Trump’s Economic Plan Could Add $5.8 Trillion to the National Debt Over the Next Decade

Trump vs. Harris: National Debt and Economic Proposals in the 2024 Election

As the 2024 presidential race intensifies, two new analyses from the Penn Wharton Budget Model shed light on the significant differences between the economic proposals of Donald Trump and Kamala Harris. Both candidates’ plans would increase the national debt, but the scale of impact varies dramatically. Trump’s proposals are projected to add trillions more to the national debt compared to Harris’ plans, according to a report by Axios.

The Financial Impact of Campaign Promises

Trump’s campaign promises could increase the national debt by $5.8 trillion over the next decade, while Harris’ proposals would add $1.2 trillion. Even after accounting for “dynamic pricing,” which considers increased tax revenues from policies that boost economic activity, Trump’s plans would still result in a $4.1 trillion increase in debt, compared to $2 trillion under Harris.

Tax Policy Differences

A significant factor driving the difference between the two candidates’ economic plans is how they handle Trump’s existing tax cuts, set to expire at the end of 2025. Trump plans to extend these cuts, which would cost $3.4 trillion over 10 years. In addition, Trump proposes reducing the corporate income tax rate further, to 15%, and eliminating income taxes on Social Security benefits, adding another $1.8 trillion to the debt.

In contrast, Harris plans to increase the corporate income tax rate to 28%, raising an estimated $1.1 trillion. This revenue would fund initiatives such as increasing the child tax credit, expanding the earned income tax credit, and supporting first-time homebuyers, which are projected to cost around $600 billion.

Long-Term Economic Consequences

According to the Penn Wharton study, Trump’s proposals would increase the national debt by 9.3% above its current trajectory by 2034 and by 12.7% by 2054. Harris’ proposals would lead to smaller increases of 4.4% and 7.7%, respectively.

Both candidates’ plans are expected to slightly reduce U.S. GDP relative to the current baseline. Trump’s proposals would lead to a 0.4% decline by 2034, while Harris’ would result in a 1.3% decrease.

Income Distribution Impacts

The candidates’ tax plans would also have differing impacts on income distribution. Under Trump’s proposals, the top 1% of earners would see their post-tax income rise by $47,000 in 2026. In contrast, the same group would experience a $9,000 decrease under Harris’ plan. Both plans would provide the median household with an approximate $2,000 annual income boost.

Conclusion

The analyses suggest a significant shift in the Republican Party’s approach to fiscal responsibility, with Trump’s current proposals prioritizing tax cuts and economic growth over reducing the national debt. In contrast, Harris’ plans focus on targeted spending and raising revenue through corporate taxes, leading to a smaller increase in the national debt. As the 2024 election approaches, voters will need to consider the long-term economic implications of each candidate’s proposals.