as early as the late 2020s, lifting growth above 2.5%. And according to the AI Coalition, AI could raise long-run productivity growth by 0.8 to 1.5 percentage points per year — a massive unlock in a mature $27 trillion economy. Yes, even 3–4% might not be enough if interest rates spiral. But today's 4.4% Treasury yield isn't permanent — it's a reflection of uncertainty, not inevitability. If AI stabilizes growth expectations, that could anchor yields and restore fiscal confidence. The spread between nominal growth and average borrowing costs is the most important line on the chart — and AI could flip it back in our favor. Yes, productivity gains may be uneven or delayed. That's true of any general-purpose technology. Electricity and the internet took years to show up in the data. But early results are already promising — especially in high-leverage sectors like finance, law, and logistics. And no, growth alone won't fix Medicare or solve Social Security. But it will buy time — and make eventual reforms more politically and economically feasible. AI is not a substitute for tough decisions. It's the only viable bridge to a sustainable future. The original Marshall Plan powered postwar recovery through investment and innovation. AI can do the ... More same for America today. Post-WWII America didn't just survive high debt. It flourished — building a dominant economy powered by innovation, infrastructure, and productivity. We now face a similar inflection point. This time, AI is the catalyst. We have a choice: treat AI like a regulatory threat, or embrace it as a national growth strategy. Because the truth is, America doesn't have a debt problem — it has a growth problem. And the longer we delay confronting that reality, the more constrained our options become. If AI can unlock a new era of economic abundance, it won't just be good for business. It may be the only way to save the Republic's balance sheet.
Yahoo
23-05-2025
- Business
- Yahoo
The new Trump-led tax bill promises an American ‘golden age' – that conveniently ends with his presidency
Congressional Republicans passed a huge spending bill on Thursday morning that, for some taxpayers, may deliver the 'golden age' Donald Trump has promised – but only while he is president. The One Big Beautiful Bill Act, which passed narrowly with 215-214 votes, is centered on permanently extending tax cuts enacted during Trump's first term, while also creating new deductions to make good on his campaign promise of providing relief to the working class and families. But there's a catch: those deductions would be available only through 2028, meaning that when Trump finishes his term in January 2029, his tax relief will have expired. And to sway fiscal hardliners, Republicans have filled the bill with cuts to social safety net programs that could drive millions of poor and disabled Americans off the benefits they depend on. 'This seems pretty overtly tied to the presidential election cycle. I am not aware that that's happened before,' said Maya MacGuineas, president of the Committee for a Responsible Federal Budget (CRFB), a non-partisan watchdog group focused on government spending. The bill now moves on to the US Senate, where lawmakers are expected to make their own changes. Democrats have little influence over the measure, which is crafted under the budget reconciliation procedure that allows it to be passed with simple majorities in both chambers. As currently written, the bill is expected to add an outsize $3.4tn to the deficit through 2034, much of which is due to the permanent extension of tax cuts Trump signed in 2017. It would also allow taxpayers to write off overtime, tips and the interest paid on loans for cars assembled in the US, in line with Trump's campaign promises. Parents would see the child tax credit increase by $500, and be given the option of opening 'Trump accounts' to save money to help their children afford a home or schooling once they turn 18, into which the government would deposit $1,000. And while the legislation does not include Trump's promise to slash taxes on social security payments, it does offer a new $4,000 deduction for taxpayers aged 65 or older. But once the year 2028 ends, so too do these deductions, as well as the government's deposits into any Trump accounts and the increased child tax credit. By that time, poor Americans will have begun navigating funding cuts and new requirements imposed on two of the government's biggest anti-poverty programs. In 2027, new work requirements for some recipients of Medicaid, the healthcare program for poor and disabled Americans, would go into effect. The Urban Institute thinktank, based on an analysis of a similar policy, believes those would cost as many as 5.2 million people their health insurance coverage, largely because of enrollees not understanding the requirement or being unable to prove their compliance. People who depend on the Supplemental Nutrition Assistance Program (Snap), which helps pay for groceries and other essentials, would also face work requirements beginning in October 2027. The left-leaning Center on Budget and Policy Priorities estimates those would put about a quarter of Snap recipients, or nearly 11 million people, at risk of losing their benefits. 'To make the math work and to satisfy all camps, they have put together a kind of a structure in which Trump can be satisfied that he will see these provisions go into effect under his term, the deficit hawks and the spending hawks can be assured that, at least on paper, these cuts are coming, and then actually it will be somebody else's, some other Congress's actual job, to decide what happens to them after that,' said Alex Jacquez, a former economic policy adviser to Joe Biden who is now the chief of policy and advocacy at the Groundwork Collaborative thinktank. Despite the new deductions, the non-partisan Congressional Budget Office (CBO) estimated that the wealthy will benefit most from the bill. Taxpayers with the highest incomes will see their household resources increase by 4% in 2027 and 2% in 2033, largely due to the extended tax cuts. The poorest tax payers would see their resources drop by 4% in 2033, largely due to the downsized benefit programs, the CBO forecast. MacGuineas warned that the temporary deductions combined with the delayed start of the spending cuts will create a 'fiscal cliff' for a future Congress and president, who will face pressure to stop or further delay what could be a politically toxic combination of policies. 'You could have a big showdown in 2028, 2029 about what to extend, how to pay for it, if you do, whether you have to and whether to delay the offsets. And that could be, overall, a very ugly fiscal picture,' she said. Cancelling the spending cuts and keeping the new deductions in place would cost $4.8tn, the CRFB forecasts – more than the government spent responding to the Covid pandemic.
