The debt service costs, along with the higher total debt, complicate Trump’s efforts to renew his 2017 tax cuts, much of which are set to expire after next year. The higher debt from those tax cuts could push interest rates higher, making debt service even costlier and minimizing any benefits the tax cuts could produce for growth.
“Clearly, it’s irresponsible to run back the same tax cuts after the deficit has tripled,” said Brian Riedl, a senior fellow at the Manhattan Institute and a former Republican congressional aide. “Even congressional Republicans behind the scenes are looking for ways to scale down the president’s ambitions.”
Democrats and many economists say Trump’s income tax cuts disproportionately benefit the wealthy, which deprives the government of revenues needed for programs for the middle class and poor.
“The president-elect’s tax policy ideas will increase the deficit because they will decrease taxes for those with the highest ability to pay, such as the corporations whose tax rate he’s proposed reducing even further to 15%,” said Jessica Fulton, vice president of policy at the Joint Center for Political and Economic Studies. This Washington-based think tank deals with issues facing communities of color.
Trump’s team insists he can make the math work.
“The American people re-elected President Trump by a resounding margin, giving him a mandate to implement the promises he made on the campaign trail, including lowering prices. He will deliver,” said Karoline Leavitt, the Trump transition spokeswoman.
When Trump was last in the White House in 2020, the federal government spent $345 billion annually to service the national debt. The average interest rate was low, so repayment costs were manageable even as debt levels climbed, making it possible to run up the national debt with tax cuts and pandemic aid.
Congressional Budget Office projections indicate that debt service costs next year could exceed $1 trillion. That’s more than projected spending on defense. The total is also greater than nondefense spending on infrastructure, food aid and other programs under the direction of Congress.
Higher interest rates have fueled the increased cost of servicing the debt. In April 2020, when the government was borrowing trillions of dollars to address the pandemic, the yield on 10-year Treasury notes fell as low as 0.6%. They’re now 4.4%, having increased since September as investors expect Trump to add several trillions of dollars to projected deficits with his income tax cuts.
Democratic President Joe Biden can point to strong economic growth and successfully avoiding a recession as the Federal Reserve sought to bring down inflation. Still, deficits ran at unusually high levels during his term. That’s due in part to his initiatives to boost manufacturing and address climate change and to the legacy of Trump’s previous tax cuts.
People in Trump’s orbit, as well as Republican lawmakers, are already scouting out ways to reduce government spending to minimize the debt and bring down interest rates. They have attacked Biden for the deficits and inflation, setting the stage for whether they can persuade Trump to take action.
Elon Musk and Vivek Ramaswamy, the wealthy businessmen leading Trump’s efforts to cut government costs, have proposed that the incoming administration simply refuse to spend some of the money approved by Congress. Trump has also backed this idea, but it would likely provoke challenges in court as it would undermine congressional authority.
Russell Vought, the White House budget director during Trump’s first term and Trump’s choice to lead it again, put out an alternative proposed budget for 2023 with more than $11 trillion in spending cuts over 10 years to generate a surplus.
Michael Faulkender, a finance professor who served in Trump’s Treasury Department, told a congressional committee in March that to reduce deficits, Biden’s Inflation Reduction Act from 2022 should be repealed, including its energy and environmental components.
Trump has also talked up tariffs on imports to generate revenues and reduce deficits, while some Republican lawmakers such as House Budget Committee Chairman Jodey Arrington, R-Texas, have discussed adding work requirements to trim Medicaid expenses.
The White House was last pressured by high rates to address debt service costs roughly three decades ago during the start of Democrat Bill Clinton’s presidency. Higher yields on the 10-year Treasury notes led Clinton and Congress to reach an agreement on deficit reduction, ultimately producing a budget surplus starting in 1998.
Clinton’s political adviser, James Carville, joked that bond investors pushing up borrowing rates for the U.S. government could humble the commander in chief.
“I used to think that if there was reincarnation, I wanted to come back as the president or the pope or as a .400 baseball hitter,” Carville said. “But now I would like to come back as the bond market. You can intimidate everybody.”
___
Associated Press
57 comments
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November 24, 2024 at 10:59 am
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White Spiteful Demon
November 24, 2024 at 11:45 am
99 dollars a pound prime roast at Publix
Trump is your president
November 24, 2024 at 6:54 pm
Free shit in the toilet, libturd. Save your 99 cents and eat your preferred meal.
Trump is your president
November 24, 2024 at 8:54 pm
Again, forgive my crassness. I cannot get the Trump shaped dildo – the “lil-Don’ out of my ass and it keeps vibrating. Irritating like my comments.
JD
November 25, 2024 at 10:20 am
My name is JD. I have VD and like to cry about stealing Monikers while doing it myself. I am subhuman trash.
