White House Promotes: Economy Will "Explode with Growth"
On the eve of Independence Day, the Trump administration's "The Great Beautiful Act" has captured the attention of both political and market arenas. The White House insists that this so-called "largest-ever" tax bill will recreate the economic miracle of the 2017 tax cuts, predicting a short-term GDP growth rate of 4.2% to 5.2%, far exceeding the current official forecast of 1.8%.
President Trump stated on social media that the bill would increase the U.S. economic growth rate to "threefold or fivefold." Senior Republicans have also echoed this sentiment, claiming the bill will bring dual prosperity of capital investment and employment. The White House Council of Economic Advisers supports this forecast, emphasizing the historically proven stimulative effects of tax cuts on economic growth.
Academia Refutes: Growth "Beautiful," But Limited in Strength
However, facing the White House's optimistic estimates, various independent institutions and economists have raised objections, arguing that the policy's effects are significantly exaggerated. The model from Wharton School at the University of Pennsylvania shows that ten-year GDP growth only increases by 0.4 percentage points, almost negligible. The Tax Foundation's analysis also concludes that the bill can only boost long-term growth by 0.8%, with revenue offsetting the cost ratio less than one-third.
More noteworthy, the Joint Committee on Taxation points out that the tax returns from the economic growth triggered by the bill account for less than 3% of the total cost. The Yale Budget Lab predicts that after growth accelerates to 2%, it will be countered by debt expansion.
Former Biden administration economic adviser Kimberly Clausing stated bluntly: "If the Republican plan fails, it might actually be the best outcome for the U.S. economy."
Fiscal Risks Rise, Deficit Pressures Highlighted
The Congressional Budget Office warns that "The Great Beautiful Act" will add $2.4 trillion to the U.S. fiscal deficit over the next decade. With the current deficit at its highest in years and the continued upward pressure on interest rates, the additional fiscal burden is undoubtedly a further challenge to the sustainability of federal finance.
Although White House economic advisers argue that after the 2017 tax cuts, the federal tax-to-GDP ratio did not decline significantly, several studies suggest that the policy at the time did not "pay for itself" as expected, but instead expanded the deficit.
Tariff Shadows Dampen Confidence, Investors Wait and See
Meanwhile, economists point out that even if tax cuts bring incentive effects, the high tariff policy implemented by the Trump administration remains an uncertain factor in economic prospects. Morgan Stanley's Chief Economist Seth Carpenter noted that tariff uncertainties weaken corporate confidence, and even if tax cuts allow immediate deduction of capital expenditures, "without tariff certainty, companies will not act rashly."
This raises questions about the actual effect of the highly anticipated bill in promoting long-term structural economic investment.
A Significant Gap Remains Between Policy Vision and Real Effects
Even before "The Great Beautiful Act" is passed, it has already become one of the most controversial topics in Washington politics. On one side is the Republican-led optimism, while on the other is the economic community's sober analysis depicting a moderate or even limited growth outlook. Whether this bill is an economic booster or a fiscal risk remains to be seen over time.
