by Winston Wendell
I have been watching America’s debt situation, and it is worrying to observe the scale. According to the latest data the national debt has officially surpassed an unprecedented $40 trillion. A significant part of its growth can be attributed to the policies implemented by President Donald Trump.
The increased debt can be explained by the direct intervention of Trump and the GOP in the economy through corporate tax reductions. In particular, the enactment of the Tax Cuts and Jobs Act (TCJA) of 2017 resulted in a significant decrease of the corporate tax rate by 14% (from 35 to 21%). The TCJA introduced substantial changes in the taxation of pass-through income, allowing businesses to deduct up to 20% of their profit. In addition, the lawmakers doubled the exemption threshold of the estate tax. The Trump administration’s fiscal policy was built on neoclassical supply-side ideas, claiming that the changes to the corporate tax would lead to economic growth and prosperity. Well it didn’t.
According to the estimates conducted by the Congressional Budget Office and the bipartisan Joint Committee on Taxation, the initial design of the TCJA led to a $1.5 trillion reduction in revenues over the decade. The administration’s actions in Congress failed to recognize the limitations of the supply-side economics, which promised to deliver the significant growth of the economy, in other words it failed. As the federal budget was starved of revenue, it complicated the situation with the COVID-19 pandemic response.
The pro-business and billionaire policies of the administration, which decreased the overall revenues of the federal budget, resulted in the inability to finance the pandemic response adequately. Thus, the federal debt is forecasted to exceed 100% of the GDP, which makes the U.S. economy extremely vulnerable. Trump’s interference in the economy resulted in the growing budget deficit, which has a detrimental effect on the federal budget.
Trump’s approach to fiscal policy promised to deliver economic growth, but it actually reduced revenues of the federal budget making the debt issue skyrocket. The Republican party needs to stop pretending Trump’s policies did’t increase the federal debt. Trump keeps blaming others when the blame for over 30 percent of the debt is squarely on this tax the middle class and give to the rich. These consequences will be pasted to future generations. Maybe it’s time to reform the taxation system to make sure that everyone, including billionaires and millionaires, contribute to country proportionally to their incomes.
Blue Press Journal 