Trump’s Economic Proposals Could Add Over $4 Trillion to Deficits Over a Decade

[Eric Loh]

37 minutes ago, TedG said:

I’d love to see the Harris proposal to reduce the future deficits.  LOL

Harris's economic proposal will would add $1.2 trillion to the deficit compare to Trump's $5.8 trillion deficit over the next decade (Penn Wharton Budget Model). She plan to raise corporate tax rate to 28% from current 21%. She will also adopt President Biden's budget proposal for 2025 fiscal year to raise revenue worth $5 trillion. Proposals include raising individual tax rate on weathy and corporations and weath tax on tax payers with net wealth of at least $100M.

Edited August 29 by Eric Loh
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[candide]

1 hour ago, Cameroni said:

 

First, we’re an outlier in how small our fiscal footprint is. Compared with the rest of the world, we don’t tax and spend much. 

 

Second, raising U.S. revenue levels to the average level of our peer countries would raise the equivalent of $2.61 trillion, roughly five times the amount needed to close the fiscal gap. Importantly, places like France and the Nordic countries collect this level of high revenue while still delivering reliable growth in living standards. These rich, high-functioning countries don’t seem hampered by excess taxation.

 

https://www.epi.org/blog/could-tax-increases-alone-close-the-long-run-fiscal-gap/

You are right but it's not that simple. It's not only about tax revenues, but also what services are provided for it.

France and Nordic countries have higher taxes, but also finance a significant re-distribution of revenues, I.e. free/cheap education, health, public transport portation, etc.. They don't just take the money.

 

[Cameroni]

4 minutes ago, candide said:

You are right but it's not that simple. It's not only about tax revenues, but also what services are provided for it.

France and Nordic countries have higher taxes, but also finance a significant re-distribution of revenues, I.e. free/cheap education, health, public transport portation, etc.. They don't just take the money.

 

That's true to some degree, but France has the same problems as Germany, UK and the US, in terms of how to pay for the health servicing of the old population and above all their pensions. This is financed by going to the capital markets as well, because contributions and investments from those do not suffice to pay the costs.

 

The problem with the high taxation model is how can it possibly be sustainable with negative birth rates in the long term? People have ever less purchasing power but are taxed ever more. It's a terrible cross to bear for the young people while the old enjoy their  pensions.

[TedG]

10 minutes ago, Eric Loh said:

Harris's economic proposal will would add $1.2 trillion to the deficit compare to Trump's $5.8 trillion deficit over the next decade (Penn Wharton Budget Model). She plan to raise corporate tax rate to 28% from current 21%. She will also adopt President Biden's budget proposal for 2025 fiscal year to raise revenue worth $5 trillion. 

That’s still going the wrong way.  Plus, Biden proposed a 7 trillion dollar budget for FY2025.  None of this fiscal sanity. 

[TedG]

2 minutes ago, Cameroni said:

That's true to some degree, but France has the same problems as Germany, UK and the US, in terms of how to pay for the health servicing of the old population and above all their pensions. This is financed by going to the capital markets as well, because contributions and investments from those do not suffice to pay the costs.

 

The problem with the high taxation model is how can it possibly be sustainable with negative birth rates in the long term? People have ever less purchasing power but are taxed ever more. It's a terrible cross to bear for the young people while the old enjoy their  pensions.

 

The West is running up massive debt to fund the fund the government they can’t afford. 

[Cameroni]

1 minute ago, TedG said:

 

The West is running up massive debt to fund the fund the government they can’t afford. 

 

Exactly right. It does seem counterintuitive, all the countries borrowing from each other to finance their social services.

[Chomper Higgot]

51 minutes ago, TedG said:

I’d love to see the Harris proposal to reduce the future deficits.  LOL

A weak deflection in a discussion in a discussion on a likely $4Trillion hike.

[TedG]

Just now, Chomper Higgot said:

A weak deflection in a discussion in a discussion on a likely $4Trillion hike.

 

What is weak about it? 

[Chomper Higgot]

10 minutes ago, TedG said:

 

The West is running up massive debt to fund the fund the government they can’t afford. 

Time to start taxing the hyper wealthy, like we used to do back when the prosperity of the working and middle classes were growing and prospering.

[Chomper Higgot]

1 minute ago, TedG said:

 

What is weak about it? 

The source is a good place to start.

[newbee2022]

14 hours ago, Social Media said:

 

A recent analysis by the Penn Wharton Budget Model estimates that former President Donald Trump’s proposed economic plans, including major tax cuts and spending initiatives, could add over $4 trillion to the U.S. national deficit over the next decade. The analysis, released on Monday, provides a detailed look at the potential impact of Trump’s proposed extensions of his 2017 tax reforms, elimination of taxes on Social Security benefits, and reductions in corporate income tax rates. These proposals, if implemented, are projected to significantly widen the nation’s budget deficits from 2025 to 2034.

 

According to the analysis, Trump’s proposals could increase primary deficits by $5.8 trillion on a conventional basis over the ten-year period. When factoring in economic feedback effects—adjustments that consider how the proposals might influence overall economic performance—the projected increase is slightly lower, at $4.1 trillion. The report underscores the substantial fiscal impact of the proposed measures, which seek to expand the tax cuts that were central to Trump’s economic policies during his presidency.

