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The Gingrich plan would reduce federal revenues by $1.28 trillion below CBO’s baseline, according to the nonpartisan Tax Policy Center, resulting in revenues of about 13.2 percent of GDP. That is an absurdly low level. Unsurprisingly, therefore Gingrich’s plan would pile up debt shockingly fast. Ultimately, Gingrich’s plan would:
– Result in perpetual trillion-dollar deficits: The budget deficit is expected to be 6.2 percent of GDP in the current fiscal year, but projected to decline in the coming years. With Gingrich’s tax plan in place, however, deficits would be even higher in perpetuity. In the best year under his plan, fiscal year 2015, the deficit would be $1.2 trillion, or 6.6 percent of GDP. Annual deficits would continue to mount, reaching $2 trillion in just over a decade. Again, this assumes that drastic spending cuts also take place.
– Explode the debt to historic levels: Under the Gingrich plan, the publicly-held debt would double by 2019, and triple by 2024. By the end of a second Gingrich term as president, the debt would reach $25 trillion, or more than 100 percent of GDP. The United States will have added about $12.5 trillion in debt during that period, with no end in sight.
– Commit the United States to trillion dollar interest payments on the debt: By enacting a tax plan with grossly inadequate revenues, the U.S. would be committing to pay ever-increasing sums of money to creditors like China. Under Gingrich’s plan, by 2021 the United States would be paying more than $1 trillion every year just in interest on the debt. Interest on the debt would represent nearly a quarter of all government spending.