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Boston Globe
8 hours ago
- Business
- Boston Globe
Can Trump fix the national debt? Republican senators, many investors, and even Elon Musk have doubts.
The White House has viciously lashed out at anyone who has voiced concern about the debt snowballing under Trump, even though it did exactly that in his first term after his 2017 tax cuts. Get Starting Point A guide through the most important stories of the morning, delivered Monday through Friday. Enter Email Sign Up White House press secretary Karoline Leavitt opened her briefing Thursday by saying she wanted 'to debunk some false claims' about his tax cuts. Advertisement Leavitt said the 'blatantly wrong claim that the 'One, Big, Beautiful Bill' increases the deficit is based on the Congressional Budget Office and other scorekeepers who use shoddy assumptions and have historically been terrible at forecasting across Democrat and Republican administrations alike.' House Speaker Mike Johnson piled onto Congress' number crunchers on Sunday, telling NBC's 'Meet the Press,' 'The CBO sometimes gets projections correct, but they're always off, every single time, when they project economic growth. They always underestimate the growth that will be brought about by tax cuts and reduction in regulations.' Advertisement But Trump himself has suggested that the lack of sufficient spending cuts to offset his tax reductions came out of the need to hold the Republican congressional coalition together. In this image from video with the final vote total, the House of Representatives passed President Donald Trump's big bill of tax breaks and program cuts after an all-night session at the U.S. Capitol in Washington. Uncredited/Associated Press 'We have to get a lot of votes,' Trump said last week. 'We can't be cutting.' That has left the administration betting on the hope that economic growth can do the trick, a belief that few outside of Trump's orbit think is viable. Most economists consider the non-partisan CBO to be the foundational standard for assessing policies, though it does not produce cost estimates for actions taken by the executive branch such as Trump's unilateral tariffs. Tech billionaire Musk, who was until recently part of Trump's inner sanctum as the leader of the Department of Government Efficiency, told CBS News: 'I was disappointed to see the massive spending bill, frankly, which increases the budget deficit, not just decreases it, and undermines the work that the DOGE team is doing.' Federal debt keeps rising The tax and spending cuts that passed the House last month would add more than $5 trillion to the national debt in the coming decade if all of them are allowed to continue, according to the Committee for a Responsible Financial Budget, a fiscal watchdog group. To make the bill's price tag appear lower, various parts of the legislation are set to expire. This same tactic was used with Trump's 2017 tax cuts and it set up this year's dilemma, in which many of the tax cuts in that earlier package will sunset next year unless Congress renews them. But the debt is a much bigger problem now than it was eight years ago. Investors are demanding the government pay a higher premium to keep borrowing as the total debt has crossed $36.1 trillion. The interest rate on a 10-year Treasury Note is around 4.5%, up dramatically from the roughly 2.5% rate being charged when the 2017 tax cuts became law. Advertisement The White House Council of Economic Advisers argues that its policies will unleash so much rapid growth that the annual budget deficits will shrink in size relative to the overall economy, putting the U.S. government on a fiscally sustainable path. The council argues the economy would expand over the next four years at an annual average of about 3.2%, instead of the Congressional Budget Office's expected 1.9%, and as many as 7.4 million jobs would be created or saved. Council chair Stephen Miran told reporters that when the growth being forecast by the White House is coupled with expected revenues from tariffs, the expected budget deficits will fall. The tax cuts will increase the supply of money for investment, the supply of workers and the supply of domestically produced goods — all of which, by Miran's logic, would cause faster growth without creating new inflationary pressures. 'I do want to assure everyone that the deficit is a very significant concern for this administration,' Miran said. White House budget director Russell Vought told reporters the idea that the bill is 'in any way harmful to debt and deficits is fundamentally untrue.' Economists doubt Trump's plan can spark enough growth to reduce deficits Most outside economists expect additional debt would keep interest rates higher and slow overall economic growth as the cost of borrowing for homes, cars, businesses and even college educations would increase. 