Donald Trump’s latest wave of policy and tax proposals will increase the US deficit by $7.5 trillion in the next decade. This is according to a report from the Committee for a Responsible Federal Budget.
The CRFB estimates that the projected increase in the deficit of $3.5 trillion is double what Kamala Harris would have generated.
The CRFB is a nonpartisan group that advocates fiscal responsibility. It highlights how Trump’s tax cuts, tariff increases, military expansions and mass deportations have all contributed to the fiscal disaster of his plan.
Harris’ fiscal strategy focuses on spending on social policies, tax reductions for middle class households, and higher taxes on high income families and corporations.
The fiscal plans of both candidates would increase the already projected $22 trillion US deficit over the next 10 years, if there are no changes to the current policies.
Debt levels nearing record highs
US debt is now more than $28.3 Trillion, which roughly equals the entire US economy.
The US debt load is expected to increase even more, surpassing levels seen after World War II. This will be largely due to the ageing population of the US and structural imbalances between revenue and expenditure.
The growing amount of debt is a concern for economists, as it could have a significant impact on the economy.
The US is currently avoiding a financial crisis with a solid economy that continues to grow despite its ballooning debt.
Source : Committee for a Responsible Federal Budget
Trump’s tax cut drives the surge in deficit
Tax cuts are a key factor in Trump’s huge deficit projections.
Trump, in addition to prolonging his 2017 tax cut, set to expire by the end of this year, has also made grand promises, including the elimination of taxes on Social Security, overtime pay, and tips.
The tax reform of 2017 had capped the state and local tax deduction at $10,000. He has promised to reinstate this deduction.
Trump’s tariffs and energy policies do not balance out the impact of his tax cuts. Marc Goldwein is the senior vice president at the CRFB.
The President Trump began promising new tax cuts at each rally and these really added up.
In a very short time, his promises have caused his projected deficit to increase far more than Harris’s.
Trump and Clinton had similar fiscal plans six weeks ago. But Trump’s tax-cut promises have changed the equation, putting his plan in a much deeper state of deficit.
Harris’s more moderate deficit impact
Although Kamala Harris’s proposals for economic growth would increase the deficit as well, her estimate of $3.5 trillion is significantly lower than Trump’s.
Harris’s plan includes new tax credits and investments for first-time homeowners and families with kids, as well as paid leave, child care and tax breaks for those earning less than $400,000.
She supports increasing taxes on high-income corporations and individuals in order to cover some of the costs.
CRFB analysts think that despite Harris’s advocacy for deficit reduction, it will be hard to accomplish, due to the widespread opposition to tax increases.
Marc Goldwein said, “the menu of offsets is full of really, really difficult stuff.”
Committee for a Responsible Federal Budget
Both plans do not stabilize the debt
Both Trump and Harris’ plans contain counterproductive elements to the benefits they could bring.
Trump’s tariffs could, for example, hurt the economy, while Harris tax hikes on the rich may reduce investment.
CRFB says that both plans would see the debt continue to rise faster than the economic growth.
Goldwein stated that “neither of them is moving towards stabilizing debt”.
The growing debt is a challenge to whoever wins the presidential election.
It is unclear whether the candidates’ fiscal strategies will be adjusted to reflect economic realities, but current projections show a worrying picture for America’s financial future.
The post Trump’s Budget Plan Will Increase Deficit by $7.5T, Double the Size of Harris’ Proposal, CRFB Study Finds may be updated as new developments unfold.
