The Trumpified GOP’s Great Big Ugly Debt Bomb
When it comes to the Donald’s Big Beautiful Bill there is one place, and one place alone, to start the discussion. We are referring, of course, to the built-in baseline of revenues, outlays and deficits under current Federal law and policy.
Needless to say, the latest CBO baseline amounts to a five-alarm dumpster fire. If Congress does nothing about entitlements, tax law or current funding policy for defense and nondefense discretionary programs, the annual Federal deficit will reach nearly $3 trillion and 6.1% of GDP by the end of the 10-year budget window. Accordingly, total public debt will soar from today’s $37 trillion to more than $58 trillion by 2035.
After that, it would be all over except the shouting because a combination of rising bond yields and soaring public debt would cause Uncle Sam’s interest expense to explode. Subsequently, the already massive structural deficit would easily double, thereby pushing the Federal debt level to a staggering $150 trillion by mid-century. Of course, we would likely never actually get that far because the financial markets would collapse long before 2050.
Given this cataclysmic outlook, you would think that slashing the deficit and braking the relentless growth of the public debt would be at the heart of the GOP fiscal plan. After all, it took the first 230 years of the American republic and 45 presidents to generate $21.8 trillion of public debt. Now, however, that figure would be duplicated again in the next 10-years unless Washington pivots hard toward fiscal austerity.
Alas, baseline deficit reduction is not even on the GOP’s agenda! That’s right. For the full ten year period they have not and will not table a single dime of net deficit reduction in crafting their Reconciliation Bill. And that’s actually pretty sick, given that the “reconciliation” mechanism was originally enabled in the 1974 budget reform act as a tool to facilitate fiscal control.
Instead, the GOP legislators are arguing about how much to INCREASE the already massive flow of red ink shown in the table below. In the fiscal scheme of things, the Donald’s Big Beautiful Bill is surely the most wanton act of fiscal perfidy ever committed on the banks of the Potomac.
Table: CBO Baseline Projections for FY 2026–2035 (billions)
Actually, the table above is barely the half of it. What is also embedded in the annual flow of these Federal budget numbers is the great big stinky trick the Trumpified GOP pulled the last time around in 2017. To wit, they embedded a huge $4 trillion “fiscal cliff” in the budget numbers beginning in FY 2026, owing to the expiration in 2025 of their ballyhooed TCJA tax cut of December 2017.
What this means, therefore, is that even the massive baseline deficit numbers shown in the table above assume a huge Federal tax increase commencing in 2026.
Accordingly, just to maintain the current individual income tax burden by extending the TCJA for a decade would add another $4 trillion to the baseline deficit even before you add higher debt service on the reduced revenue. And given that the GOP legislators devoutly desire to keep current tax rates, credits and deductions in place, they have actually started with a true baseline of upwards of $63 trillion of public debt by the end of the budget window.
And yet and yet. They are struggling to come up with even $1.5 trillion of budget cuts over the next decade, and virtually all of those cuts have been re-allocated to spending increases for defense, border control and other priorities—with hardly a net dime left for deficit reduction.
So, yes, the House bills show potential 10-year savings of $700 billion from Medicaid, $200 billion from Food Stamps, $300 billion from education and student loans and $200 billion from the delayed phaseout of the Biden green energy boondoggle tax credits. But those savings could be easily swallowed up over time by the $100 billion per year increase in the defense budget already tabled in the Trump “skinny budget” for FY 2026 alone and partially approved by the House Armed Services Committee. Also, there are tens of billions of additional increases annually for border control, veterans, air traffic control and other domestic priorities, which are virtually certain to become permanent, thereby eating up hundreds of billions of the above savings over the full ten-year budget period.
Indeed, the House markups to date are so full of budget gimmicks and scams, such as termination of many of the new tax cuts after 2028, that the Reconciliation bill’s net savings are likely to end up close to zero for one simple reason: The Trumpified GOP doesn’t give a good goddamn about fiscal control or the soaring public debt.
So to state the sheer criminal negligence of the matter: Faced with a fiscal dumpster fire, the Trumpified GOP looked $89 trillion of baseline spending for FY 2026-2035 squarely in the face and came up with a great big goose egg in terms of net savings.
It doesn’t get more perfidious than that. At the end of the day, the GOP rank and file know this bill is a Big, Ugly Debt Bomb, but they are so bamboozled by the fiscal miscreant in the Oval Office that they have thrown every bit of fiscal sobriety to the winds.
The truth is, unless they implant another fiscal cliff after FY 2035 by having the so-called Trump tax cut expire again, the honest longer-run impact of permanently extending the TCJA would be truly catastrophic: It would add an incremental 1% of GDP to the public debt each and every year, as far as the eye can see.
In short, the present policy of the Trumpified GOP is to guarantee that the bond pits will suffer a catastrophic breakdown long before 2050, meaning that smart investors will see it coming and begin to sell their US Treasury debt or even short it in order to get out of harms’ way. And once the selling starts in the bond pits, it will fuel a financial avalanche and collapse which will be unstoppable, even by the mighty printing presses of the Federal Reserve.
Federal Revenue Impact Of Extending the Expiring Provisions of the 2017 TCJA Thru 2035 (billions)
Despite all of this bad news, however, even the additional red ink displayed in the above table doesn’t tell the whole story. That’s because the real cost of TCJA extension for another ten years would be $1.2 trillion higher if the $10,000 per joint return cap on deductions for state and local taxes (SALT cap) is not also extended. Failure to re-up the SALT
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LewRockwell.com is a libertarian website that publishes articles, essays, and blog posts advocating for minimal government, free markets, and individual liberty. The site was founded by Lew Rockwell, an American libertarian political commentator, activist, and former congressional staffer. The website often features content that is critical of mainstream politics, state intervention, and foreign policy, among other topics. It is a platform frequently used to disseminate Austrian economics, a school of economic thought that is popular among some libertarians.