'This just adds to the problem future policymakers are going to face,' said Brendan Duke, a former Biden administration aide now at the Center on Budget and Policy Priorities, a liberal think tank. Duke said that with the tax cuts in the bill set to expire in 2028, lawmakers would be 'dealing with Social Security, Medicare and expiring tax cuts at the same time.' Advertisement Kent Smetters, faculty director of the Penn Wharton Budget Model, said the growth projections from Trump's economic team are 'a work of fiction.' He said the bill would lead some workers to choose to work fewer hours in order to qualify for Medicaid. 'I don't know of any serious forecaster that has meaningfully raised their growth forecast because of this legislation,' said Harvard University professor Jason Furman, who was the Council of Economic Advisers chair under the Obama administration. 'These are mostly not growth- and competitiveness-oriented tax cuts. And, in fact, the higher long-term interest rates will go the other way and hurt growth.' The White House's inability so far to calm deficit concerns is stirring up political blowback for Trump as the tax and spending cuts approved by the House now move to the Senate. Republican Sens. Ron Johnson of Wisconsin and Rand Paul of Kentucky have both expressed concerns about the likely deficit increases, with Paul saying Sunday there are enough GOP senators to stall the bill until deficits are addressed. 'I think there are four of us at this point' who would oppose the legislation 'if the bill, at least, is not modified in a good direction,' Paul said on CBS' 'Face the Nation.' 'The GOP will own the debt once they vote for this,' Paul said. Four Republican holdouts would be enough to halt the bill in the Senate, where the party holds a three-seat majority. Advertisement Trump banking on tariff revenues to help The White House is also banking that tariff revenues will help cover the additional deficits, even though recent court rulings cast doubt on the legitimacy of Trump declaring an economic emergency to impose sweeping taxes on imports. When Trump announced his near-universal tariffs in April, he specifically said his policies would generate enough new revenues to start paying down the national debt. His comments dovetailed with remarks by aides, including Treasury Secretary Scott Bessent, that yearly budget deficits could be more than halved. 'It's our turn to prosper and in so doing, use trillions and trillions of dollars to reduce our taxes and pay down our national debt, and it'll all happen very quickly,' Trump said two months ago as he talked up his import taxes and encouraged lawmakers to pass the separate tax and spending cuts. The Trump administration is correct that growth can help reduce deficit pressures, but it's not enough on its own to accomplish the task, according to new research by economists Douglas Elmendorf, Glenn Hubbard and Zachary Liscow. Ernie Tedeschi, director of economics at the Budget Lab at Yale University, said additional 'growth doesn't even get us close to where we need to be.' The government would need $10 trillion of deficit reduction over the next 10 years just to stabilize the debt, Tedeschi said. And even though the White House says the tax cuts would add to growth, most of the cost goes to preserve existing tax breaks, so that's unlikely to boost the economy meaningfully. 'It's treading water,' Tedeschi said.
Yahoo
11 hours ago
- Business
- Yahoo
Not holding Trump officials in contempt? Just one reason not to pass the House budget
The U.S House budget would cost 8.6 million people Medicaid coverage, the Congressional Budget Office reports, and trigger roughly $490 billion in Medicare cuts. Other provisions include: cuts to SNAP and green energy tax credits; a 10-year prohibition on states restricting Artificial Intelligence, and a tax break for purchasing gun silencers. Perhaps most insidiously, the bill makes it difficult for courts to hold administration officials in contempt. Multiple judges are currently considering contempt citations against administration officials. These citations provide a check on executive power. Without them, our president becomes a king. We must let our senators know they must not pass this bill. Helen Wolfson, Durham I applaud the NCDOT trying to be environmentally sensitive when it comes to sourcing the tremendous amount of rock needed to rebuild I-40 through the Pigeon River Gorge. It is also worth mentioning this crisis presents an opportunity to install needed wildlife road crossings along that