Donald Trump · Federal Reserve (FED) · White House · US Congress · Fortune Technology
Trump, the $39 trillion national debt, rosy growth assumptions and the question of 'a sustainable path'
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President Trump’s fiscal year 2027 budget is built on a single, load-bearing bet: that the U.S. economy can grow at 3% annually for the next decade.
Key facts
- The centerpiece is a $1.5 trillion defense funding request for FY 2027, combining a $251 billion increase in base defense discretionary spending with $350 billion in new reconciliation resources
- CRFB estimated that if you replace OMB’s growth assumptions with CBO’s more conservative projections—and account for the Supreme Court ruling striking down IEEPA-based tariffs—the national debt
- The $1.5 trillion deficit gain and the $750 billion interest cost would hit simultaneously, leaving a true net fiscal benefit of roughly $750 billion—less than half the number the administration’s
- The White House’s own projections show the debt-to-GDP ratio peaking at 103% in 2029 before declining—a trajectory that depends almost entirely on the 3% growth assumption holding for a full decade
Summary
A leading budget economist explained to Fortune why the sustainability picture isn’t getting better, even if you accept the White House’s growth numbers at face value. Kent Smetters, faculty director of the Penn Wharton Budget Model, ran the numbers on what an extra percentage point of real GDP growth—the gap between OMB’s 3.0% projection and the lower percentage seen by CBO, the Federal Reserve, and PWBM itself—delivers to the federal balance sheet. But Smetters didn’t stop at the headline figure. The $1.5 trillion deficit gain and the $750 billion interest cost would hit simultaneously, leaving a true net fiscal benefit of roughly $750 billion—less than half the number the administration’s framing implies.