The non-partisan Committee for a Responsible Federal Budget estimates that over ten years the Trump plan would increase the deficit by $5.3 trillion whereas the House of Representatives' plan would lower it by $7 trillion.
For now, Trump has given the markets a lot to digest. He’s pledged to cut taxes while launching a massive program building roads, bridges, and airports. His proposals would boost the nation’s debt by $5.3 trillion, according to the nonpartisan Committee for a Responsible Federal Budget.
“Unified Republican control of Congress and the executive branch provides potential for significant changes in fiscal policy,” Edward Lorenzen, a senior policy advisor for the Committee for a Responsible Federal Budget, wrote in a memorandum provided to the media Thursday. “The budget process provides Republicans in Congress tools to enact parts of their agenda over Democratic opposition. However, there are limits on what can be done through the budget process [in the Senate] with 51 votes.”
“Enacting their agenda through the budget process will require some difficult choices that they have been able to avoid in the past and ultimately will require bipartisan support to achieve many of their goals,” he added.
According to the Committee for a Responsible Federal Budget (or CRFB), Trump’s plan would most likely lead to a -$5.8 trillion due to tax cuts and another -$0.7 trillion from higher interest costs, supported by only $1.2 trillion from primary spending cuts. The CRFB believes that Trump’s plan would leave the US economy (IWF) (IWD) (SQQQ) with a net $5.3 trillion in increased fiscal deficit over the next ten years.
“I know [CRFB President] Maya [MacGuineas] very well, she’s somebody I think very highly of and I think has a made a real contribution to educating the American public about this threat” -- Representative Tom Cole
Increasing the Social Security cap helps, but it does not solve the impending Social Security shortfall. The tax cap would actually have to be eliminated entirely to close a significant percentage of the Social Security gap, according to calculations by the Committee for a Responsible Federal Budget, a think tank that publicizes Social Security and other federal budget issues.
According to the nonpartisan Committee for a Responsible Federal Budget, Trump’s plan, if enacted as written, would cause federal debt held by the public to swell to 105 percent of GDP in 10 years, up from 77 percent now.
In contrast, the Center for Health and Economy, which is nonpartisan and includes both liberal and conservative experts, estimates that 18 million people — mostly low-income adults — would become uninsured in the first year and that Trump's changes would decrease the deficit by $583 billion between 2017 and 2026. Previously, the Committee for a Responsible Federal Budget, which promotes fiscal constraint and is anti-deficit, calculated that repealing the ACA would double the number of uninsured, leading to more than 21 million people losing coverage, and would cost $550 billion over a decade.
“Pretty much any Republican who worked on Social Security from around 1995 through 2006 supported diverting some of the payroll tax to private accounts,” says Marc Goldwein, senior policy director at the Committee for a Responsible Federal Budget in Washington. In 2005, Goldwein points out, Social Security was running big surpluses.
“Conventional wisdom on the right and even amongst some Democrats was that those surpluses should instead be diverted into personally owned retirement savings accounts,” he says.
As a reminder, the Committee for a Responsible Federal Budget estimates that Trump's plans would add $5.3 trillion to the national debt over a decade and that merely a stabilization of the debt as a percentage of GDP would require a combination of severe non-entitlement spending cuts and a doubling or tripling of the current economic growth rate. Possible, yes. But highly improbable.
The national debt could increase $5.3 trillion over a decade should Mr. Trump cut taxes and boost spending as he has said during the campaign, according to the nonpartisan Committee for a Responsible Federal Budget.
Trump campaigned heartily on a spending splurge and nothing he’s said since his shocking election suggests he will reverse course. Republican leaders on Capitol Hill, meanwhile, are papering over divisions with the man who frequently tossed party orthodoxy aside on the trail.
“There is now a real risk that we will see an onslaught of deficit-financed goodies — tax cuts, infrastructure spending, more on defense — all in the name of stimulus, but which in reality will massively balloon the debt,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget.
Republicans, despite prattling on endlessly about the danger of budget deficits during the President Obama administration, are now ready to embrace unprecedented deficit spending under Donald Trump. “There is now a real risk that we will see an onslaught of deficit-financed goodies — tax cuts, infrastructure spending, more on defense — all in the name of stimulus, but which in reality will massively balloon the debt,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, in an interview with Politico.
Congress could balk at projections from the Committee for a Responsible Federal Budget that Trump’s current proposals would result in a doubling of the national debt save for drastic nonentitlement budget cuts and much faster-than-anticipated economic growth. Under this scenario, a new recession would hit within the next two years and result in an economy 5 percent smaller, employing 4 million fewer Americans by the end of Trump’s term.
The president-elect’s pledges include tax cuts and spending $500 billion or more over a decade on infrastructure. His proposals would boost the nation’s debt by $5.3 trillion, the nonpartisan Committee for a Responsible Federal Budget estimated. The government’s marketable debt has already more than doubled under President Barack Obama, to a record of almost $14 trillion.