"The Real" JD
November 25, 2024 at 12:38 pm
Funny how you cry like a bitch Willy. Cannot take a dose of your own medicine. LOL
"The Real" JD
November 25, 2024 at 12:59 pm
Funny how I have no standards and are a total scumbag. My prostitute candidate lost and I’m going to be a sore loser. An entitled brat. That is what I am. Pond scum.
JD
November 25, 2024 at 1:06 pm
LOL. You’re not winning Willy. Nobody cares about your ego but you. LOL
"The Real" JD
November 25, 2024 at 1:29 pm
I enjoy talking to myself as you can see.
Billy is still JD's Bitch
November 26, 2024 at 4:07 am
LOL – more MAGA crying
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JD
November 25, 2024 at 2:00 pm
Biden broke me
Michael
November 24, 2024 at 12:25 pm
“The American people re-elected President Trump by a resounding margin giving him a mandate to implement the promises he made on the campaign trail, including lowering prices. He will deliver,” said Karoline Leavitt, the Trump transition spokeswoman.
‘If wishes were horses, beggars would ride” and if empty rhetoric could solve economic problems, Republicans would be batting 1.000.
For all the articles that have been pumped out about the Trump administration ideas, the only thing that has a whiff of actual working would be to cut the budget.
Ok, eliminate the Dept of Education for $238 billion, which eliminates student loans for higher education. That should be fine for Trump voters since they never have nor never will see the inside of a college. However, since the national debt is $27.8 trillion, there is $27. 5 trillion left to go. Whoops, you forgot the net impact of Trump’s tax cuts….sorry, we are back up now to $30.5 trillion. Interest on debt isn’t going down, it is going up. What other stuff do you have to smoke in your pipe?
Trump is your president
November 24, 2024 at 6:49 pm
You scumbags own the debt and now you are bitching about it? You voted for this shit libturd. GFY
Trump is your president
November 24, 2024 at 8:52 pm
Forgive my name calling. I’m just angry because I cannot get the Trump shaped dildo out of my ass and it keeps buzzing, waking me up.
JD
November 25, 2024 at 10:21 am
Forgive me for stealing monikers. I am transitioning still. Eating dik is what I live for.
"The Real" JD
November 25, 2024 at 12:40 pm
Funny how you cry like a bitch Willy. Cannot take a dose of your own medicine. LOL And now people are mocking you. Thiese comments will degrade into even further trash.
"The Real" JD
November 25, 2024 at 1:04 pm
Yes the VD has rotted my brain. All that hard salami was worth it I guess. Can’t sit down because I’ve been pounded so much. I’ll be moaning about the election for the next 4 years! Please give me attention!
JD
November 25, 2024 at 1:08 pm
Funny how you seem to be the on bitching about the election, all of my remarks have mostly been about you still crying MAGA tears like a sore winner. Nobody cares about your ego but you. LOL. “So much winning”
"The Real" JD
November 25, 2024 at 1:31 pm
Good thing I don’t have any yucky icky guns because they’d be taken away by now due to my obvious blue cultist insanity.
I like to slob on the orange knob
November 25, 2024 at 7:12 am
Actually, you own the debt now – you won you effing moron. This is what winning looks like 🤣
A Day without being MAGA Supporter
November 24, 2024 at 12:40 pm
MAGA in food line begging for food,why Trump is eating prime rib with his family ,their nothing wrong with being poor,but still being a MAGA supporter and poor is another thing Google Poor MAGA Voters
Trump is your president
November 24, 2024 at 6:51 pm
What form of pathetic libturd coc sucking bs is this? I know you’re transitioning but c’mon man, or whatever the fuc you are, get a grip!
Trump is your president.
November 24, 2024 at 8:56 pm
I admit it! I have a lifesized Trump cutout that I attempt to make love to each eveing, but he keeps rejecting me. I am taking it out on you all.
JD
November 25, 2024 at 10:23 am
My name is JD. I have VD from being gang raped. As you can see it has given me brain damage although the BBC in my ass felt great!
"The Real" JD
November 25, 2024 at 12:42 pm
Well, I guess you know what BBC is because you like watching your boyfriend watches you get cockold by one as you feltch the moneyshot from yourself. LOL. More crying like a bitch. MAGA tears are the best tears.
"The Real" JD
November 25, 2024 at 1:07 pm
Yes I am definitely a big fan of the radiator hose going all up inside me. As you can see the VD from all them brothers has turned me into a vegetable.
JD
November 25, 2024 at 1:10 pm
Well, given your extensive experience with the subject, I’m sure you’ve had a few “exploratory” adventures into your colon. You cannot hang with me, no matter how big your ego is.
PS. We are all still laughing at your MAGA Tears.