interstate stretch, as Safe Passage Coalition called for. Enlarging the existing creek culverts to allow bear, deer and elk to cross under the highway would be a triple win: it helps the wildlife survive, it improves motorist safety (hitting a 500-lb bear or 1000-lb elk isn't fun!) and it would also help those culverts and the highway survive hurricanes. Ron Sutherland, chief scientist at Wildlands Network, Durham I've lived in Raleigh, on and off, since 1962. Then, graffiti wasn't much of an issue. For years, the city has had ordinances requiring property owners to clean up graffiti. Today, graffiti and tagging are nearly everywhere, often linked to gangs or people trying to create that impression. Given the wide availability of affordable graffiti removal methods — like soda blasting, which doesn't damage the underlying paint — why doesn't Raleigh invest in mobile cleanup? A city-operated van equipped with eco-friendly cleaning tools, color-matching technology like what's used at Lowe's and a lift cage could make a huge difference. A dedicated employee, perhaps even a police officer for safety, seems like a smart investment. For under $200,000 annually, Raleigh could maintain cleaner streets, support property owners and discourage criminal activity. It's time for Raleigh to be more proactive. A cleaner Raleigh is a safer, more welcoming place. Jarles Alberg, Raleigh The federal debt is a mess. An annual deficit makes paying our debt harder. As a former business owner, we should pay our debt and balance our budget as Congress is attempting. The budget proposal passed by the U.S. House takes a hatchet to clean energy tax credits. Companies rely on these credits to plan for the future, allowing them to create good-paying jobs and build factories, such as the Boviet Solar plant that opened in Pitt County. Toyota announced it will expand its Randolph County plant, investing almost $14 billion. The House budget would eliminate many of the credits these companies relied on to bring investments. This will cause economic uncertainty and could spark divestment in under-invested areas. I served as a Fayetteville councilor for 10 years and am well aware the government must be fiscally responsible. I hope our senators will fight for our communities and keep these jobs and investments safe. Bobby Hurst, Fayetteville Without Medicare, healthcare or food stamps, children will get hungry, sick or, worst, die. Our children are the future of this nation. Without them there's no future. Micheal Wilson, Raleigh Responding to the May 21 op-ed, 'At least 6 NC species face severe threats from new Trump administration proposal,' 28 N.C. native plants are federally listed as endangered in addition to 345 state-listed species, which includes 944 nationally-listed. Rare plants are particularly vulnerable to habitat loss because many only occur in specialized habitats, often overrun by invasive species, or succumb to habitat loss from land conversion. Many animals have some ability to move, but plants do not (outside of seed and/or fruit dispersal), which is further limited in our modern world. Plants create the habitat within which most animals live and are the basis of food chains and webs. Do not ignore the plight of rare flora in what is often an animal-based perspective sometimes referred to as 'plant blindness.' Johnny Randall, former director of conservation at North Carolina Botanical Garden, Chapel Hill
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First Post
12 hours ago
- Business
- First Post
Debt vs. growth: Trump's tax plan puts economic theory and political unity to the test
President Trump's sweeping tax cut plan is testing both economic theory and GOP unity as concerns mount over its potential to balloon the national debt. While the White House claims faster growth and tariff revenues will offset deficits, economists and some Republicans remain skeptical, warning that the plan lacks sufficient fiscal discipline and realistic assumptions. read more President Donald Trump is walking a political and economic tightrope as he pushes for a multitrillion-dollar tax break plan that faces mounting scrutiny from Republican senators, investors, voters and even Elon Musk. At the heart of the challenge is whether the administration can convince skeptics that the proposal won't further inflate the national debt. Financial markets have responded warily, reflecting doubts about Trump's ability to follow through on earlier promises to reduce deficits. Critics say the administration's rhetoric on cutting spending hasn't materialised, and the tax bill may lock in higher deficits for years to come. STORY CONTINUES BELOW THIS AD 'All of this rhetoric about cutting trillions of dollars of spending has come to nothing — and the tax bill codifies that,' Michael Strain of the right-leaning American Enterprise Institute told AP. He added that concerns over the administration's fiscal competence amplify the risks of expanding the deficit further. The White House has been quick to push back against such criticism. Press secretary Karoline Leavitt dismissed claims that the proposal will worsen deficits, blaming them on flawed forecasts from traditional budget scorekeepers like the Congressional Budget Office. Trump himself acknowledged the difficulty of making spending cuts while maintaining political support. 