The Guardian
22-05-2025
- Business
- The Guardian
The new Trump-led tax bill promises an American ‘golden age' – that conveniently ends with his presidency
Congressional Republicans passed a massive spending bill on Thursday morning that, for some taxpayers, may deliver the 'golden age' Donald Trump has promised – but only while he is president. The One Big Beautiful Bill Act, which passed narrowly with 215-214 votes, is centered on permanently extending tax cuts enacted during Trump's first term, while also creating new deductions to make good on his campaign promise of providing relief to the working class and families. But there's a catch: those deductions would be available only through 2028, meaning that when Trump finishes his term in January 2029, his tax relief will have expired. And to sway fiscal hardliners, Republicans have filled the bill with cuts to social safety net programs that could drive millions of poor and disabled Americans off the benefits they depend on. 'This seems pretty overtly tied to the presidential election cycle. I am not aware that that's happened before,' said Maya MacGuineas, president of the Committee for a Responsible Federal Budget (CRFB), a nonpartisan watchdog group focused on government spending. The bill now moves on to the US Senate, where lawmakers are expected to make their own changes. Democrats have little influence over the measure, which is crafted under the budget reconciliation procedure that allows it to be passed with simple majorities in both chambers. As currently written, the bill is expected to add an outsize $3.4tn to the deficit through 2034, much of which is due to the permanent extension of tax cuts Trump signed in 2017. It would also allow taxpayers to write off overtime, tips and the interest paid on loans for cars assembled in the US, in line with Trump's campaign promises. Parents would see the child tax credit increase by $500, and be given the option of opening 'Trump accounts' to save money to help their children afford a home or schooling once they turn 18, into which the government would deposit $1,000. And while the legislation does not include Trump's promise to slash taxes on social security payments, it does offer a new $4,000 deduction for taxpayers aged 65 or older. But once the year 2028 ends, so too do these deductions, as well as the government's deposits into any Trump accounts and the increased child tax credit. By that time, poor Americans will have begun navigating funding cuts and new requirements imposed on two of the government's biggest anti-poverty programs. In 2027, new work requirements for some recipients of Medicaid, the healthcare program for poor and disabled Americans, would go into effect. The Urban Institute thinktank, based on an analysis of a similar policy, believes those would cost as many as 5.2 million people their health insurance coverage, largely because of enrollees not understanding the requirement or being unable to prove their compliance. People who depend on the Supplemental Nutrition Assistance Program (Snap), which helps pay for groceries and other essentials, would also face work requirements beginning in October 2027. The left-leaning Center on Budget and Policy Priorities estimates those would put about a quarter of Snap recipients, or nearly 11 million people, at risk of losing their benefits. 'To make the math work and to satisfy all camps, they have put together a kind of a structure in which Trump can be satisfied that he will see these provisions go into effect under his term, the deficit hawks and the spending hawks can be assured that, at least on paper, these cuts are coming, and then actually it will be somebody else's, some other Congress's actual job, to decide what happens to them after that,' said Alex Jacquez, a former economic policy adviser to Joe Biden who is now the chief of policy and advocacy at the Groundwork Collaborative think tank. Despite the new deductions, the nonpartisan Congressional Budget Office (CBO) estimated that the wealthy will benefit most from the bill. Taxpayers with the highest incomes will see their household resources increase by four percent in 2027 and two percent in 2033, largely due to the extended tax cuts. The poorest tax payers would see their resources drop by four percent in 2033, largely due to the downsized benefit programs, the CBO forecast. MacGuineas warned that the temporary deductions combined with the delayed start of the spending cuts will create a 'fiscal cliff' for a future Congress and president, who will face pressure to stop or further delay what could be a politically toxic combination of policies. 'You could have a big showdown in 2028, 2029 about what to extend, how to pay for it, if you do, whether you have to and whether to delay the offsets. And that could be, overall, a very ugly fiscal picture,' she said. Cancelling the spending cuts and keeping the new deductions in place would cost $4.8tn, the CRFB forecasts – more than the government spent responding to the Covid pandemic.
