‘Work of fiction…’: Will Donald Trump bury US government in debt with multitrillion-dollar tax breaks? Even Elon Musk is concerned

The House-approved tax and spending reductions may increase the national debt by over $5 trillion during the next ten years if maintained. (AI image)

US President Donald Trump is not finding it easy to convince multiple stakeholders, including the Republican senators and international investors that his ‘One Big Beautiful Bill’ won’t bury the US government in a huge pile of debt. So much so that one of his biggest supporters, Tesla CEO Elon Musk, has also expressed concerns about the impact of the multitrillion-dollar tax breaks package.Financial markets have responded with doubt, even as the Donald Trump administration continues to struggle to demonstrate effective deficit reduction strategies.“All of this rhetoric about cutting trillions of dollars of spending has come to nothing — and the tax bill codifies that,” said Michael Strain, director of economic policy studies at the American Enterprise Institute, a right-leaning think tank, according to an Associated Press report. “There is a level of concern about the competence of Congress and this administration and that makes adding a whole bunch of money to the deficit riskier.“The Trump administration has responded aggressively towards critics expressing worry about increasing debt under the new US President’s leadership, despite evidence of rising debt levels following his 2017 tax reductions during his first presidential term.What White House and Donald Trump have saidWhite House Press Secretary Karoline Leavitt in her briefing earlier this week attempted to address what she termed as inaccurate assertions regarding the tax reductions.Leavitt criticised the assessment that the ‘One, Big, Beautiful Bill’ would increase the deficit, dismissing the Congressional Budget Office’s analysis and other evaluators’ projections, stating they employ unreliable assumptions and have consistently failed at forecasting across both Democratic and Republican administrations.Also Read | ‘Went COLD TURKEY, it was devastating for them…’: Donald Trump slams China for ‘violating’ trade agreement with US – what went wrong this time?However, Trump’s own statements have indicated that the insufficient spending reductions to balance his tax cuts were a result of maintaining unity within the Republican congressional group. “We have to get a lot of votes,” Trump stated last week. “We can’t be cutting.”The Trump administration seems to fervently be relying on economic growth as the primary solution, a strategy that receives limited support outside Trump’s immediate circle.The White House Council of Economic Advisers believes that their policies will generate substantial growth, leading to reduced annual budget deficits in proportion to the overall economy, thereby establishing fiscal sustainability for the US government.The council projects economic growth averaging 3.2% annually over the next four years, contrasting with the Congressional Budget Office’s 1.9% forecast, and estimates creating or preserving up to 7.4 million jobs. Most economic experts regard the non-partisan CBO as the authoritative source for policy assessment, though it doesn’t evaluate costs for executive branch actions, such as Trump’s independent tariff decisions.Elon Musk’s apprehensions & disappointmentExpressing his concerns, technology magnate Elon Musk, who previously served in Trump’s close circle as the head of the Department of Government Efficiency, shared his views with CBS News: “I was disappointed to see the massive spending bill, frankly, which increases the budget deficit, not just decreases it, and undermines the work that the DOGE team is doing.”Soon after his take on the ‘One Big Beautiful Bill’, Musk also announced his exit from Trump’s Department of Government Efficiency. In an official statement, Musk conveyed his appreciation to Trump for the chance to head DOGE, stating, “As my scheduled time as a Special Government Employee comes to an end, I would like to thank President Donald Trump for the opportunity to reduce wasteful spending. The DOGE mission will only strengthen over time as it becomes a way of life throughout the government.“Also Read | ‘Even if we lose…’: Donald Trump administration readying two-part strategy to impose reciprocal tariffs, says ‘we will do it another wayRising US national debtThe House-approved tax and spending reductions would increase the national debt by over $5 trillion during the next ten years if maintained, according to analysis from the Committee for a Responsible Financial Budget, an organisation monitoring fiscal responsibility.The legislation employs a strategy of setting expiration dates for various components to artificially reduce its apparent cost. This approach mirrors the strategy used in the 2017 tax reductions, which has created the current situation where numerous tax cuts will expire in 2024 without Congressional renewal.The debt situation has significantly worsened compared to eight years prior. With total debt exceeding £36.1 trillion, investors now require higher returns on government borrowing. The 10-year Treasury Note currently yields approximately 4.5%, a substantial increase from the 2.5% rate that prevailed when the 2017 tax legislation was enacted.‘Work of fiction’External economic analysts anticipate that increased debt levels would maintain elevated interest rates and dampen overall economic expansion, as borrowing costs would rise for housing, vehicles, commercial ventures and educational financing.“This just adds to the problem future policymakers are going to face,” said Brendan Duke, a former Biden administration aide now at the Center on Budget and Policy Priorities, a liberal think tank according to the AP report. Duke said that with the tax cuts in the bill set to expire in 2028, lawmakers would be “dealing with Social Security, Medicare and expiring tax cuts at the same time.”The Penn Wharton Budget Model’s faculty director, Kent Smetters, dismissed the growth forecasts from Trump’s economic advisers as unrealistic and a ‘work of fiction’. He indicated that the legislation could encourage some employees to reduce their working hours to become eligible for Medicaid.“I don’t know of any serious forecaster that has meaningfully raised their growth forecast because of this legislation,” said Harvard University professor Jason Furman, who was the Council of Economic Advisers chair under the Obama administration. “These are mostly not growth- and competitiveness-oriented tax cuts. And, in fact, the higher long-term interest rates will go the other way and hurt growth.”Also Read | ‘Way better to take 25% tariff hit…’: Apple exports 2.9 million iPhones from India to US despite Trump’s pressure; China sees big fall