The respected Tax Policy Center earlier this month concluded that Donald Trump’s tax proposals could blow up the national debt and that Hillary Clinton’s plans did little to change its current trajectory. The nonpartisan group took heat for not including in its projection how the proposals might affect economic activity.
Turns out, the answer is not much.
The center, composed of tax-policy veterans from both major political parties, released updated analyses Tuesday of the candidates’ plans.
“I think what you are finding is the macroeconomics (of the plans) are not all that large,” Len Burman, the center’s director, said in a phone call with reporters.
When accounting for how the deep tax cuts could reverberate in the economy, the center concluded that Trump’s plan would shave a little off of what still amounted to an enormous increase in the national debt.
Federal revenues would fall by about $6 trillion over the first 10 years in force, versus almost $6.2 trillion without measuring the economic effect. Under Trump, the national debt would grow by almost $7.1 trillion over the first decade, a bit less than the $7.2 trillion projected without measuring for economic effects. The Trump campaign has promised unspecified spending cuts to offset at least some of that lost tax revenue.
Similarly, Hillary Clinton’s plan that raises taxes on the wealthiest Americans was estimated to grow federal revenues by $1.36 trillion over 10 years, reducing the debt by $1.57 trillion over a decade.
But when factoring in the negative economic effects on growth from higher taxes, the research concluded growth would slow a tad, thus bringing in slightly less revenue of $1.33 trillion over 10 years, and shaving $1.53 trillion from the national debt.
As fiscal experts have long warned, however, the deficit is now rising again — and, under current law, is projected to continue doing so. The Concord Coalition, in a statement on Oct. 18, 2016
Debt and deficits received scant attention in the first two presidential debates. The Concord Coalition, a nonpartisan budget watchdog organization, called on the candidates to address those issues during Wednesday’s final debate.
“As the economy recovered in recent years from the Great Recession, federal deficits fell. This unfortunately produced widespread complacency in Washington about the need for structural budget reforms,” the group said in a statement, noting that the recently ended fiscal year saw the federal deficit jump to $587 billion from $439 billion the previous year.
The government took in more tax revenue last fiscal year, $3.267 trillion, as the economy continued to improve. But that increased revenue paled next to the rise in government spending to $3.854 trillion.