'We have to get a lot of votes,' he said. 'We can't be cutting.' That balancing act, retaining GOP unity while delivering on economic promises has left the administration banking on a surge in economic growth to counterbalance the tax reductions. However, many economists and observers are skeptical that growth alone can bridge the gap. Even Musk, who once held an advisory role in Trump's government efficiency initiative voiced disappointment. 'The massive spending bill increases the budget deficit and undermines the work the DOGE team is doing,' he told CBS News. According to the Committee for a Responsible Federal Budget, the combined tax and spending cuts passed by the House last month could add over $5 trillion to the national debt in the next decade, assuming they remain in place. Much like the 2017 tax cuts, many provisions are set to expire in future years to mask their long-term cost—a strategy that has left Congress grappling with difficult renewal decisions now. STORY CONTINUES BELOW THIS AD But unlike 2017, the fiscal environment has shifted dramatically. With total U.S. debt surpassing $36.1 trillion, borrowing costs are climbing. The interest rate on a 10-year Treasury Note is around 4.5%, up from 2.5% when Trump's first tax package became law. The White House Council of Economic Advisers insists that the plan will stimulate rapid economic growth. Council chair Stephen Miran projects annual GDP growth of 3.2% over the next four years—well above the CBO's 1.9% forecast—and claims this will generate enough revenue to reduce the deficit, especially when paired with tariff proceeds. 'I do want to assure everyone that the deficit is a very significant concern for this administration,' Miran said, arguing the tax cuts would boost investment, labor participation, and domestic output without stoking inflation. Budget director Russell Vought echoed this optimism, calling fears over fiscal impact 'fundamentally untrue.' But outside experts are far less sanguine. Many say that persistent deficits will likely keep interest rates elevated, dampening overall economic growth and raising borrowing costs for households and businesses. STORY CONTINUES BELOW THIS AD 'This just adds to the problem future policymakers are going to face,' warned Brendan Duke, a former Biden official, noting that Congress could soon confront simultaneous fiscal dilemmas involving Social Security, Medicare, and the expiration of key tax cuts. Skepticism extends across the ideological spectrum. Kent Smetters of the Penn Wharton Budget Model said the administration's growth forecasts are 'a work of fiction,' and Harvard economist Jason Furman described the tax plan as poorly targeted for long-term competitiveness. Meanwhile, Senate Republicans such as Ron Johnson and Rand Paul have expressed misgivings about the plan's fiscal trajectory. Johnson said he believes there are enough GOP votes to stall the bill until more concrete deficit reductions are offered. Trump's hope that tariff revenues could cover new deficits also faces legal and practical hurdles. Court rulings have challenged the validity of declaring an economic emergency to justify sweeping trade restrictions. Despite these obstacles, Trump has remained confident, telling supporters that the plan will usher in prosperity and rapidly reduce the national debt. Treasury Secretary Scott Bessent and other aides have echoed that message, claiming the measures could eventually halve annual deficits. STORY CONTINUES BELOW THIS AD However, recent research by economists including Douglas Elmendorf, Glenn Hubbard, and Zachary Liscow indicates that while growth can help reduce deficit pressures, it won't be enough. Yale economist Ernie Tedeschi estimates that stabilizing the debt would require $10 trillion in deficit reductions over the next decade—far beyond what current policies are expected to deliver. 'Growth doesn't even get us close to where we need to be,' Tedeschi said, adding that most of the cost of the new tax cuts simply extends existing breaks rather than stimulating new economic activity. 'It's treading water.'