The Congressional Budget Office estimates that, under current law, the national debt will grow from 77% of GDP in fiscal 2016 to 86% in fiscal 2026. However, in a September analysis of President-elect Trump’s fiscal plans, the Committee for a Responsible Federal Budget estimated that they would push the debt to 105% of GDP by 2026 if fully implemented. Most of the cost of these plans comes from large proposed tax cuts for both corporations and individuals, although increased defense spending also has a sizable impact.
According to the independent think tank the Committee for a Responsible Federal Budget Mr Trump’s plans could lead to an explosion in US government indebtedness, raising the debt to GDP ratio by one third in the next ten years.
“We have an aging population, we have health care costs that continue to grow faster than the economy. We have to do something about Social Security and Medicare,” said Maya MacGuineas. “There are plenty of ways to make changes that would protect the people who depend on them but kicking the can year after year – which is what we have done – hurts our budget and it will hurt the economy.”
Trump has pledged to reduce personal taxes across the board, cut corporate taxes to 15 percent from 35 percent and spend from about $500 billion to $1 trillion to rebuild the nation’s crumbling infrastructure. Based on the lower end of that range, his plans would boost the nation’s debt by $5.3 trillion, according to an estimate by the non-partisan Committee for a Responsible Federal Budget.
The trillions in federal debt Trump is set to add as part of his fiscal stimulus plans and the possible risks of runaway inflation. The market’s initial Tuesday night terror about an apparent Trump's win quickly gave way to aggressive buying as traders realized the president-elect’s tax cut, infrastructure spending and military buildup plans amount to a huge, if unfunded, fiscal stimulus totaling roughly $12 trillion over the next decade, according to the Committee for a Responsible Federal Budget.
Will Obamacare be repealed? Replaced? Amended? We have lots of clues, but they all point in different directions
During the campaign, Trump also stated a preference for a “universal health care plan,” which was at odds with his own policy proposal. "I am going to take care of everybody," Trump told 60 Minutes in an interview last fall, during the primaries. "I don’t care if it costs me votes or not. Everybody’s going to be taken care of much better than they’re taken care of now."
The plan that Trump released this past March did not live up to that promise. Instead, the Committee for a Responsible Federal Budget estimated that it would cause 21 million people to lose insurance coverage.
Trump and congressional Republicans have said they are against further borrowing and growing the national debt, which is near $20 trillion ($14 trillion held by government entities)...In fact, the Committee for a Responsible Federal Budget estimate his economic policies will grow the national debt to $36 trillion by 2026, which will equate to 129 percent of GDP.
The US economy is at virtual full employment and the federal budget deficit is already rising. Indeed, the US Committee for a Responsible Federal Budget estimated in September that Trump’s plans for massive personal and corporate tax cuts plus more defence spending would push the US national debt to 105% of GDP by 2026, against 77% currently and 86% assumed for 2026 under current laws.
On top of heavy spending, Trump has promised massive tax cuts that would reduce revenue by $7 trillion in the first decade alone, according to the Tax Policy Center. The Committee for a Responsible Federal Budget estimates Trump's fiscal plans, especially the tax cuts, would cause the U.S. debt to soar to 143% of GDP by 2026, compared with 104% today.
The Committee for a Responsible Federal Budget, a bipartisan fiscal watchdog had estimated that under Hillary Clinton, the debt would reach 29 trillion in ten years against 39 trillion for Donald Trump.
President-Elect Trump's plans to reform corporate and personal taxes could, if pushed through a now-friendly Congress controlled by Republican lawmakers, provide a $9.5 trillion stimulus to the world's biggest economy over the next 10 years. However, the unprecedented fiscal expansion - about half of U.S. GDP - could also add more than $5.3 trillion to the country's already staggering $14 trillion in outstanding debt, according to the Committee for a Responsible Federal Budget.
Early in 2017, Mr. Trump and congressional leaders will have to make potentially unpopular decisions over how to fund the government, including raising the federal government's borrowing power, as the debt ceiling is expected to be reached by March. That will pit members of Congress against Mr. Trump's economic growth policies, which the Committee for a Responsible Federal Budget estimated would increase the national debt by $5 trillion, sending it from the current 77% of GDP to as high as 105%.
As structured now, Trump’s plans are set to double the national debt, per the Committee for a Responsible Federal Budget, at a cost of nearly $12 trillion over the next 10 years.
Ryan and House Republicans have spent the past six years enforcing strict budget caps aimed at holding down the federal debt. Republicans even took the government to the brink of default in a battle over raising the debt limit. "As we move from campaigning to governing, something will have to give since cutting taxes without major spending cuts will make our already unsustainable debt situation even worse," says Maya MacGuineas, president of the non-partisan Committee for a Responsible Federal Budget in Washington.
Some budget groups and organizations including the Committee for a Responsible Federal Budget and the nonpartisan Congressional Budget Office warn that it will take a comprehensive strategy of spending cuts, higher taxes and major reforms of Social Security, Medicare and other entitlements to slow the growth of the long-term debt.