A Lot of Spending, Huge Debt: Something Has to Give

Debt Projections and GDP Ratios The CBO's current projections5 - which assume only current fiscal policies in the forecast period, GDP and inflation growth rates averaging about 2%, and interest rates on the 10-year Treasury note averaging only 4% - are that the total federal debt held by the public will reach $45 trillion in the next 10 years. [...]the IRS recently announced it can now step up audit efforts on "high-income earners, partnerships, large corporations, and promoters abusing the nation's tax laws" as its first application of that new funding.11 The CBO estimates that the additional funding will return tax revenues at a rate two-times the increased budget.12 However, the funding is again in jeopardy: the House Republican majority has made the repeal of that funding13 a priority in its legislative negotiations with the Senate and White House. Unfortunately for those receiving the benefits - but perhaps fortunately when it comes to mitigating deficit increases - all the individual provisions will expire at the end of2025.14 These include all the individual bracket rate cuts, the doubling of the standard deduction, the doubling of the child tax credit, the substantial narrowing of alternative minimum tax provisions for individuals, and the doubling of estate tax and lifetime gift exemptions. [...]there is a pending Supreme Court case {Moore v. United States19) that could impact any possible enactment of a wealth tax.