(Bloomberg) -- The new U.S. tax overhaul may well worsen the U.S. fiscal deficit over the next 10 years due to lower corporate-tax rates, Nobel economics prize winner Edmund Phelps said.
“That's another case where I think Trump has seriously stumbled, and his initiatives are very likely to be quite costly,” Phelps said Thursday in a Bloomberg TV interview with Flavia Rotondi in Rome.
Phelps predicted a “more serious debt problem 10 years from now when a lot of public expenditures will have to increase.”
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He acknowledged it was a good idea to find a way to induce the corporations to repatriate their massive profits overseas.
“There's a big minus,” Phelps added. “And that is that now we're going to have 10 years with reduced tax rates on corporate profits.”
To contact the reporters on this story: Kevin Costelloe in Rome at kcostelloe@bloomberg.net, Flavia Rotondi in Rome at rotondi@bloomberg.net.
To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Kevin Costelloe, Michael Winfrey
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