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.
2020-02-02 10:31:00 Sunday ET
Our proprietary alpha investment model outperforms the major stock market benchmarks such as S&P 500, MSCI, Dow Jones, and Nasdaq. We implement
2017-11-13 07:42:00 Monday ET
Top 2 wealthiest men Bill Gates and Warren Buffett shared their best business decisions in a 1998 panel discussion with students at the University of Washin
2023-08-07 12:29:00 Monday ET
Oxford macro professor Stephen Nickell and his co-authors delve into the trade-off between inflation and unemployment in the dual mandate of price stability
2017-06-27 05:40:00 Tuesday ET
These famous quotes of self-made billionaires are inspirational words of wisdom on financial management, innovation, and entrepreneurship. For financial
2020-05-28 15:37:00 Thursday ET
Platform enterprises leverage network effects, scale economies, and information cascades to boost exponential business growth. Laure Reillier and Benoit
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