Like Augustine, I have a confession to make.
A few weeks ago, I went to great lengths to explain how I thought the Trump tariffs might work. I said how, because of the rebalancing of the GDP equation (C+I+G+(X-M)), away from the “G” of government spending, to the “I” of investment, the Trump administration’s economic policy made sense, despite what critics were saying. My assessment, however, was built on the idea that cutting government spending was a real commitment (we had created a Department of Government Efficiency, after all), a presupposition that now seems premature.
More pointedly, if certain assessments are to be believed, particularly from the Congressional Budget Office (CBO), it looks as though the most recent legislation isn’t designed to cut spending at all, but to add to it.
Hence, as said above, a mea culpa is in order.
But is the idea that the Big Beautiful Bill will add to the deficit likely to materialize?
Maybe, but maybe not.
Specifically, while the CBO has traditionally provided the go-to analysis for bills such as this, it, like many other institutions in Washington, is subject to the same type of partisanship, a fact that should not be overlooked. Furthermore, a more granular analysis reveals that the CBO’s estimates, particularly regarding GDP growth, may not be accurate.
Treasury Secretary Scott Bessent pointed this out recently on X:
Even with full expensing for manufacturing equipment and historic tax relief, the CBO still projects only 1.8% growth.
If you turn up the growth projections to 2.8%, which was achieved during President Trump’s first term, then the debt disappears.
We are growing GDP faster than debt and that trend will continue through the remainder of the President’s term.
Bessent has a point.
Indeed, so many of the proclamations made by official Washington have been just as wrong as the secretary claims. For instance, before Trump’s first term, New York Times columnist and Nobel Prize-winning economist Paul Krugman claimed that the president’s economic plan would crash the U.S. economy, a view which was not only grossly overstated but outright wrong. More recently, the warnings about the Trump tariffs increasing inflation seem to have been exaggerated, as have the claims that the recent intervention in Iran would cause World War III. Finally, can anyone forget the claims about the president’s double agency, the accusation that he was a Russian asset?
Nevertheless, we must still contend with the old saying that the only thing Washington can agree on is spending. No less than billionaire financier Ray Dalio has weighed in on all this on X, saying that either we face “a big squeezing out (and cutting off) of spending and/or unimaginable tax increases, or a lot of printing and devaluing of money and pushing interest rates to unattractively low levels.”
Clearly, to use the terms of the old philosophers, we are caught between a dilemma. Are we to believe such experts as Dalio, who take the CBO at its word, and have therefore concluded that, because of the Big Beautiful Bill, we are in deep trouble where the country’s debt is concerned? Or are we to remember all the false flags from the past several years regarding the current president, which have now become so commonplace?
Oh, for the baby-splitting skills of King Solomon!
Therefore, until another such wise man emerges, we must wait and see.
And, like Augustine, pray for a good outcome…
Along with his father, Allen Keller runs a lumber business in Stevenson, Alabama. He has a Ph.D. in Creative Writing from Florida State University and an MBA from University of Virginia. He can be reached for comment at [email protected].
The views and opinions expressed here are those of the author and do not necessarily reflect the policy or position of 1819 News. To comment, please send an email with your name and contact information to [email protected].
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