Former President Donald Trump’s economic proposals have been analyzed by the nonpartisan Penn Wharton Budget Model, revealing that they would lead to an increase in federal deficits by $5.8 trillion over the next decade. This staggering number is almost five times more than the deficit increase projected from the economic proposals of Vice President Kamala Harris, which are estimated to add $1.2 trillion to deficits in the same time period.
Details of Trump’s Economic Plan
A significant portion of Trump’s deficit increase comes from his plan to permanently extend the 2017 tax cuts, which the study found would add over $4 trillion to deficits over the next 10 years. Additionally, his proposal to eliminate taxes on Social Security benefits carries a $1.2 trillion price tag, and his pledge to further reduce corporate taxes would result in nearly $6 billion in deficit increases.
On the other hand, the analysis of Harris’ economic proposals showed that her plan to expand the Child Tax Credit, the Earned Income Tax Credit, and other tax credits would raise deficits by $2.1 trillion over the next decade. Furthermore, her proposal to create a $25,000 subsidy for qualifying first-time homebuyers would add $140 billion to deficits in the same period. However, the report also noted that raising the corporate tax rate to 28% from the current level of 21% could partially offset the costs of her spending by $1.1 trillion.
Harris has indicated support for the $5 trillion worth of revenue raisers outlined in President Joe Biden’s budget proposal for the 2025 fiscal year, with a focus on corporate tax hikes. Nonetheless, the majority of her revenue streams would require congressional approval. In contrast, Trump has proposed paying for his agenda with tariffs on imports, including a 10% tariff on all imports and a 60% tariff on Chinese imports. These tariffs do not need to be passed by Congress to be implemented.
Trade Policy Implications
Economists warn that Trump’s hardline tariff policy could reignite inflation, as the rate of consumer price increases has just begun to cool. Moody’s Chief Economist Mark Zandi estimated that Trump’s tariffs would likely generate $2.5 trillion in revenue, adding further complexity to the potential outcomes of such policies.
Both the Trump and Harris campaigns have engaged in a race to portray the other side as an economic danger, with each attempting to appeal to voters concerned about the high cost of living. Harris campaign spokesperson James Singer criticized Trump’s economic agenda as an “inflation and deficit bomb,” while Trump campaign spokesperson Karoline Leavitt defended the former president’s economic record, citing his business acumen in building the American economy.
Challenges and Present Economic Landscape
The Harris campaign has faced pressure to roll out its economic agenda swiftly, especially given the perceived vulnerability of the Democratic campaign on economic issues this election cycle. The impact of the ongoing COVID-19 pandemic on the economy further complicates the dynamics of economic policy proposals and their potential impact on voters.
The economic proposals put forth by Trump and Harris carry significant implications for federal deficits, revenue streams, and trade policy. The contrasting approaches to taxation, spending, and funding strategies underscore the divergent economic philosophies of the two candidates, ultimately shaping the narrative of the 2024 presidential election.
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