AI won't rescue US finances: deficit needs 4.4% growth, CBO says AI adds just 0.1 point
nordicinst · x · 2026-10-12
Guardian analyst Eduardo Porter argues the White House is betting on AI-fuelled growth to grow the US out of debt — a new take on the Reagan-era claim that tax cuts pay for themselves — but the numbers don't back it up.
- Treasury Secretary Scott Bessent is counting on AI to deliver 3% annual growth; the Committee for a Responsible Federal Budget calculates cutting the deficit to 3% of GDP by 2036 requires 4.4% yearly growth, and balancing the budget 7.2%.
- The CBO expects AI to add only 0.1 percentage points of growth a year.
- AI shifts income from taxed labour to lightly taxed capital (about half the rate), so the same growth yields less revenue.
- Tech giants borrowing heavily for data centres compete with the government for investors, as US debt passes 100% of GDP.
- Economists Jared Bernstein and Ryan Cummings estimate big cloud firms need $13.1tn–$18.7tn in extra revenue over a decade to justify AI spending; missing those targets could make US debt even harder to finance.
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