Discussion on the fiscal policies of Donald Trump and Kamala Harris and their implications for the federal deficit and debt levels

According to the Committee for a Responsible Federal Budget (CRFB), the current federal debt is around $35.6 trillion, and both candidates’ proposals would exacerbate this issue. Trump’s plans primarily focus on extending the 2017 tax cuts and introducing further tax reductions, which would lead to substantial revenue losses. In contrast, Harris aims to extend certain tax cuts for lower-income households while proposing new social programs, funded partially by tax increases on corporations and high earners. Despite these revenue-raising measures, both candidates’ proposals are expected to contribute significantly to the national debt, with projections indicating that public debt could reach as high as 142% of GDP under Trump’s plans and 133% under Harris’s plans by 2035.

Key Components of Trump and Harris’s Fiscal Plans

• Trump’s Proposals:
  • Tax Cuts: Plans to extend and modify the 2017 tax cuts, which would add over $5.3 trillion to the deficit.
  • Additional Cuts: Further tax reductions, including eliminating taxes on social security benefits, would contribute an estimated $3.8 trillion.
  • Tariffs: Proposed tariffs on imports could raise $2.7 trillion, but overall, his plans lead to a significant increase in the deficit.
• Harris’s Proposals:
  • Tax Extensions: Aimed at extending tax cuts for households earning under $400,000, which would add approximately $3 trillion to the deficit.
  • Social Programs: Initiatives like paid leave and expanded tax credits would cost around $1.4 trillion.
  • Revenue Increases: Proposed tax hikes on corporations and high earners are projected to raise about $4 trillion, but this is not enough to offset the overall increase in the deficit.

Implications for Fiscal Policy

The analysis indicates that both candidates’ fiscal agendas may lead to a continuation of the current trajectory of increasing federal debt, raising concerns among fiscal conservatives and economists. The CRFB has emphasized the need for a comprehensive fiscal reform plan to address the growing debt levels, suggesting that without significant changes, the U.S. could face unprecedented debt levels that could weaken the economy in the long term.