Trump’s Economic Plan Cuts Deficit Without a Recession, According to Bessent
Treasury Secretary Scott Bessent says the U.S. deficit is shrinking relative to the size of the economy, proof, he argues, that President Donald Trump’s fiscal policies are cutting debt without slowing growth.
Speaking at a Federal Reserve conference, Bessent highlighted that the deficit-to-GDP ratio has dropped into the 5% range, its lowest since before the pandemic. “The deficit-to-GDP now has a five in front of it,” he said, calling the figure a sign that the administration is rebalancing the budget “without a recession.”
The Congressional Budget Office estimated the 2025 deficit at $1.8 trillion, nearly unchanged in dollar terms but down to 5.9% of GDP from 6.4% a year earlier. Bessent said the aim is to push that figure closer to 3% by the end of Trump’s second term.
Tariffs, Taxes, and Interest Costs
Higher tariff revenues have helped offset weaker corporate tax receipts after last year’s rate cuts, though the CBO noted that interest payments on federal debt surpassed $1 trillion for the first time. Bessent credited the tariff surge with cushioning the budget while supporting domestic production.
He also pointed to the next round of changes under Trump’s One Big Beautiful Bill, including no taxes on tipped wages, lower Social Security taxes, and interest deductions on U.S. car purchases. Those revisions, he said, will boost refunds early next year and raise take-home pay for middle- and lower-income workers.
“On the Right Path”
Despite the ongoing government shutdown delaying official Treasury data, Bessent insisted the direction is clear. “The numbers show progress,” he said. “We’re seeing a smaller deficit, steady jobs, and no recession – exactly the outcome we planned for.”
Source: Bloomberg
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