US’s Reagan-era economic promises return as Trump’s AI-fueled growth fantasy
Summary
Republicans have long promised that tax cuts will boost growth enough to pay for themselves, but this has not happened. Now, under President Trump, the Treasury Secretary expects strong economic growth fueled by artificial intelligence, but experts say this is unlikely and won’t fix the growing national debt.Key Facts
- Republicans, dating back to President Reagan, have claimed tax cuts would increase growth and reduce deficits, but deficits have grown instead.
- Treasury Secretary Scott Bessent predicts 3% annual growth based on AI advancements, a rate rarely achieved in recent decades.
- President Trump expects faster growth to help pay off the $40 trillion federal debt over time.
- US 10-year Treasury bond yields recently rose to their highest level in nearly 25 years, showing investor concerns.
- Rising bond yields increase government borrowing costs, adding pressure on the budget.
- Foreign central banks are buying fewer US bonds, leaving private investors as the main buyers.
- Trump’s 2025 tax cut law could add $4.7 trillion to the debt by 2035, increasing budget challenges.
- Experts say to stabilize or reduce the deficit, the economy would need unrealistic growth rates of 4.4% to 7.2% annually over the next decade.
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