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10-year Treasury yield climbs above 5.3% to a level not seen in 24 years

122 points · 193 comments · kaycebasques

  1. guelo · · focus · HN ↗
    It's weird how the discussion on this rarely mentions Trump's giant 2017 and 2025 tax cuts, plus the insane increase in military spending. Somehow it's always about we need to cut entitlements.

    People need to study this graph <a href="https:&#x2F;&#x2F;fred.stlouisfed.org&#x2F;series&#x2F;FYFSD" rel="nofollow">https:&#x2F;&#x2F;fred.stlouisfed.org&#x2F;series&#x2F;FYFSD and think about what changed when.

    1. missedthecue · · focus · HN ↗
      According to the CBO, the TCJA and 2025 cuts&#x2F;extensions have reduced revenues by about $430B per year. That&#x27;s only 20% of the current annual deficit. It&#x27;s just so small compared to the trillions per year in entitlement spending. And of course, that&#x27;s just a first-order reading of the tax cuts. The second-order effect is that the tax cuts led to more private sector spending and investment, which spurred a little more GDP growth. The CBO estimates $2.6T of cumulative GDP growth as a result of the tax cuts through 2028.

      <a href="https:&#x2F;&#x2F;www.cbo.gov&#x2F;publication&#x2F;54994" rel="nofollow">https:&#x2F;&#x2F;www.cbo.gov&#x2F;publication&#x2F;54994

      So that&#x27;s about $52B per year in taxation added back on that extra GDP growth, so the net effect of the cuts are around $380B reduced federal revenue per year, or 18% of the deficit.

      18% of the deficit is a lot but if you could snap your fingers and undo it, you now have a $1.7T problem instead of a $2.1T problem. Eventually you have to look at entitlements. There&#x27;s just no way around it.

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