Analyst Says Trump’s Tax Bill Will Barely Dent Deficit, Warns of Long-Term Contraction

Senate Republicans advanced Trump’s tax and spending bill with Vice President JD Vance's tie-breaking vote, nearing Trump’s July 4 deadline, according to Barron's. The bill extends Trump-era tax cuts, cuts Medicaid and food stamps, increases defense and immigration funding, adjusts student loans, and raises the debt ceiling. Citi Global Chief Economist Nathan Sheets stated that the legislation would have a minimal impact on the deficit. He estimates U.S. deficits will remain near 6% to 6.25% of GDP, amounting to $20 to $22 trillion in new Treasury issuance over the next decade. He called growth projections from the Trump administration overly optimistic, saying the bill may be only mildly stimulative early on and potentially contractionary later. Sheets said deregulation and trade policy pose a more meaningful impact on economic growth heading into fall.