Yahoo
15-05-2025
- Business
- Yahoo
GOP Tax Bill Seen Masking More Than $1 Trillion Hit to US Debt
(Bloomberg) — The cost of Republican lawmakers' draft plan for sweeping tax cuts weighed in at $3.8 trillion over the next 10 years in one official estimate. The reality is likely much higher, thanks to the use of budget and political tools designed to minimize the appearance of the fiscal hit, according to independent analysts including former Republican staff members. As Coastline Erodes, One California City Considers 'Retreat Now' How a Highway Became San Francisco's Newest Park Power-Hungry Data Centers Are Warming Homes in the Nordics A New Central Park Amenity, Tailored to Its East Harlem Neighbors Maryland's Credit Rating Gets Downgraded as Governor Blames Trump Budget experts typically calculate the cost of legislation, or 'score,' over a 10-year period. But President Donald Trump's headline-grabbing pledges to remove taxes on tips and overtime are supposed to expire after just four years in the latest bill. That has effect of downplaying the potential revenue loss if the measures are extended — which Congress has a tendency to do. It could also raise concerns among investors and economists about the scale of future borrowing needs for a government whose debt load is on track to surpass 118% of the economy's size by 2035, potentially undermining confidence in US securities. Republicans are quick to defend the size of the tax cuts, saying they will grow the economy and, with Trump's tariff policies, bring in trillions of dollars of added revenue to federal coffers — along with savings found by the Elon Musk-led Department of Government Efficiency. Speaker Mike Johnson is aiming to secure House approval later this month for a bill that, along with providing Trump's new benefits, makes permanent the lower income-tax rates set in Trump's 2017 package. Those rates had been scheduled to expire at the end of this year — something that had limited the official cost of that package in Trump's first term. Analysis by the Committee for a Responsible Federal Budget, a centrist fiscal watchdog group, shows that extending the new benefits for a full decade would take the cumulative increase in the deficit to $5.2 trillion. That compares with an official congressional Joint Committee on Taxation tally of $3.8 trillion. After factoring in spending cuts in Medicaid and other items, the CRFB estimated the deficit boost at $3.3 trillion. While both Republicans and Democrats have previously used budget tricks to portray a better fiscal impact, the scale of the potentially hidden effects of the GOP tax package is striking, said Marc Goldwein, senior policy director at the CRFB. 'The entire reason they did this temporarily was to reduce this cost,' Goldwein said. 'They are basically trying to hide' the additional costs, he said. Trump and his cabinet members have argued that official scoring fails to capture hundreds of billions of dollars of future revenue from increased tariffs. They also claim that the administration's deregulatory agenda will lift burdens on businesses, boosting growth. Jason Smith, the GOP chair of the tax-writing House Ways and Means Committee, has blasted Democrats opposing the bill for effectively seeking 'the largest tax hike in American history.' The combination of Trump's tax cuts, savings and de-regulation means a more likely deficit impact of below $2 trillion over the coming decade, Richard Stern, a fiscal expert at the Heritage Foundation, a conservative-leaning think tank. 'The spending cuts are not going to hold back growth — they are not cutting critical services or going to hold back business flows,' Stern said. 'These are cutting largely wasteful and fraudulent spending.' Even without adding to US borrowing needs, the existing run rate has the federal debt burden on a trajectory that most observers, including Treasury Secretary Scott Bessent, view as unsustainable. Annual deficits have been clocking near $2 trillion in recent years, or more than 6% of gross domestic product. The debt-to-GDP ratio is heading for a record high in just four years' time, according to the nonpartisan Congressional Budget Office. Trump has dubbed the legislation, which includes a slew of spending reductions yet to be specified in detail, 'one big, beautiful bill.' Barclays Plc economists on Wednesday titled a research note on the topic, 'One big, beautiful' deficit. 'Investors in longer US bonds are unlikely to be happy,' they wrote. By the calculation of G. William Hoagland at the Bipartisan Policy Center, sunsetting many Trump's new benefits after four years, the tax bill saved roughly $500 billion. The draft bill has a deduction for senior citizens sunsetting in four years, with an expanded child tax credit of $2,500 ending Dec. 31, 2028. 'This is an old trick the tax writers do,' Hoagland, a former congressional Republican staff member, said of phasing out a benefit. 'From a fiscal perspective, it underestimates the real cost of these bills." Rohit Kumar, national tax office co-leader at PricewaterhouseCoopers LLP and a former top Senate policy aide, said that if provisions prove 'super popular, whoever's running for president in 2028 can run on renewing them.' The other way lawmakers tried to cut the bill's cost was to was 'to put the guardrails around who qualifies,' Kumar added. This included adding income limits for a new deduction aimed at retirees, as well as detailing which industries were eligible for the no-tax-on-tips provision. Ultimately, the four year time line for when the tax cuts expire will only stoke uncertainty for both businesses and individuals, said Goldwein at the CRFB. 'How can you plan around a tax code when large parts of it expire in four years,' he said. —With assistance from Ben Steverman, Christopher Cannon, Mathieu Benhamou and Kate Rabinowitz. Cartoon Network's Last Gasp DeepSeek's 'Tech Madman' Founder Is Threatening US Dominance in AI Race Why Obesity Drugs Are Getting Cheaper — and Also More Expensive As Nuclear Power Makes a Comeback, South Korea Emerges a Winner Trump Has Already Ruined Christmas ©2025 Bloomberg L.P.