Yahoo
14 hours ago
- Business
- Yahoo
GOP Senator Tells Car Crash Town Hall ‘We're All Going to Die'
Republican Senator Joni Ernst's meeting with her constituents went off the rails on Friday when she faced angry protests over Donald Trump's 'big, beautiful bill.' In one jaw-dropping moment, the senator gave a flippant response, further agitating the crowd when being pressed over the cuts to Medicaid and other benefits like food assistance. While Ernst was talking about who was eligible for benefits, someone in the audience could be heard raising concerns that people would die. 'Well, we all are going to die, so for heaven's sake,' Ernst responded with a smile. A rumble went through the crowd. It was a standout moment as many constituents took issue with the bill passed in the House and now headed to the Senate for cutting Medicaid and other benefits. The fiery town hall in rural Butler County, Iowa, is the latest in a series of Republican events where lawmakers have returned home from Washington to be lambasted by livid constituents. In other vitriolic confrontations at the Iowa meeting, one angry attendee blasted the Trump administration's actions as a 'Nazi blitzkrieg' and another branded Ernst a 'coward.' The Congressional Budget Office estimates millions will lose Medicaid coverage, but Ernst denied the legislation cuts the low-income insurance program and insisted the bill would make it so people who are not eligible would not be receiving benefits. The 'big, beautiful bill' was the priority for many of the attendees who showed up early on a Friday to give the senator an earful, but it was not the only matter that got constituents going. One man, a teacher who said he served in the Navy, told Ernst to her face that Trump is destroying the federal government and claimed the House and Senate had been 'rendered useless.' 'You folks have let it happen. You sat back and done nothing,' he said as the crowd applauded. 'The House is the best example. We're still seeing on the Senate. It looks like there's a little gumption to fight back against the new dictator. But this has been like a Nazi blitzkrieg and you folks have sat back and done nothing.' He then blasted her for voting for Defense Secretary Pete Hegseth and accused her of being scared. 'Are you afraid of Trump, are you corrupt like Trump, or are you just at the point you don't care anymore, and that's why you don't do anything?' he asked. His question prompted a round of cheers and applause from the crowd. 'Obviously, I don't agree because I don't think our country is being destroyed,' Ernst responded as the crowd grumbled. Another person shouted about squealing as Ernst talked about her focus on government spending. The senator fired back, saying: 'I'm not squealing, ma'am.' At another point, a constituent stood up to ask her about a provision of the House bill that would restrict the federal courts from enforcing contempt orders and warned about it unraveling the government's system of checks and balances. He asked her if she would pledge not to vote for the bill or any other that contains the 'poisonous provision.' Ernst argued that while the House wrote one version of the bill, the Senate would have its own version of the legislation. She claimed that due to Senate rules, their reconciliation bill has to stick to mandatory spending. 'I don't know anything about that provision that talks about mandatory spending or revenues, so a lot of what has been wrapped up into the House bill will be flushed out in what we call the Byrd bath in the Senate,' Ernst said. However, her answer did not satisfy attendees in the auditorium who shouted out follow-up questions. Ernst responded that the provision would not be in the Senate bill. As she tried to move on to the next question, disgruntled constituents loudly disapproved and said they didn't trust it. One woman could be clearly heard as she called the senator a 'coward.'
15 hours ago
- Business
Can Trump fix the national debt? Republican senators, many investors and even Elon Musk have doubts
WASHINGTON -- President Donald Trump faces the challenge of convincing Republican senators, global investors, voters and even Elon Musk that he won't bury the federal government in debt with his multitrillion-dollar tax breaks package. The response so far from financial markets has been skeptical as Trump seems unable to trim deficits as promised. 'All of this rhetoric about cutting trillions of dollars of spending has come to nothing — and the tax bill codifies that,' said Michael Strain, director of economic policy studies at the American Enterprise Institute, a right-leaning think tank. 'There is a level of concern about the competence of Congress and this administration and that makes adding a whole bunch of money to the deficit riskier.' The White House has viciously lashed out at anyone who has voiced concern about the debt snowballing under Trump, even though it did exactly that in his first term after his 2017 tax cuts. White House press secretary Karoline Leavitt opened her briefing Thursday by saying she wanted 'to debunk some false claims" about his tax cuts. Leavitt said that the "blatantly wrong claim that the 'One, Big, Beautiful Bill' increases the deficit is based on the Congressional Budget Office and other scorekeepers who use shoddy assumptions and have historically been terrible at forecasting across Democrat and Republican administrations alike.' But Trump himself has suggested that the lack of sufficient spending cuts to offset his tax reductions came out of the need to hold the Republican congressional coalition together. 'We have to get a lot of votes,' Trump said last week. 