“Jeff Bezos, Larry Fink and Donald Trump’s Treasury pick Scott Bessent all agree: Turbocharging economic growth is the best route to reining in the U.S.’s massive $36 trillion debt. History is not on their side.
Bessent warns that this is the “last chance” for the country to grow its way out of the record debt without becoming a “European-style socialist democracy.” Fink, who heads the world’s largest asset manager BlackRock, urged the incoming administration in an Election Day op-ed to promote artificial intelligence and infrastructure investments to grow the economy and tame the deficit. And Amazon founder Bezos told economic power brokers at the DealBook Summit this month that the only way to solve the problem is to expand the economy by 3 to 5 percent a year while simultaneously trimming annual deficits.”
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“That’s a tall order that few modern presidents have managed to achieve for any sustained period. Bill Clinton famously generated budget surpluses while the economy soared at rates of more than 4 percent in the late 1990s. Ronald Reagan brought down deficits in 1984 and 1987 but otherwise ran up the red ink. And Trump himself will face even more significant challenges if he follows through on tax and tariff pledges that budget forecasters say could add $4.1 trillion to $15.6 trillion to the debt over the next decade.
Trump promised during the campaign that a combination of lower taxes, more energy production, looser regulations and punishing tariffs would generate “explosive” growth to pay down the debt. And government budgets would shrink by “trillions,” he said, with Elon Musk and Vivek Ramaswamy tasked with tackling government waste.
But Trump has also vowed that he won’t touch entitlement programs like Social Security and Medicare, which are by far the chief drivers of the debt and are projected to be insolvent by the mid-2030s. Imposing tariffs on imports could trigger reprisals that would harm growth, and even if they didn’t, many economists believe it would take a historic economic boom to meaningfully address the country’s fiscal challenges.
“You can’t improve this with growth,” said Tom Porcelli, the chief U.S. economist at PGIM Fixed Income. “You’d have to have 5 percent growth for a pretty decent amount of time to have any real notable impact.””
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” Fiscal watchdogs and credit-rating agencies have been clanging alarms for years about the U.S.’s growing debt, which is the accumulation of annual budget deficits. Rising deficits — which can be inflationary and push up interest rates — could become more acute as the population ages and spending for mandatory entitlement programs climbs. Even steep cuts to discretionary federal programs wouldn’t make a meaningful dent in the debt without extensive structural reforms.”
“Were Trump to implement Musk’s vision while simultaneously honoring his promise to avoid cutting entitlements and the GOP’s commitment to avoiding defense spending cuts, then he would need to slash all other government programs by 80 percent. That would involve gutting all social services for low-income Americans, food inspections, air safety, health insurance subsidies, and infrastructure investments, among countless other things.
This would abruptly and massively reduce demand in the US economy, potentially triggering a recession.
There is little reason to expect such severe and haphazard spending cuts to benefit the economy in the long term. After all, government investments in education and infrastructure often increase the economy’s growth potential — slashing funding for such programs could impair America’s economic performance in the coming decades.”
“The federal government posted a $1.8 trillion budget deficit during the fiscal year that ended on September 30, despite an increase in tax revenue, thanks to higher spending and the rapid growth of interest costs tied to the $35.6 trillion national debt.”
“big study gave 1,000 low-income people $1,000 per month for three years—no strings attached. What happened?
Not the great things that were promised. After three years of getting $1,000/month, UBI recipients were actually a little deeper in debt than before.
Why? Because they worked less. Their partners did, too.
Some recipients talked about starting businesses, but few actually tried it. Most who said they did start a business waited until the third year of the study—when their free money was about to end.”
“According to brand-new Congressional Budget Office (CBO) numbers, the 2024 budget deficit is around $1.8 trillion. It’s heading to $2.8 trillion in 10 years, assuming a very rosy scenario. Worrisome too is that interest payments on government debt will eat up over 20 percent of revenue in 2025. As the Hoover Institution’s Joshua Rauh noted, if you remove the revenue earmarked for the Social Security Old Age and Disability Insurance program, that number jumps to 27.9 percent and rising.”
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“Three months into the term and four months after the last $900 billion COVID-19 relief bill, the Biden-Harris administration pushed through another $1.9 trillion bill. This spending was so out of proportion with the state of the economy, which faced an output gap of only $420 billion, that we suffered the worst inflation in 40 years. This wasn’t just a serious hit to the deficit—it also cost the typical family more than $10,000.
