Sorry Scotty - I don't think we're growing and tariffing our way out of this debt

We hit a new fiscal milestone in this country last week - $40 trillion in debt! But Treasury Secretary Scott Bessent says Americans shouldn't worry, because we can just power through it.

Treasury Secretary Scott Bessent says "we're going to have to grow our way out of this" in reference to the U.S. debt crossing the $40 trillion threshold.

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— NBC News (@nbcnews.com) August 20, 2026 at 3:00 PM

But it won't just be growth that gets our fiscal situation back on track, In that same interview with CNBC's Sara Eisen, Bessent claimed tariff revenue will be part of the plan.

“One of things that’s temporary here that’s influencing the deficit has been these tariff refunds, and we won’t have to do that again,” Bessent said, adding that the administration was reinstituting tariffs. “I would expect that our 2026 tariff income is going to be roughly what it was in 2025.”

Oh? You mean we will be back to having $30 billion a month in tariffs that Congress didn't approve of? That's what businesses and consumers were paying to the government before the previous tariffs were ruled illegal by the Supreme Court, and those funds had to be sent back to those businesses (and not necessarily to consumers).

But the CBO said on Friday that tariff refunds and related adjustments will only lower around $250 billion a year of tariff revenue in this fiscal year, and CBO has also estimated our budget deficit to go over $2 trillion for this fiscal year. So that's another $1.85 trillion of deficit due to everything else. And how is that number going to go down in future years?

Perhaps Bessent was thinking of a couple of things. The first is new 10-12.5% tariffs on most imported goods that the US put in place last month. Although I'll add that the CBO accounted for this in their analysis of lower tariff revenue overall.

Or maybe Bessent knew this was going to happen after the markets closed on Friday.

Update: The U.S. has now imposed 50% tariffs on $20 billion worth of Canadian products. Prime Minister Mark Carney says Canada will match those tariffs "dollar for dollar" next month.

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— NPR (@npr.org) August 22, 2026 at 11:33 AM

Trade negotiations between the United States and Canada fell apart Friday night, shortly before a midnight deadline for the 50% tariffs to take effect on $20 billion worth of Canadian products, including some dairy products, alcoholic beverages, cement and hockey equipment.

U.S. Customs and Border Protection issued a bulletin to businesses Friday warning that its officers would be ensuring importers complied with the new rates starting immediately after the deadline passed. Carney said Friday night that "Canada will match those tariffs dollar for dollar to protect our workers and businesses." He later said the retaliatory tariffs set to kick in next month will focus on American sectors such as "steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics."

Tariffs on dairy, pulp and paper? That seems pretty relevant to Wisconsin farmers and businesses, as UW-Madison's Menzie Chinn reminds us that Wisconsin has nearly 1/4 of the value of its exports go to Canada.

If you adjust for inflation, it looks like we export nearly $6 billion to Canada. Do you think any of the 6 WisGOP Congressmen are going to tell the Trump Admin that these new tariffs are likely help their constituents? Including Tom Tiffany, who wants to be governor of this entire state, and would deal with the job losses that might result from the lack of sales?

What, me worry?
Likewise, are these Congressmen going to be asked if they agree with this claim from Trump's Treasury Secretary?

Bessent on the latest bad jobs report: "After the deportations that we've seen and the closing of the border, we don't need to produce as many jobs"

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— Aaron Rupar (@atrupar.com) August 20, 2026 at 10:16 AM

So how do we grow so fast our debt doesn't matter, while not creating as many jobs as in the past?

It's not possible unless you are talking about massive inflation that $40 trillion total have a lot less meaning than it has today. There's no way we'd be having massive growth as Bessent describes without a large amount of supply shortages (due to fewer workers making stuff) and big increases in income to workers and consumer spending - when real wage growth is down in 2026 and consumer saving is already declining and at multi-year lows, so how much more is the consumer going to spend?

Trump/GOPs are nothing but BSers when it comes to the budget and the real economy. But what do you expect from the dumb son of a real estate mogul whose advisors are mostly mega-millionaires and billionaires? Aka "people who will ever deal with the consequences of a bad decision that hurts the economy for people with real jobs?"