The White House pushed back Monday on speculation that President Trump’s economic agenda contributed to Moody’s downgrading of the U.S. credit rating.
The debt downgrade put immediate pressure on bond prices, sending yields higher on Monday morning.
However, Council of Economic Advisers Chairman Stephen Miran told reporters that Moody’s tends to be “backward looking” and “late on these things.”
“The fiscal health of the United States deteriorated under President Biden. The explosion of the deficit to $2 trillion once you account for the student loan shenanigans during a peacetime expansion was just nothing short of reckless,” Mr. Miran said.
“However, President Trump has a plan to address deficits, bring deficits down, and it’s going to be successful. And I think that part of the reason why there’s a lot of confusion in analysis of this stuff is because folks tend to overly credit [Congressional Budget Office] forecasts,” he said.
Mr. Miran said the analysis excludes increases in revenues that can result in “surging economic growth,” referencing the Tax Cuts and Jobs Act first passed in 2017.
“If you look at what happened to Tax Cuts and Jobs Act last time, it significantly boosted economic growth and real revenues in fiscal year 2024,” he said. “That’s a result of the additional capital accumulation and labor supply incentivized by TCJA.”
Mr. Miran said he and his team at CEA have estimated that provisions in Congressional Republicans’ reconciliation bill “will create a real economic growth boom of 4.2% to 5.2% over the next four years and 2.9% to 3.5% in the long run.”
The White House also predicts the bill will spur employment by about 7 million new jobs and boost investments by roughly 10% to 15% over the next four years by about 5% to 7.5% in the long term.
Mr. Miran also noted that the legislation can potentially boost real wages between $6,000 and $11,000 per worker.
