Trump’s Tax Cuts have walked the USA into Debt Trap

Blain’s Morning Porridge October 9th, 2026“Taxation is the price we pay to remain civilised.”The US economy looks rosy – if you are looking at the fantabulous promises of the Stock Market. The reality is very different. The scale of the $40 trillion National Debt is a problem that will not just go away and puts substantial limits on how the US can respond to any new economic or conflict crisis without risking massive inflation. Underlying the scale of the debt is not just poor spending decisions, but tax cuts that have accelerated the debt crisis.Key Takeaways:The pace of the rising US National Debt has massively outpaced the growth of the economy and tax revenues.Tax receipts, and how tax cuts have effectively increased the scale of the US national debt, are just as important as spending to the debt quantum as Government Spending.Trump’s two rounds of tax cuts in 2017 and 2025 have had major impacts on the outstanding debt but show limited effects in terms of triggering economic growth.Tax cuts have been Reverse Robin Hoods, favouring the wealthy over the poor – a contradiction to Trump’s promise to support those left behind by globalisation, foreign competition and industrial decline.Now the USA finds itself with an unsustainable debt pile which becomes more expensive as self-inflicted inflation rises and leaves it less able to respond to economic and conflict crises as global Treasury buyers look elsewhere.Inflating away the scale of the debt, as Trump has proposed, would be a disaster for the economy and likely trigger higher rates and destructive hyper-stagflation.The front pages say it all this morning.Open AI revenues disappointed to the tune of $20 bln, while Masayoshi Son of Softbank is asking Gulf investors for a further $100 bln to fund his AI investment thesis… (He’s already backed OpenAI to the tune of $65 bln.) Masayoshi’s brilliant, cunning plan is to buy firms and use AI to make them more profitable – which is exactly what the commercial world is struggling to do. Business has embraced AI – it’s made work better, easier, but it’s not entirely clear how it changes profitable firms into extremely profitable firms – especially in highly competitive markets where every firm is doing it. In other words, AI is just like a tax or any other fixed cost. You have to pay it to remain in the game!Taxes are the main theme of the Porridge this morning.Continued/ go to www.morningporridge.com for access to the full story.If you subscribe to the full Morning Porridge you get the email every morning and links to videos and podcasts…