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The White House has insisted that Donald Trump’s economic policies will help cut the US debt as it makes a final pitch to win over fiscal hawks in the Senate and get the president’s flagship tax bill over the line this week.
In a new analysis released on Wednesday the White House Council of Economic Advisers argued stronger growth and tariff revenues would more than cover the costs of making Trump’s first-term tax cuts permanent.
The report comes as the administration tries to allay the concerns of some Republican senators after multiple independent forecasters warned the legislation will exacerbate the country’s already swollen debt pile.
The bill is “extremely powerful and we expect it to not only create an economic boom . . . but also to restore fiscal sanity and bring the deficit and debt ratios down,” said Stephen Miran, chair of the CEA, which advises the president on economic policy.
Trump wants to sign the landmark bill into law by July 4 and has piled pressure on the Senate to pass it by the end of the week. The House of Representatives passed its own version of the legislation last month.
“To my friends in the Senate, lock yourself in a room if you must, don’t go home, and GET THE DEAL DONE THIS WEEK,” the president posted on his Truth Social network on Tuesday. “NO ONE GOES ON VACATION UNTIL IT’S DONE.”
Republicans have a narrow majority of just 53-47 in the upper chamber, but some senators have threatened to withhold their support for the bill unless it does more to curtail US debt levels.
“What we’re concerned about is an acute debt crisis,” said Ron Johnson, a Republican senator from Wisconsin, last week. “What we’re trying to avoid is global creditors looking at the United States and saying you’re a credit risk.”
Independent forecasters including the Congressional Budget Office, the Committee for a Responsible Budget and the Wharton School have all said the bill will widen deficits over the coming decade, sending the US federal debt past its previous world war two high.
But the CEA said on Wednesday that debt would fall to 94 per cent of GDP by 2034 when the effects of the Senate bill are combined with wider Trump policies, driving $8.5 to $11.2tn in deficit reductions over the period.
The CBO found this month that the version of the tax bill passed by the House of Representatives would swell the US debt by $2.4tn by 2034.
Taking into account higher interest rates, offset slightly by economic growth, the fiscal watchdog said this figure would rise to almost $2.8tn. It said separately that tariffs would cut deficits by $2.8tn over the decade.
The Treasury bond market has grown to $29tn from roughly $5tn in 2008 as the US has cut taxes while increasing spending.
Senior Republicans have sought to undermine the CBO’s analysis, arguing its projections have fallen short in the past. “They’ve always been wrong, and they’ve always ignored what tax cuts will do to grow the American economy,” said Steve Scalise, Republican House majority whip, this month.
On Wednesday, Miran insisted the CBO assessment was “not intended to give a holistic view of where the deficit is going over time because it doesn’t include the other things” included in the CEA analysis.
The CEA forecast up to $2.3tn in deficit reductions over the next decade from growth triggered by the bill’s tax provisions and up to $3.7tn from the president’s deregulation and energy policies.
Discretionary spending reductions would cut another $1.8tn, while tariff revenue would bring in $3.2tn, the council said.
