The study reveals that Harris' plans could augment the national debt, while Trump's initiatives might contribute additional debt increments.
The proposed plans include significant expenditures, yet the candidates have failed to outline a clear strategy to fully finance these expenses. Consequently, the national debt would escalate by additional trillions, regardless of who emerges victorious in the election, exacerbating the country's existing fiscal difficulties.
According to a report by the Committee for a Responsible Federal Budget, published on Monday, Harris' plan would boost the debt by $3.5 trillion over the next decade, while Trump's proposals would increase it by an astounding $7.5 trillion. This analysis is part of a series of assessments of the candidates' proposals, which generally indicate that Trump's initiatives would have a more substantial impact on the national debt than Harris' plans. The committee acknowledges that its estimates contain a considerable margin of uncertainty and are based on numerous assumptions since neither candidate has provided comprehensive proposals.
The analysis utilizes various sources, including official campaign announcements, websites, white papers, social media posts, speeches, discussions with campaign staff, similar proposals in presidents’ budgets, and other references. The committee offers a range of cost estimates due to the lack of detailed platforms. It suggests that Harris' measures could maintain the debt level or even increase it by $8.1 trillion, while Trump's proposals could inflate the debt by anywhere between $1.5 trillion and $15.2 trillion. Predicting how Americans and corporations might alter their behavior if these policies are implemented is challenging, as nearly all of these initiatives require congressional approval.
Neither candidate has addressed the issue of reduceing the nation's mounting debt, despite frequent calls from both Republicans and Democrats to control the debt, which currently stands at an alarming $35.7 trillion. The federal government continues to spend more money than it collects in revenue, resulting in a swift increase in the debt. Several experts, including Federal Reserve Chair Jerome Powell, have expressed concern that the nation is on an unsustainable fiscal trajectory.
“We’re currently spending more on interest than on Medicare and defense, and this heavy debt really limits everything else,” Marc Goldwein, the committee’s senior policy director, told CNN. “It limits investment in the private sector, resulting in less economic growth. It limits spending in the public sector, meaning less budget for our other priorities.”
Harris' proposals
The most expensive component of the vice president's platform is the extension of the 2017 Tax Cuts and Jobs Act provisions for individuals earning less than $400,000 per year – a cost of $3 trillion, according to the committee. The individual income and estate tax provisions in this law are set to expire at the end of 2025.
Following this, there is an expansion of the child tax credit and earned income tax credit, which would incur a $1.4 trillion expense. Additionally, there is a plan to extend the enhanced Affordable Care Act premium subsidies, contributing $550 billion to the total cost.
The committee also includes Harris' proposals for supporting affordable housing, manufacturers and small businesses; eliminating taxes on tips; improving border security; and strengthening education and the care economy, including establishing a national paid family and medical leave program. These proposals would collectively cost $2.3 trillion.
(For some of these items, the committee used measures contained in Biden administration budgets and packages as models since Harris has not unveiled more detailed policies.)
Harris intends to partially offset the cost of her platform by increasing the corporate tax and capital gains rates to 28%, along with hiking other taxes on wealthy Americans and big corporations. However, these measures are not expected to fully cover the expenses. The committee assumes Harris will propose many revenue-raising provisions from President Joe Biden's budget since her campaign has stated its support for these measures.
Trump's measures
Trump wants to extend most of the provisions in the 2017 tax cuts law, one of his significant achievements in his first term. He also plans to enhance certain elements, such as eliminating the $10,000 cap on state and local tax deductions and restoring companies' ability to immediately deduct investments in equipment and research. In total, these changes would cost nearly $5.4 trillion.
Trump has also promised to eliminate taxes on tips, overtime pay, and Social Security benefits, as well as reduce the corporate tax rate to 15% for domestic manufacturers. These measures would result in a $3.8 trillion reduction in revenue.
Additionally, the committee's assessment includes strengthening the military, securing the border, and deporting unauthorized immigrants, enacting housing reforms, and providing more support for health care, long-term care, and caregiving.
Trump has repeatedly asserted that the new tariffs he desires to impose – a 10% or 20% tariff on all foreign imports coming into the US, and another 60% tariff on all Chinese imports – will finance his proposals.
However, the committee estimates that these tariffs would generate between $2 trillion and $4.3 trillion over a decade – insufficient to cover Trump's agenda. Furthermore, there would be trade-offs. Most economists agree that tariffs would cause the prices Americans pay for imported goods to increase. This is because the cost of the tariffs is typically passed on to consumers – the American company importing the goods often pays the tariff.
Another potential retaliation could be retaliatory taxes. Experts assert that other nations would likely implement taxes of their own on American goods. A trade conflict could decelerate the American economy, lessening the total income the government collects.
Additionally, Trump has pledged to increase energy production, abolish the Department of Education and eliminate unnecessary spending, fraud, and corruption. According to the committee's evaluation, these actions would result in an increase or savings of approximately $1.1 trillion.
Contributions to this report were made by CNN's Katie Lobosco and Matt Egan.
Despite the significant expenditures in the proposed plans, there's a lack of clear strategies to fully finance these expenses in politics, leading to a potential escalation of the national debt. The analysis of both Harris' and Trump's proposals indicates that their initiatives could further increase the nation's debt, with Trump's proposals having a more substantial impact compared to Harris' plans.
