Dive Brief:
- U.S. policymakers should rank cutting the national debt — which exceeds the size of the U.S. economy — as their top goal, according to a survey of economists released Monday by the National Association for Business Economics and conducted before the Supreme Court on Friday deemed illegal most of the tariffs that undergird the Trump administration’s federal budget.
- Sixty-one percent of business economists view current fiscal policy as too stimulative, the largest share of respondents with that view since 2018, the NABE said. Forty-six percent of the economists said reducing the U.S. deficit and debt should be the No. 1 policy priority, an increase of 3 percentage points from an August survey, according to the NABE survey.
- Deficit reduction should outrank immigration and healthcare reform as a priority, according to the business economists. They favor “a mix of structural measures to boost growth, spending restraint or entitlement reform and higher taxes to address the fiscal gap,” Gregory Daco, EY-Parthenon Chief Economist and NABE president, said in a statement.
Dive Insight:
The impact from the Supreme Court ruling on the U.S. fiscal outlook has flared into a public debate between the Trump administration and federal policy analysts.
Treasury Secretary Scott Bessent said Sunday that the court’s decision will not undermine U.S. revenue, citing plans by President Donald Trump to gain additional income from import taxes allowed under alternative executive authority.
“Tariff revenue will be unchanged this year and will be unchanged in the future,” Bessent said in a Fox News interview, noting that since the ruling Trump has announced an additional 15% global tariff.
Bessent criticized an estimate Friday by Maya MacGuineas, president of the Committee for a Responsible Federal Budget, that without an adjustment to fiscal policy, revocation of the tariffs could increase the projected federal deficit by about $2 trillion during the next decade.
“Maya MacGuineas should be ashamed, and they should take the word responsible out of her organization's name,” Bessent said. “Everything she told you was completely irresponsible,” Bessent told the interviewer.
MacGuineas, referring to the court’s decision, said Friday that “we are in a dismal fiscal situation and it just got worse.”
“With the national debt already the size of the entire U.S. economy and interest on the debt costing more than $1 trillion this year, this is very bad news,” she said.
“Relying on legally questionable sources of revenue was clearly less than ideal,” she said. “It’s Congress that needs to get our debt under control.”
MacGuineas on Monday pushed back against Bessent’s criticism, saying that the CRFB for years has repeatedly called on both Democrats and Republicans to improve the federal budgetary outlook and put the U.S. deficit and debt on a sustainable path.
“Ad hominem attacks won’t help us improve the fiscal trajectory,” MacGuineas said in a statement. “With debt approaching record levels as a share of the economy and interest payments surging past $1 trillion, we hope policymakers in both parties are ready to begin taking our budget deficits seriously.”
The Supreme Court’s tariff ruling may provide some stimulus to economic growth, Federal Reserve Governor Christopher Waller said Monday.
The decision “overturning a large share of import tariffs imposed last year may have a positive impact on spending and investment, but how large that impact may be and how long it could last is unclear,” Waller said in a speech.
“The administration plans to reimpose at least some of the tariffs using other laws, but there is considerable uncertainty over to what extent tariffs will continue,” he said.
