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Yomiuri Shimbun
3 days ago
- Business
- Yomiuri Shimbun
Trump Proposes Policies That Would Increase the Soaring National Debt
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.
Yahoo
28-05-2025
- Business
- Yahoo
Letter: Republican fiscal policy rewards rich, punishes others
Fact: The Committee for a Responsible Federal Budget estimates that making President Donald Trump's tax cut of 2017 permanent, as passed by the House last week, would add approximately $37 trillion to the U.S. deficit over 30 years. Fact: The tax cut benefits citizens with high incomes much more than those with lower incomes. Why are the Republicans making the tax cut permanent if they want to lower the federal deficit? Why are the Republicans helping higher income citizens more than lower income citizens? Why are they targeting programs that help lower income families make ends meet? Which group really controls the budget legislation now being considered by the Senate? Just some thoughts to consider if you are not rich. George Seifrit Lower Heidelberg Township
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.
Yahoo
19-05-2025
- Business
- Yahoo
President Donald Trump's 'big, beautiful' tax-and-spending bill could come with a big, ugly cost, economists warn.
President Donald Trump's 'big, beautiful' tax-and-spending bill could come with a big, ugly cost, economists warn. Nonpartisan research groups studying the proposal have estimated that it would add more than $2.5 trillion to the federal debt—currently at an all-time high of $36.8 trillion—over the next decade. Despite those projections, White House Press Secretary Karoline Leavitt on Monday insisted that the bill would actually save the federal government $1.6 trillion: 'This bill does not add to the deficit,' she told reporters. 'It is the largest savings for any legislation that has ever passed Capitol Hill in our nation's history.' The White House and the Office of Management and Budget did not respond to a request for comment on how that $1.6 trillion figure was calculated. Fiscal watchdogs have sharply disputed such claims, citing the bill's steep tax cuts—estimated at $3.8 trillion—and relatively modest spending reductions. The nonpartisan Committee for a Responsible Federal Budget estimates that the House bill in its current form will increase debt by $3.3 trillion through 2034, and increase annual deficits to $2.9 trillion to $3.3 trillion. Deficits are high on the minds of a handful of Republican fiscal hawks in Congress whose wariness over the bill's spending could doom it. Trump's 2017 tax cuts are set to expire at the end of the year, and simply extending them would cost $4.6 trillion over a decade, according to the Congressional Budget Office. The Republican bill also reduces taxes on tips and overtime, and increases spending on the military and border security. Republicans plan to offset that spending in part by cuts to Medicaid, food stamps, and federal subsidies for clean energy projects. Republican leaders have struggled to strike the right balance of lowering the bill's price tag while not losing support from moderates who are wary of cutting too much from widely used safety-net programs. Trump is expected to attend the House Republicans' conference meeting at the Capitol on Tuesday to shore up support for the bill. The bill's cost-saving measures include work requirements for Medicaid recipients, a reduction in nutrition assistance, and tighter eligibility for undocumented migrants to access federal benefits. Critics argue that these reductions disproportionately impact low-income Americans. 'The structure of this bill is such that low- and middle-income households bear the brunt, while the wealthy reap significant benefits,' Daniel Hornung, a former Deputy Director of the National Economic Council under President Joe Biden, tells TIME. He adds that 'there's really no way to look at this where deficits are lower because of this bill.' Debate over the measure's final cost has exposed rifts within the Republican Party. Fiscal conservatives argue that the bill's spending reductions are too modest and that the promised savings are illusory. 'We can and must do better before we pass the final product,' Texas Rep. Chip Roy wrote on social media late Sunday, after the House Budget Committee narrowly advanced the bill in a 17-16 vote—with four deficit hawks voting 'present' so the measure could advance. Five Republican fiscal hawks on the committee had joined with all Democrats in voting against the bill last Friday. House Speaker Mike Johnson and his leadership team spent the weekend in frantic negotiations before passing the bill out of the Budget committee on Sunday. The bill could reach the House floor as early as this week, as Johnson has pledged to bring the bill to a vote before Memorial Day. After that, it would go to the Senate, where Republicans have their own concerns and, like in the House, Republicans will need the support of virtually all of their caucus. 'The One Big Beautiful Bill will almost certainly add to our deficits and debt,' Republican Sen. Ron Johnson of Wisconsin wrote in a recent Wall Street Journal op-ed. 'I can't imagine that they want Republicans to increase annual deficits. That's why I can't support this bill as it's currently being discussed and doubt that it will pass the Senate.' Economists warn that the bill's impact on the deficit could be even more severe than current projections, given that the bill puts end dates on some tax cuts to keep the cost lower. Congress has a long history of ultimately extending temporary tax cuts beyond their expiration dates. The Committee for a Responsible Federal Budget has estimated that extending the bill's tax cuts for a full decade could push the total increase in the deficit to as high as $5.3 trillion. Fiscal hawks in Congress aren't the only ones concerned about deficits. Moody's Ratings recently downgraded the U.S.'s AAA rating, citing doubts about the country's ability to maintain fiscal discipline. The bill's passage could further pressure U.S. bond yields, which have already climbed above 5%, signaling growing investor anxiety over American debt. House Republicans have insisted that the bill will stimulate economic growth, which they argue will generate enough revenue to offset the increased debt. Jason Smith, chairman of the tax-writing House Ways and Means Committee, said the economy would 'go gangbusters' under Trump's tax and regulatory agenda. Write to Nik Popli at
