Fiscal hawks are very concerned about the rising deficit and the best person to explain the administration’s plan is Treasury Secretary Scott Bessent. He spoke with Rob Schmitt on Newsmax last night to respond to concerns by Senators Paul and Johnson about the deficit spending.
The CBO claims the deficit spending will add $4 trillion to the debt but they did not account for explosive growth of 4.6% GDP in the second quarter this year. That will help lower the deficit.
Secretary Bessent said it has to be thought of in terms of the GDP.
“I’m a fiscal Hawk, but I am also a realist. And the way to think about this is, every $300 billion is 1% of GDP. And as a clip that you just said, or you just showed where I said we didn’t get here in a year. We’re not going to get out of it in a year that we have to bring this down gradually, because we want to do two things. We want to cut and constrain spending, and we want to grow the economy. And what Senator Paul is asking for or advocating for, I think could cause a sudden stop in the economy. So I’m a deficit hawk, but I’m also a realist.”
Rob Schmitt talked about Rand Paul wanting to cut a trillion or more. A trillion would be 3% of GDP.
“…what’s important here is our debt to GDP, so that if we don’t grow then we won’t grow the tax base, and we’re not going to grow revenues. We’re not going to grow the economy. “
“So the we inherited a mess, and we have to constrain spending, cut spending, and then grow our way out of this.
He also explained that thing we need to do, like building the wall, cost money.
Secretary Bessent does not agree with Sen. Paul on the debt ceiling. Sen. Paul wants to dish out a debt ceiling increase of $500 billion every few months because he doesn’t trust Congress to curtail spending. After each $500 billion, Congress would have to show how they have improved.
Bessent responded to that by saying it puts too much in the hands of Democrats who will blackmail Republicans to add hundreds of billions for their favorite causes.
“And as far as the debt ceiling goes, that I am not sympathetic at all with Senator Paul there, because when he said, “This is going to be the first debt ceiling that has passed with Republicans,” Well, Rob, let me tell you what happens every time. Every time, and you can ask Senator Paul about this, when it’s bipartisan, when the Republicans are in and they have to go across the aisle, because senators like Senator Paul will not vote for this, the Democrats will hold us up.
“So they will demand 100, 200, $300 billion in extra spending. So where’s the practicality in that?”
Schmitt asked about where we would be in cutting debt and deficits by 2028.
“Well, look, Rob, if we could cut a percent a year, that’d be a great start. And the way to think about it is, what is the deficit to GDP? So the Biden administration blew it out to 6.7% the highest that we’ve ever seen when we weren’t in a war, when we weren’t having a recession. So we’ve got to bring that down slowly. So we could bring the deficit to GDP down by half a percent, a percent every year for the next few years. But the deficit to GDP, part of it is cutting the deficit, but the other part is growing the GDP. …
“The other thing here that this tax bill is not a tax cut for the most part. It is making permanent the 2017 tax cuts and job act. So what we are doing is it is current tax policy. We are going to make that permanent, then for working Americans, we are going to put in the President’s agenda of no tax and tips, no tax on Social Security, no tax on overtime and making auto loans deductible again. On the other side, we’ve got tariff income coming in, which I also believe Senator Paul does not like, and that could be substantial, that over the CBO scoring window of 10 years, could be between two and $2.5 trillion.”
In this clip Scott Bessent explains how the rescissions and tariffs will proceed in light of newly-raised concerns.
You can comment on the article after the ads (please be polite to commenters), and subscribe to the Daily Newsletter here if you would like a quick view of the articles of the day and any late news:
I have a question for Bessent and his supporters: If Biden’s people could raise the deficit-to-GDP ratio to 6.7% suddenly, why does the Trump Administration have to bring it down slowly? What is Bessent afraid of?
Bessent seems good, but, there are still 3 more weeks to pass the bill. The best solution is to make some changes to the bill. Force the RINOs to vote instead of letting them hide. This debate should be about them, for instance, the quiet Thune, who shows no leadership. Luna is a leader, she is out there speaking up.… Read more »