A recent study from the Pentagon’s favorite consulting firm found that raising taxes — particularly on corporations — could dramatically reduce the federal deficit and safeguard the economy better than President Donald Trump’s inflationary and chaotic tariff policies.
While the European Union suspended its trade deal with the United States over the future of Greenland’s sovereignty, Trump boasted to political leaders at the World Economic Forum in Davos this week that sweeping tariffs, implemented by his administration in 2025, “radically reduced” the US trade deficit. Throughout the last year, the president has argued that tariffs will “lower our debt, which is a national security thing” and pay for, well, everything — even repeatedly claiming that increased tariffs may soon eliminate the need for federal income taxes.
But researchers at the defense-focused RAND Corporation, a leading Washington, DC, think tank and top policy adviser to the Pentagon, recently determined there are potentially more effective ways than tariffs to balance America’s books and reverse the US budget deficit — which they previously deemed a national security concern.
While Trump’s aggressive tariffs may dramatically increase revenue, they stifle economic growth by spiking production costs while lowering consumption rates, researchers conclude. “These adverse impacts on economic activity can impair the government’s ability to raise future revenues from all tax channels,” they contend.
The Congressional Budget Office, Congress’s economic research arm, finds that Trump’s aggressive tariff regime, if it lasts, could reduce the budget deficit by $3 trillion, including interest obligations, over the next eleven years. But this barely makes a dent in the US government’s debt burden. Baseline projections estimate the federal government will pay roughly $53 trillion in interest payments alone in the next thirty years, coming to represent…
Auteur: Veronica Riccobene
