Key Points – Kent Smetters, a professor at President Trump’s alma mater, the Wharton Business School, has sharply criticized Trump’s “Big Beautiful Bill,” labeling the administration’s theory that its tax cuts will fuel economic growth a “work of fiction.”
-Smetters argues that despite some Medicaid cuts, the bill will likely lead to overall revenue loss and significantly worsen the national debt, a concern echoed by CBO projections of a $3.8 trillion deficit increase.
-He also characterized Trump’s tariffs as a “wake-up call” that the US is “no longer too big to fail,” with a Wharton paper suggesting these tariffs are more economically damaging than corporate tax hikes.
Trump’s Alma Mater Bites Back: Wharton Expert Warns on ‘Big Bill’ & Tariffs
President Donald Trump does not have a particularly good relationship with his alma mater, the University of Pennsylvania, nor with its Wharton Business School. The university has often distanced itself from Trump during his time in politics, and the feeling has been fairly mutual, with Trump rarely mentioning Penn, especially during his 2024 campaign.
While regularly visiting Philadelphia and Pennsylvania while running last year, Trump did not return to the Ivy League university, which is also the alma mater of three of his five children (Don Jr., Ivanka, and Tiffany).
As pointed out by The Daily Pennsylvanian, nearly all of Trump’s mentions of his alma mater during the 2024 campaign were references not to his having gone there, but rather to a nonsensical conspiracy theory that the Penn Biden Center, a think tank set up at Penn by former President Biden before his presidency, had been funded with Chinese money.
Trump, as president, has not launched the type of crackdown against Penn as he has against Harvard, although his administration did recently demand records from Penn about its “foreign ties.”
But he’s unlikely to be happy with some recent comments about his legislative agenda by a Wharton professor.
“A Work of Fiction”: Trump Has a Problem
The comments came from Wharton Business School’s Kent Smetters, in a Fortune magazine story about the concerns some economists have about the “Big Beautiful Bill,” Trump’s package of tax cuts and spending cuts, which comprises the bulk of his first-year legislative agenda.
The bill, following months of wrangling, has passed the House of Representatives, where it got through by a single vote, although that version is not seen as having much of a chance to pass the Senate, with several Republican senators raising objections.
The Fortune story talks about how economists have looked at the fine print of the bill, and “experts fear the plan could be the final nail in the coffin for national debt.”
The Congressional Budget Office has projected that the bill would add $3.8 trillion to the deficit, while the included Medicaid cuts would only save $1 trillion.
The Trump theory of the case is that the tax cuts in the bill would grow the economy. But Smetters, the Wharton professor, told Fortune that he doesn’t buy that- in fact, it’s a “work of fiction.”
A Broken Formula
“Because you’ve gotten rid of some of Medicaid on a static basis it looks like you save money,” Smetters said in the story. However, some households relative to that conventional score will actually work a little less because they want to requalify for Medicaid. We also have this shift, even though things like total hours goes up a bit, it’s actually coming from different groups.”
Nor did Smetters believe other aspects of the plan will work.
“Lower-income people will actually work a bit more and … from the GDP perspective, that looks like it’s a good thing,” he said. “But actually, higher-income people are taxed at a much higher rate than lower-income people, and so from a revenue perspective you’re actually losing money overall even though total hours worked goes up.”
Smetters also weighed in on Trump’s tariff announcements. He called them a “wake-up call that the United States is no longer too big to fail,” the professor said. “Capital markets will discipline, and I think that is gonna be the real harsh reality.”
Wharton had released a paper, in April, on “The Economic Effects of Trump’s Tariffs,” which was published “under the guidance” of Smetters, although four other people produced the data.
“Tariffs are estimated to raise about the same amount of revenue as increasing the corporate income tax from 21 to 36 percent, in the absence of these recent tariffs,” the report said. “While raising the corporate tax rate is generally seen as highly economically distorting, tariffs would reduce GDP and wages by more than twice as much. All future households are worse off. The estimated economic declines are likely lower bounds, with actual declines potentially even larger.”
About the Author
Stephen Silver is an award-winning journalist, essayist and film critic, and contributor to the Philadelphia Inquirer, the Jewish Telegraphic Agency, Broad Street Review and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. For over a decade, Stephen has authored thousands of articles that focus on politics, technology, and the economy. Follow him on X (formerly Twitter) at @StephenSilver, and subscribe to his Substack newsletter.
Fighter Jet Fails
Russia’s Su-57 Felon Stealth Fighter Is a Waste of Rubles
Pingback: Is Trump Crowning Himself 'King'? Fears Grow Over Executive Overreach - National Security Journal