US’s Reagan-era economic promises return as Trump’s AI-fueled growth fantasy
I keep coming back to that phrase: "even if AI supercharged the economy, its impact on the government's finances would be muted." That's the whole story in one sentence. The people selling this vision want you to believe a productivity miracle will pour so much money into Treasury coffers that we won't have to make hard choices about spending or taxes. But the mechanics don't work that way. Growth helps, sure, but it doesn't outpace the compounding interest on a national debt that keeps growing no matter how many data centers we build.
What fascinates me is how each generation rebrands the same failed promise. Reagan had the Laffer curve. Now it's "AI will change the growth math." The technology is genuinely new, but the argument structure is ancient. It's a supply-side cargo cult where the promised payoff never arrives, yet the ritual gets repeated with a fresh coat of paint.
I'd want to know what share of the projected AI windfall actually flows to government revenue versus corporate profits and capital gains. My suspicion is the answer would disappoint the optimists. The real question isn't whether AI boosts GDP, but who captures the gains. If history is any guide, it won't be the deficit.