Time Magazine
19-05-2025
- Business
- Time Magazine
What Trump's ‘Big, Beautiful Bill' Would Do to the National Debt
President Donald Trump's 'big, beautiful' tax-and-spending bill could come with a big, ugly cost, economists warn. Nonpartisan research groups studying the proposal have estimated that it would add more than $2.5 trillion to the federal debt—currently at an all-time high of $36.8 trillion—over the next decade. Despite those projections, White House Press Secretary Karoline Leavitt on Monday insisted that the bill would actually save the federal government $1.6 trillion: 'This bill does not add to the deficit,' she told reporters. 'It is the largest savings for any legislation that has ever passed Capitol Hill in our nation's history.' The White House and the Office of Management and Budget did not respond to a request for comment on how that $1.6 trillion figure was calculated. Fiscal watchdogs have sharply disputed such claims, citing the bill's steep tax cuts—estimated at $3.8 trillion—and relatively modest spending reductions. The nonpartisan Committee for a Responsible Federal Budget estimates that the House bill in its current form will increase debt by $3.3 trillion through 2034, and increase annual deficits to $2.9 trillion to $3.3 trillion. Deficits are high on the minds of a handful of Republican fiscal hawks in Congress whose wariness over the bill's spending could doom it. Trump's 2017 tax cuts are set to expire at the end of the year, and simply extending them would cost $4.6 trillion over a decade, according to the Congressional Budget Office. The Republican bill also reduces taxes on tips and overtime, and increases spending on the military and border security. Republicans plan to offset that spending in part by cuts to Medicaid, food stamps, and federal subsidies for clean energy projects. Republican leaders have struggled to strike the right balance of lowering the bill's price tag while not losing support from moderates who are wary of cutting too much from widely used safety-net programs. Trump is expected to attend the House Republicans' conference meeting at the Capitol on Tuesday to shore up support for the bill. The bill's cost-saving measures include work requirements for Medicaid recipients, a reduction in nutrition assistance, and tighter eligibility for undocumented migrants to access federal benefits. Critics argue that these reductions disproportionately impact low-income Americans. 'The structure of this bill is such that low- and middle-income households bear the brunt, while the wealthy reap significant benefits,' Daniel Hornung, a former Deputy Director of the National Economic Council under President Joe Biden, tells TIME. He adds that 'there's really no way to look at this where deficits are lower because of this bill.' Debate over the measure's final cost has exposed rifts within the Republican Party. Fiscal conservatives argue that the bill's spending reductions are too modest and that the promised savings are illusory. 'We can and must do better before we pass the final product,' Texas Rep. Chip Roy wrote on social media late Sunday, after the House Budget Committee narrowly advanced the bill in a 17-16 vote—with four deficit hawks voting 'present' so the measure could advance. Five Republican fiscal hawks on the committee had joined with all Democrats in voting against the bill last Friday. House Speaker Mike Johnson and his leadership team spent the weekend in frantic negotiations before passing the bill out of the Budget committee on Sunday. The bill could reach the House floor as early as this week, as Johnson has pledged to bring the bill to a vote before Memorial Day. After that, it would go to the Senate, where Republicans have their own concerns and, like in the House, Republicans will need the support of virtually all of their caucus. 'The One Big Beautiful Bill will almost certainly add to our deficits and debt,' Republican Sen. Ron Johnson of Wisconsin wrote in a recent Wall Street Journal op-ed. 'I can't imagine that they want Republicans to increase annual deficits. That's why I can't support this bill as it's currently being discussed and doubt that it will pass the Senate.' Economists warn that the bill's impact on the deficit could be even more severe than current projections, given that the bill puts end dates on some tax cuts to keep the cost lower. Congress has a long history of ultimately extending temporary tax cuts beyond their expiration dates. The Committee for a Responsible Federal Budget has estimated that extending the bill's tax cuts for a full decade could push the total increase in the deficit to as high as $5.3 trillion. Fiscal hawks in Congress aren't the only ones concerned about deficits. Moody's Ratings recently downgraded the U.S.'s AAA rating, citing doubts about the country's ability to maintain fiscal discipline. The bill's passage could further pressure U.S. bond yields, which have already climbed above 5%, signaling growing investor anxiety over American debt. House Republicans have insisted that the bill will stimulate economic growth, which they argue will generate enough revenue to offset the increased debt. Jason Smith, chairman of the tax-writing House Ways and Means Committee, said the economy would 'go gangbusters' under Trump's tax and regulatory agenda.
