2018-08-07 07:33:00 Tue ET
treasury deficit debt employment inflation interest rate macrofinance fiscal stimulus economic growth fiscal budget public finance treasury bond treasury yield sovereign debt sovereign wealth fund tax cuts government expenditures
President Trump sounds smart when he comes up with a fresh plan to retire $15 trillion national debt. This plan entails taxing American consumers and producers when they buy goods and services from countries subject to his tariffs. The taxes involve steel and aluminum taxes on western allies such as Canada, Europe, and Mexico as well as another 25% tariffs on $200 billion Chinese imports.
However, math seems to be on the other side of this healthy trade debate.
For the fiscal year 2018, the U.S. Congressional Budget Office projects the federal budget deficit to be $800 billion. The Office of Management and Budget projects an even higher deficit of $1 trillion in 2019. In other words, it is difficult for the Trump administration to remain fiscally neutral due to large infrastructure expenditures, tax cuts, trade barriers, and capital investment restrictions. The new Trump tariffs may bring in $100 billion in light of stable macroeconomic demand for imports from Canada, China, Europe, and Mexico.
In this negative light, the Trump administration may not be able to curtail the current budget deficit. In order for the Trump administration to balance the U.S. budget, it would require imposing 40% tariffs on almost all $2 trillion imports. The American dream of total national debt elimination thus seems remote.
In the alternative positive light, it is still plausible for the Trump administration to attain fiscal neutrality in the medium term. If the Trump administration successfully boosts 2.5% real GDP economic growth to 3% or above by 2020, the annual U.S. fiscal revenue may increase from $4.5 trillion to $5.4 trillion. The additional $900 billion fiscal intake can then offset the current U.S. budget deficit. In other words, these pro forma calculations suggest that whether Trump can keep his promise to retire national debt depends on medium-term real GDP economic revival.
Overall, 3%+ real GDP economic growth determines whether President Trump can fulfill his economic MAGA mantra.
If any of our AYA Analytica financial health memos (FHM), blog posts, ebooks, newsletters, and notifications etc, or any other form of online content curation, involves potential copyright concerns, please feel free to contact us at service@ayafintech.network so that we can remove relevant content in response to any such request within a reasonable time frame.
2019-03-13 12:35:00 Wednesday ET

Uber seeks an IPO in close competition with its rideshare rival Lyft and other tech firms such as Slack, Pinterest, and Palantir. Uber expects to complete o
2017-04-07 15:34:00 Friday ET

Would you rather receive $1,000 each day for one month or a magic penny that doubles each day over the same month? At first glance, this counterintuitive
2017-12-01 06:30:00 Friday ET

Dr Kai-Fu Lee praises China as the next epicenter of artificial intelligence, smart data analysis, and robotic automation. With prior IT careers at Apple, M
2018-07-17 08:35:00 Tuesday ET

Henry Paulson and Timothy Geithner (former Treasury heads) and Ben Bernanke (former Fed chairman) warn that people seem to have forgotten the lessons of the
2019-04-13 14:28:00 Saturday ET

Saudi Aramco unveils the financial secrets of the most profitable corporation in the world. In its recent public bond issuance prospectus, Aramco offers the
2019-01-21 10:37:00 Monday ET

Andy Yeh Alpha (AYA) AYA Analytica financial health memo (FHM) podcast channel on YouTube January 2019 In this podcast, we discuss several topical issues