"The Real" JD
November 25, 2024 at 1:34 pm
Yes, my prostitute candidate lost so all I have left are my 3 tik tok viewers and my pathetic loser comments! Poor me! Back to stealing monikers I guess. The hate keeps me warm at night when Dwane ain’t around to pound me
A Day Without White Poverty
November 24, 2024 at 12:57 pm
Poor Whites have always been looked down,by others Whites, even the founding fathers did not think much of them,they are the one that always references the founding fathers, even today other White people look down on other poor White, even Trump, because they cannot buy his golf fees,no I do not hate White people,I just have a better understanding of White people than lots of them do of their selves,I always buy a White woman children toys during the holiday,lots of White probably would not do that
Trump is your president
November 24, 2024 at 6:52 pm
The sooner you racist turds are deported the better.
Trump is your president
November 24, 2024 at 8:58 pm
Forgive my lashing out. I am still transitioning and the hormones make me say rude things – along with my digital tourette syndrome.
JD
November 25, 2024 at 10:24 am
Forgive me for stealing Monikers. My name is JD and I got a BBC stuck in my stomach.
"The Real" JD
November 25, 2024 at 12:43 pm
LOL so much losing Willy. Pathetic. Try and keep up.
"The Real" JD
November 25, 2024 at 1:09 pm
As you can see. I am a root vegetable just like biden. Feels so good to bend over so the democrat party can pound me for hours. Florida is still in play!
JD
November 25, 2024 at 1:12 pm
So much winning – those MAGA tears are fantastic. All we got to do is goad you with being homosexual. LOL.
Fantastic.
"The Real" JD
November 25, 2024 at 1:40 pm
I have no life as you can see. Guess I’ll just steal some more monikers and be offended by everything for the next 4 years. It’s only bad when others do it, I’m the face of the democrat party! Embrace the suck like me
The Gimp's Willy
November 25, 2024 at 1:44 pm
Willy the Twink says what? Oh right – MAGA tears.
A Day without MAGA
November 25, 2024 at 6:13 am
You are trash to your White relatives
"The Real" JD
November 25, 2024 at 1:11 pm
You are flushable solid waste. An excrement that smells.
JD
November 25, 2024 at 1:14 pm
You realize the more you play the more this get’s indexed and the more you burn both monikers. Nobody’s reading this stuff anyway. Ja Ja Ja
"The Real" JD
November 25, 2024 at 1:49 pm
I must always get the last word in! I am strong! I am trans woman! I demand your moniker. Only i am allowed to steal it! Please give me more attention.
JD
November 25, 2024 at 1:51 pm
LOL Kettle Black on the “last word” and “attention”. But ok. Go ahead and reply.
A Day without MAGA
November 25, 2024 at 6:15 am
I am an American,I will raise hell to people like you have a psychological meltdown
"The Real" JD
November 25, 2024 at 1:13 pm
You are gutter trash that does nothing but talk. In reality you run like a coward and hide. Prove otherwise
JD
November 25, 2024 at 1:16 pm
There’s the Willy we know and love! (just like his BBC boyfriend does with the gimp). Big man on campus!
What you got for us? Prove you aren’t a coward and hiding too. LOL. You are all talk.
JD
November 25, 2024 at 1:57 pm
Yes. I’m all talk and violent too. Hide your moniker, your children and jewelry. I’ll steal it all! No deed too low for me.
JD
November 25, 2024 at 2:07 pm
LOL. That’s rich. Owners of an MCA firm are the lowest level varlet. Let’s keep the indexing Willy.
JD
November 25, 2024 at 1:52 pm
Here’s the JD we all find repulsive. I make more comments to index this humiliating defeat
JD
November 25, 2024 at 2:05 pm
More crying Willy. LOL.
JD
November 25, 2024 at 2:12 pm
Sore losers such as me are never going to recover from this horrible defeat!
JD
November 25, 2024 at 2:13 pm
Wow. You’re not even trying Willy
"The Real" JD
November 25, 2024 at 2:08 pm
Stop using my moniker! You are hurting my feelings!
JD
November 25, 2024 at 2:12 pm
Nobody believes you Billy, nor cares what you think or your ego. I find it fun to mess with you… for a bit at lease. But I have to let you go now. Don’t let the Gimp ream your ass too much. You can have the last word. Chump
JD
November 25, 2024 at 2:17 pm
As everyone can see I need to lash out because It’s the only way I can feel good. Mommy just came home smelling like beer and cigarettes so I got to go, but not before hopefully getting the last word in because I’m so insecure
JD
November 25, 2024 at 2:23 pm
I’m not even trying because I need to bury this and I need to get the last word in
Fred S
November 25, 2024 at 8:23 pm
Florida Politics — judging by the poor quality of posts on this page your censorship, I mean moderation, algorithm needs improvement as does the education level of many of your readers.
Comments are closed.