The president’s entire policy package would reduce federal deficits by an estimated $8.5 trillion to $11 trillion over the next ten years, according to Stephen Miran, chair of the Council of Economic Advisers, who spoke to reporters on Wednesday. During a call highlighting the economic impact of the GOP’s proposed tax and the slash of spending, he said, “Those are very big numbers.”
Trump’s policies expected to slash spending by $11 trillion
Stronger economic growth would account for about half of those estimated savings, or between $3 trillion and $5 trillion. Miran attributed the boost to continued deregulation and the Republican tax cut bill that is presently pending in Congress. Additionally, citing the Congressional Budget Office’s recent $2.8 trillion estimate, he cited a projected $3 trillion increase in federal revenue from higher tariffs. He maintained that Treasury interest expenses would drop by $1 trillion to $1.5 trillion as a result of the reduced debt load.
Miran gave a speech in favor of what Republicans are referring to as the “One Big Beautiful Bill,” which former President Trump hopes will be passed by July 4. The Senate will vote on its own version this week after the House passed its version last month. But according to the CBO, the House-passed version would result in a $2.8 trillion increase in the deficit. The analysis made the assumption that the current tariffs would last for ten years, but trade talks could alter that and Trump might not serve out the entire time.
Even after taking economic effects into consideration, a preliminary Tax Foundation analysis projected that the Senate version would cost $3.9 trillion over a ten-year period. When the temporary halt on reciprocal tariffs ends on July 9, Miran said he was hopeful the administration would announce several trade framework agreements. Although he conceded that there might still be “some stubborn holdouts,” he maintained that the CBO’s $2.8 trillion revenue estimate carries no downside risk.
Breakdown
The breakdown of the CEA was as follows: $1.3 trillion to $3.7 trillion from deregulation and energy policies, $2.1 trillion to $2.3 trillion in deficit reduction from tax-cut-driven growth, and a projected decline in the debt-to-GDP ratio to 94% by 2034. If Trump’s 2017 tax cuts are extended, that number equates to a predicted 117% ratio.
On the other hand, the CBO’s January report predicted that the debt-to-GDP ratio would surpass the post-World War II record by 2029, reaching 107%. Despite pointing out that the tax plan has “varying scoring,” Treasury Secretary Scott Bessent insisted that “it is my view that over the 10-year window, it will decrease.”
For two years in a row, deficits have topped 6% of GDP, despite strong growth and job creation. According to Bessent, the deficit in 2025 will be between 6.5% and 6.7%. Moody’s, which downgraded the U.S. sovereign rating last month, predicted that by 2035, deficits would approach 9% of GDP due to rising interest rates, entitlement spending, and comparatively slow revenue growth.
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