 

A major contributor to the projected deficit increase is the proposal to extend expiring individual income tax provisions from Trump’s 2017 Tax Cuts and Jobs Act (TCJA). This extension alone is estimated to add $3.4 trillion to the deficit before accounting for interest costs over the next decade. The analysis explains that this figure represents the single largest cost among Trump’s proposals, reflecting the high expense of maintaining the lower tax rates and other benefits introduced in 2017.

 

Additionally, the report points to another significant cost arising from the proposed restoration of the original TCJA regime for taxing business investments. This move is expected to add an additional $623 billion to the deficit, bringing the total cost of the TCJA extension to over $4 trillion. This estimate highlights the long-term fiscal impact of the tax reforms, which were initially designed to be temporary but are now being positioned as permanent features of Trump’s economic platform.

 

The elimination of taxes on Social Security benefits is another key component of Trump’s economic agenda, with analysts projecting that this policy could cost as much as $1.2 trillion over the next ten years. This proposal is particularly targeted at easing the financial burden on retirees, but its implementation would significantly reduce federal revenue, adding further strain to the national budget.

 

 

Trump’s plan to reduce the corporate income tax rate to 15 percent—a sharp drop from the current rate—also features prominently in the analysis. This reduction is estimated to cost $595 billion over the same period. While the move is intended to stimulate business investment and economic growth, it would also lead to substantial revenue losses, adding to the overall deficit impact of Trump’s proposals.

 

Despite the staggering costs associated with these measures, the analysis indicates that households across all income levels—low, middle, and high—would generally benefit from the proposed tax changes on a conventional basis in the years 2026 and 2034. However, the report cautions that these apparent gains do not factor in the additional debt burden that future generations will face as a result of the increased deficits. The analysis warns that the benefits seen in the short term may be outweighed by the long-term fiscal challenges posed by rising national debt.

 

The Penn Wharton Budget Model’s findings also include an evaluation of economic proposals put forward by Vice President Kamala Harris. In a separate analysis, the group assessed Harris’s plans to expand social welfare programs, such as the Child Tax Credit and the Earned Income Tax Credit, and to provide increased support for first-time homebuyers. Harris also proposes raising the corporate tax rate to 28 percent, a stark contrast to Trump’s plan to lower it. The analysis projects that Harris’s proposals would lead to a spending increase of $2.3 trillion over ten years, with tax revenue rising by $1.1 trillion, resulting in a net increase in primary deficits of $1.2 trillion. When accounting for economic feedback effects, the projected deficit increase rises to $2 trillion.

 

However, the analysts noted some uncertainties regarding Harris’s proposals, particularly concerning her stance on tax provisions outlined in President Joe Biden’s fiscal 2025 budget request. While Harris’s campaign confirmed to NBC News that she supports Biden’s revenue proposals aimed at reducing the deficit by $3 trillion over the next decade through tax increases on the wealthy, it remains unclear whether she endorses all the spending measures included in the FY 2025 budget.

 

Notably, both Trump’s and Harris’s plans include proposals that involve the non-taxation of tips earned by service workers, a controversial issue with potentially significant fiscal implications. The analysis highlights the complexities of this policy, noting that reclassifying income as tips could lead to substantial changes in revenue collection. “The ability to reclassify income is often a major source of revenue response in conventional tax scoring,” the report stated, emphasizing that a more detailed examination would be necessary to accurately estimate the budgetary impact of this provision.

 

As the 2024 presidential campaign season progresses, these competing economic visions underscore the divergent approaches to fiscal policy and deficit management between the candidates. Trump’s proposals largely continue the tax-cutting and deregulatory themes of his first term, emphasizing immediate economic growth and household benefits, while critics argue they risk ballooning the national debt. On the other hand, Harris’s plans focus on bolstering social safety nets and increasing taxes on corporations and high earners to finance new spending initiatives, though her proposals are not without their own deficit concerns.

 

The Penn Wharton Budget Model’s analysis serves as a critical tool for voters and policymakers alike, providing a clearer picture of the potential economic and fiscal consequences of these contrasting agendas. As debates over the future of U.S. economic policy continue to unfold, the findings underscore the complex trade-offs inherent in shaping a sustainable and equitable fiscal future for the country.

 

Credit: The Hill 2024-08-29

 

 

 

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Not surprising.  Just another addition to the daily general rubbish🥱

[farangkinok]

There is only one possible eventual outcome, regardless of who wins the election - 

"Fiat currency always eventually returns to its intrinsic value--zero." Voltaire (1729)

[rudi49jr]

Here’s another insight into the proposed policies of the stable genius: 16 Nobel prize winning economists say Trump policies will fuel inflation.

 

https://www.reuters.com/world/us/16-nobel-prize-winning-economists-say-trump-policies-will-fuel-inflation-2024-06-25/

 

The economists say Trump's economic plans would reignite inflation, in part because of his pledge to impose stiffer tariffs on Chinese imports, which they say will hike prices on many goods bought by U.S. consumers.

"While each of us has different views on the particulars of various economic policies, we all agree that Joe Biden's economic agenda is vastly superior to Donald Trump," the economists state in their letter. 
"We believe that a second Trump term would have a negative impact on the U.S.'s economic standing in the world, and a destabilizing effect on the U.S.'s domestic economy."
 

How about them apples?

[Chomper Higgot]

2 hours ago, farangkinok said:

There is only one possible eventual outcome, regardless of who wins the election - 

"Fiat currency always eventually returns to its intrinsic value--zero." Voltaire (1729)

He also said:

 

“Anyone who can make you believe absurdities can make you commit atrocities.”