Multiple news sources1,2,3 have reported that Trump’s tax plan will increase the national debt. This claim has been used as an argument that the Trump tax plan is bad. While it’s likely true that the Trump tax plan will increase the national debt, it doesn’t follow that this is bad for the economy.

Debt, in absolute terms, doesn’t say much about the vibrancy of a country’s economy. For instance, South Korea has significantly more debt than Sudan4, but nobody would claim that Sudan’s economy is healthier than South Korea’s. What matters is the amount of debt a country has relative to its GDP.

The United States currently has debt-to-GDP ratio of about 106%5. The Congressional Budget Office estimates that Trump’s tax plan will increase the national debt by 1.4 trillion dollars. That means that if the American economy grows by less than 1.4 trillion / 1.06 = 1.32 trillion dollars, then the debt-to-GDP ratio will increase.

I’m not an economist, so I can’t predict how much the economy might grow or shrink in response to Trump’s tax plan. However, I am a data nerd, so I can direct the conversation towards a more productive measurement: debt-to-GDP.

Comment

Facts are necessary but not sufficient to gain insight. Anyone can visit Wikipedia and read facts all day. In order to gain insight, facts must be filtered through an intelligent agent. That’s why computers are only as useful as the humans using them. In other words, CNN, The Hill, and CNBC are behaving like computers: they are exhibing factual accuracy, but a lack of intelligence is preventing them from producing insight. If journalists studied statistics or science, you’d see fewer articles like these.