The administration then decided to push several large, unpaid-for bills. Riedl lists some: “$1.4 trillion in new spending in omnibus appropriations bills, $620 billion in student loan bailouts, $520 billion for new veterans’ benefits, a $440 billion infrastructure law, a semiconductor bill, and $360 billion in new [Supplemental Nutrition Assistance Program] and health spending forced through by executive order.”
Some economists wrongly insisted that adding debt is no big deal as long as interest rates are low. This condition certainly doesn’t apply to the Biden-Harris spending spree. Add it all up, including interest payments on the debt, and you get $5 trillion on top of what was already there.”
“is DOGE doomed to fail? Not if its architects take a more realistic approach to cutting government. Fundamental reform of Social Security, Medicare, and Medicaid will require delicate, bipartisan negotiations that are already taking place within parts of Congress. Senate Democrats will not back down from filibustering a partisan GOP Social Security plan just because Musk and Ramaswamy recommended it in a report. Nor will Congress suddenly drop its longstanding opposition to eliminating entire federal departments.
Republicans need to stop overpromising and underdelivering on federal budget policy. Congressional Republicans unrealistically promise to balance the budget within a decade while not even attempting to pass any actual legislation slowing the growth of spending. Musk promises to zero out one-third of federal spending, and Ramaswamy pledges to fire three-quarters of federal employees. It’s all bluster to compensate for ultimately doing nothing.”
“In 2021, on April Fools’ Day, Manistee County, Michigan, took the title on Chelsea Koetter’s home because of a small debt she owed on her 2018 property taxes. Unfortunately, this wasn’t a prank.
Four months after seizing her home, which she shared with her two sons, the government auctioned it off for $106,500. It kept the profit.
All told, Koetter owed the government $3,863.40, which included her initial tax debt as well as penalties, interest, and fees. She does not contest she was obligated to pay that. At issue is whether the county acted lawfully when it pocketed the remaining $102,636 after selling her house, a practice known as home equity theft.
The issue may sound familiar. In 2020, the Michigan Supreme Court ruled the practice unconstitutional after the government seized Uri Rafaeli’s home, then sold it and kept all the proceeds in excess of what he owed. His initial tax debt was $8.41.
The U.S. Supreme Court weighed in on the issue last year in Tyler v. Hennepin County, ruling unanimously that Hennepin County, Minnesota, violated the Constitution when it seized an elderly woman’s home over a debt, sold it, and kept the profit. “A taxpayer who loses her $40,000 house to the State to fulfill a $15,000 tax debt has made a far greater contribution to the public fisc than she owed,” wrote Chief Justice John Roberts, referring to plaintiff Geraldine Tyler, who had fallen $2,300 behind on her property taxes. The total came to $15,000 after penalties, interest, and fees. After the sale, the government kept what was left over—$25,000. The Court said that was illegal.
Instead of complying with a straightforward interpretation of the law, Michigan has attempted to dance around it, passing a byzantine debt collection statute that sends homeowners on a wild goose chase should they want their equity back.”
“By the end of Trump’s term, the Committee for a Responsible Federal Budget calculated, he had signed legislation and issued executive orders that, on balance, added $8.4 trillion to the national debt (including interest) over 10 years. As of last June, the corresponding figure for President Joe Biden was $4.3 trillion.
During his 2024 run, Trump expressed approximately zero concern about any of this. To the contrary, the Republican platform in effect promised more borrowing to finance “large tax cuts,” an expanded military budget, and “the largest deportation operation in American history.”
The platform also promised that Trump would “fight for and protect Social Security and Medicare with no cuts, including no changes to the retirement age.” Given the looming financial crises in those entitlement programs, which will include mandatory, across-the-board cuts to Social Security benefits in a decade, that commitment is utterly reckless.
Adding together all of Trump’s promises, the Committee for a Responsible Federal Budget estimated that his fiscal plans would add about $7.8 trillion to the national debt over 10 years. The corresponding estimate for Vice President Kamala Harris was about $4 trillion.”
His plans increase the deficit, which is inflationary.
Large and broad tariffs are inflationary.
A massive crackdown on illegal immigration will also be inflationary as without cheap labor, making products will be more expensive or won’t happen here at all–particularly agricultural goods and housing.
Trump wants to end the independence of the Federal Reserve. Trump has been in favor of lower interest rates, which will increase inflation.