by Peter Navarro at The Hill
After touching 4 percent on Apr. 2, the yield on the 10-year Treasury has climbed more than 50 basis points. Pundits and portfolio managers alike insist the bond market vigilantes are delivering a decisive and unmistakable rebuke of President Trump’s One Big Beautiful Bill Act and its tax cuts — just passed in the House and now pending in the Senate.
On the surface, they appear to have a case. The Congressional Budget Office projects that the Big Beautiful Bill Act will add almost $4 trillion to the national debt over the next ten years.
To the CBO, tax cuts mean less revenue. Less revenue in the absence of equal spending cuts means more borrowing. More borrowing means higher bond yields, a bigger interest payment burden on future generations, and a fiscal drag on GDP growth.
Go a bit deeper, however, and it is clear that financial markets do not have complete information about either the historical inaccuracy of CBO forecasts or the substantial positive revenue impact of the new Trump tariffs.
For years, a feckless CBO, saddled by archaic Keynesian and static assumptions,…
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