'We can't be cutting.' That has left the administration betting on the hope that economic growth can do the trick, a belief that few outside of Trump's orbit think is viable. Tech billionaire Musk, who was until recently part of Trump's inner sanctum as the leader of the Department of Government Efficiency, told CBS News: 'I was disappointed to see the massive spending bill, frankly, which increases the budget deficit, not just decreases it, and undermines the work that the DOGE team is doing." The tax and spending cuts that passed the House last month would add more than $5 trillion to the national debt in the coming decade if all of them are allowed to continue, according to the Committee for a Responsible Financial Budget, a fiscal watchdog group. To make the bill's price tag appear lower, various parts of the legislation are set to expire. This same tactic was used with Trump's 2017 tax cuts and it set up this year's dilemma, in which many of the tax cuts in that earlier package will sunset next year unless Congress renews them. But the debt is a much bigger problem now than it was eight years ago. Investors are demanding the government pay a higher premium to keep borrowing as the total debt has crossed $36.1 trillion. The interest rate on a 10-year Treasury Note is around 4.5%, up dramatically from the roughly 2.5% rate being charged when the 2017 tax cuts became law. The White House Council of Economic Advisers argues that its policies will unleash so much rapid growth that the annual budget deficits will shrink in size relative to the overall economy, putting the U.S. government on a fiscally sustainable path. The council argues the economy would expand over the next four years at an annual average of about 3.2%, instead of the Congressional Budget Office's expected 1.9%, and as many as 7.4 million jobs would be created or saved. Council chair Stephen Miran told reporters that when that growth is coupled with expected revenues from tariffs, the expected budget deficits will fall. The tax cuts will increase the supply of money for investment, the supply of workers and the supply of domestically produced goods — all of which, by Miran's logic, would cause faster growth without creating new inflationary pressures. 'I do want to assure everyone that the deficit is a very significant concern for this administration,' Miran told reporters recently. White House budget director Russell Vought told reporters the idea that the bill is 'in any way harmful to debt and deficits is fundamentally untrue.' Most outside economists expect additional debt would keep interest rates higher and slow overall economic growth as the cost of borrowing for homes, cars, businesses and even college educations would increase. 'This just adds to the problem future policymakers are going to face,' said Brendan Duke, a former Biden administration aide now at the Center on Budget and Policy Priorities, a liberal think tank. Duke said that with the tax cuts in the bill set to expire in 2028, lawmakers would be 'dealing with Social Security, Medicare and expiring tax cuts at the same time.' Kent Smetters, faculty director of the Penn Wharton Budget Model, said the growth projections from Trump's economic team are 'a work of fiction.' He said the bill would lead some workers to choose to work fewer hours in order to qualify for Medicaid. 'I don't know of any serious forecaster that has meaningfully raised their growth forecast because of this legislation,' said Harvard University professor Jason Furman, who was the Council of Economic Advisers chair under the Obama administration. 'These are mostly not growth- and competitiveness-oriented tax cuts. And, in fact, the higher long-term interest rates will go the other way and hurt growth.' The White House's inability so far to calm deficit concerns is stirring up political blowback for Trump as the tax and spending cuts approved by the House now move to the Senate. Republican Sens. Ron Johnson of Wisconsin and Rand Paul of Kentucky have both expressed concerns about the likely deficit increases, with Johnson saying there are enough senators to stall the bill until deficits are addressed. 'I think we have enough to stop the process until the president gets serious about the spending reduction and reducing the deficit,' Johnson said on CNN. The White House is also banking that tariff revenues will help cover the additional deficits, even though recent court rulings cast doubt on the legitimacy of Trump declaring an economic emergency to impose sweeping taxes on imports. When Trump announced his near-universal tariffs in April, he specifically said his policies would generate enough new revenues to start paying down the national debt. His comments dovetailed with remarks by aides, including Treasury Secretary Scott Bessent, that yearly budget deficits could be more than halved. 'It's our turn to prosper and in so doing, use trillions and trillions of dollars to reduce our taxes and pay down our national debt, and it'll all happen very quickly,' Trump said two months ago as he talked up his import taxes and encouraged lawmakers to pass the separate tax and spending cuts. The Trump administration is correct that growth can help reduce deficit pressures, but it's not enough on its own to accomplish the task, according to new research by economists Douglas Elmendorf, Glenn Hubbard and Zachary Liscow. Ernie Tedeschi, director of economics at the Budget Lab at Yale University, said additional 'growth doesn't even get us close to where we need to be.' The government would need $10 trillion of deficit reduction over the next 10 years just to stabilize the debt, Tedeschi said. And even though the White House says the tax cuts would add to growth, most of the cost goes to preserve existing tax breaks, so that's unlikely to boost the economy meaningfully. 'It's treading water,' Tedeschi said.
