Interest is already the fastest-growing portion of the federal budget.”
She, too, argued that a big increase in federal borrowing would push up interest rates, undermining growth “or even causing negative growth.”
The Urban-Brookings Tax Policy Center estimated that when additional interest payments were included, Mr. Trump’s
campaign tax proposals would add $7.2 trillion to the national debt by 2026 and $20.9 trillion by 2036.
But the conservative-leaning Tax Foundation estimates
that two prospective elements — reducing individual rates to three brackets of 35, 25 and 10 percent, and cutting the tax rate for corporations and pass-through entities (businesses that pay taxes at individual rates) to 15 percent — would cost the Treasury $4 trillion to $6 trillion over 10 years, said Alan Cole, an economist at the foundation.
The Urban-Brookings Tax Center estimated the cost of the cuts Mr. Trump proposed during the campaign at $6.2 trillion, assuming no additional growth,
and just under $6 trillion when growth is factored in.
Mr. Cole said eliminating the deduction for state and local taxes would add about $2 trillion of revenue over 10 years.
But no economist I spoke to this week — Republican or Democrat — said growth could compensate
for an increase in the deficit of anywhere near the magnitude of $4 trillion to $6 trillion.
“It will almost certainly push up interest rates.”
And the effect would come at a time when the Federal Reserve is already raising interest rates, even without the impact of new federal borrowing.
