White House economists project falling deficits from Trump agenda
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Tax legislation moving through Congress, paired with other Trump administration policies, will create an economic growth surge that puts the national debt on a downward path, White House economists project in a report out Wednesday morning.
The big picture: The new projections are wildly at odds with estimates generated from mainstream models, including from the Congressional Budget Office and top universities, which see wider fiscal deficits and more modest growth impacts.
- The new White House analysis models the One Big, Beautiful Bill Act — a combination of tax and spending cuts that has passed the House and is pending before the Senate — along with other aspects of the Trump agenda, including deregulation and tariffs.
By the numbers: The Council of Economic Advisers' projections find that the full constellation of Trump policies will cause the U.S. debt-to-GDP ratio to fall to 94% over the next decade, from its current levels around 98%.
- The CBO projects that the tax legislation would push that ratio up to 124%, or 117% after accounting for growth benefits.
- The White House analysis projects that the cumulative deficit over the next decade will be $5.5 trillion lower than under current law, once the tax bill is combined with a growth boost from deregulation and energy policy, unspecified future spending cuts, and tariff revenue.
What they're saying: "The CBO score isn't intended to be an overall, holistic view of where the deficit is going," CEA chair Stephen Miran said on a call with reporters Wednesday morning.
- "It doesn't include things like tariff revenue, it doesn't include things like discretionary spending reductions, it doesn't include things like the much bigger economic growth we'll have."
Reality check: The deficit widened following the original 2017 Trump tax cuts, which the "big, beautiful bill" would extend.
- The deficit was 3.1% of GDP in 2016, before President Trump took office, and 4.6% of GDP in 2019, just before the COVID-19 pandemic.
Zoom in: Unsurprisingly, the private-sector modelers whose projections are more in line with the CBO numbers find the CEA's assumptions and conclusions to be unrealistic.
- "With this report, the CEA claims that these tax cuts will not only pay for themselves, the tax cuts will also pay down the growing debt that exists under current law even without the tax bill," Kent Smetters, director of The Penn-Wharton Budget Model, tells Axios.
- "It is a truly fantastical claim," adds Smetters. His group's modeling estimates that the version of the legislation that passed the House would increase cumulative deficits by $2.8 trillion over the next decade.
- "We would love to better understand how they are coming to a conclusion that is so out of line with all the other modeling done by economists across the ideological spectrum," Martha Gimbel, executive director of the Yale Budget Lab, tells Axios.
The bottom line: The White House is premising its projections on its policies delivering much faster growth than outside analysts believe is likely, paired with future deficit-reducing policies whose composition is uncertain.
