Trump’s Tax Plan Seen As Raising U.S. Federal Debt; Core PCE Inflation Rises to 1.8 Percent In February

President Donald Trump faced a legislative defeat last week trying to repeal and replace Obamacare  that complicates his effort to deliver his promise of “massive tax cuts” for American households and businesses.

In October 2016, the Tax Policy Center estimated that President Trump’s revised tax proposal which lowers the corporate tax rate to 15 percent and the top individual income tax rate to 33 percent, would reduce federal revenues by $ 6.2 trillion over the first decade before accounting added interest and macroeconomic effects.

Adding interest costs, the federal debt would rise to $ 7.2 trillion during the first decade and $ 20.9 trillion by 2026.

Three-fourths of the federal revenue loss would come from reductions in business taxes.

Trump’s tax proposal cuts taxes at every income level, although high income taxpayers would receive the largest cuts, both in dollar terms and as a percentage of income.

The U.S. federal debt currently stands at $ 19, 857 trillion.

On November 7, 2016, the federal debt held by the public reached $14.3 trillion or approximately 76 percent of the previous 12 months of GDP.

Last week, President Trump was unable to get Congress to approve the Republican American Health Care Act which the Congressional Budget Office (CBO) estimated on March 23, 2017 would only reduce federal deficits by $150 billion over the 2017-2026 period, a smaller level than was first estimated, with large cuts in Medicaid and the number of uninsured Americans rising to 21 million in 2020 and 24 million in 2026.

President Trump is proposing in his budget to increase military spending, build a border wall along the U.S. southern border while making spending cuts with the EPA, State Department, Department of Agriculture, and the Labor Department.

President Trump is also floating a $ 1 trillion dollar infrastructure spending plan with some of the costs offset by increasing the number of tolls on U.S. roads.

Next month, the U.S debt limit will need to be raised by Congress for the Treasury Dept. to pay down U.S. federal debts.

PCE Inflation For February 

The U.S. Bureau of Economic Analysis reported this morning that the PCE price index rose 0.2 percent in February, higher than the 0.1 percent estimate from economists at briefing.com.

Core PCE prices, which the Fed Reserve uses as their primary core inflation gauge for setting monetary policy, rose 0.1 percent in February to 1.8 percent which is just below the Federal Reserve’s 2 percent inflation target.

Written and Edited By:

Johnathan Schweitzer

@SchweitzFinance

schweitz31@gmail.com

 

 

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