Penn Wharton model shows ways Trump admin could lower debt while sustaining economic growth

foxbusiness.com:

Penn Wharton Budget Model faculty director Kent Smetters joins Varney & Co. to discuss how their research-based analysis could reduce the national debt if implemented.

A new analysis by the nonpartisan Penn Wharton Budget Model outlines policies that would reduce federal debt while spurring long-term economic growth, as the incoming Trump administration is due to face policy debates over taxes, spending and debt next year.

The federal government faces several key policy deadlines in 2025, starting with the debt limit suspension ending in January, which will require Congress and President-elect Trump to raise the debt limit to avoid default. Spending caps on the discretionary budget are set to expire when fiscal year 2025 ends in September, while portions of the Trump-era tax cuts are scheduled to sunset at the end of next year.

The confluence of those deadlines will leave policymakers facing a debate over how to address the massive national debt and spending growth, as well as resetting tax policies. The Penn Wharton Budget Model's policy illustration focuses on four areas – simplifying the tax code, reducing tax-induced distortions, implementing taxes to address negative externalities and reinforcing the long-term solvency of Social Security and Medicare.

«A common misunderstanding is that serious debt reduction must come at the expense of economic growth or the social safety net. We show this is incorrect,» the Penn Wharton Budget Model's analysts wrote. «The reforms herein produce sustained debt reduction, grow the economy, reduce carbon emissions, almost fully close current gaps in working-age health-care coverage, and reduce poverty among retirees.»

US NATIONAL DEBT HITS A NEW RECORD: $36 TRILLION

The Penn Wharton