Analyzing the Fiscal Impact of Harris and Trump Campaign Plans

In the ever-evolving landscape of U.S. politics, economic policy remains a pivotal aspect of candidates’ platforms. Recent analyses, particularly from the Committee for a Responsible Federal Budget (CRFB), have scrutinized the fiscal implications of campaign proposals from Vice President Kamala Harris and former President Donald Trump. The findings illuminate a common thread: both plans are predicted to expand budget deficits and accelerate national debt growth, surpassing what is projected under current law.

Overview of Fiscal Proposals

The campaign fiscal plans from both candidates delineate contrasting approaches to federal spending and revenue generation. Vice President Harris is expected to maintain revenue levels in line with current projections while significantly ramping up federal spending. In contrast, former President Trump’s agenda anticipates a reduction in revenues while keeping primary (non-interest) spending aligned with current expectations. Each approach has critical implications for national fiscal health.

Spending Projections

According to CRFB estimates, primary spending under Harris’s plan is forecasted to rise to 21.8% of Gross Domestic Product (GDP) by Fiscal Year (FY) 2035, surpassing the current law estimate of 20.9%. Total spending is projected to escalate from 25.1% to 26.2% of GDP. This increase can primarily be attributed to new spending proposals, including tax credit expansions that are integral to her platform.

On the other hand, Trump’s plan is projected to maintain primary spending at approximately 21.0% of GDP, while total spending could rise to 25.7%, slightly higher than the current law trajectory. His proposed shifts aim to increase some spending while offsetting costs in other areas, suggesting a careful balancing act intended to alleviate the fiscal burden without significant net increases in overall spending.

Revenue Forecasts

Turning to the revenue side, projections under current law anticipate a gradual increase, with revenue rising from 17.0% of GDP in FY 2025 to 18.0% by 2035. This increase is principally driven by the expiration of portions of the 2017 Tax Cuts and Jobs Act (TCJA). Harris’s fiscal strategy would keep revenues close to this trajectory, reaching approximately 18.1% of GDP by FY 2035. Her proposed tax increases would predominantly support extensions of the TCJA for households earning less than $400,000, combined with a few targeted tax cuts.

Conversely, Trump’s proposal foresees revenue plummeting to 16.1% of GDP. This decrease stems from his plans to extend and modify the TCJA and introduce additional substantial tax cuts without sufficient provisions to compensate for the lost revenue through increased tariffs or eliminated tax incentives. This significant drop in projected revenues could exacerbate the country’s fiscal challenges, sinking below the historical revenue average of 17.3% during 1974-2023.

Examining the Deficit and Debt Implications

Both candidates’ proposals are expected to widen the federal budget deficit, with Harris’s approach primarily achieved through increased spending and Trump’s via reduced revenue. While deficits would rise to 7.0% of GDP by FY 2035 under current law, they are projected to reach 8.1% for Harris and 9.6% for Trump. Such figures translate to unprecedented deficit levels outside of extreme circumstances like war, pandemic, or recession.

Concomitantly, national debt levels are projected to soar, with Harris’s plan pushing the debt to 133% of GDP and Trump’s to a staggering 142% by 2035. These projections indicate that both plans would substantially exacerbate the country’s existing fiscal woes, leading to a precarious debt landscape unless actionable restraint measures are taken.

Historical Context

When juxtaposed against the historical average fiscal metrics, both candidates’ plans represent a significant departure from established norms. The average primary spending from 1974 to 2023 stands at roughly 19%, while both proposed plans would see this figure increase well above this baseline. Similarly, total spending and deficits would also surpass historical averages, suggesting a trend towards more substantial governmental reliance on borrowing.

Conclusion

In conclusion, the fiscal analyses of Kamala Harris and Donald Trump’s campaign plans spotlight a crucial crossroads for U.S. economic policy. With both proposals likely leading to increased deficits and soaring national debt, their implications warrant robust debate and thorough public discourse. As the electoral processes unfold, understanding these fiscal ramifications will be essential for voters aiming to make informed decisions that shape the nation’s economic future.

For further insights and ongoing analyses throughout the electoral cycle, visit US Budget Watch 2024. This nonpartisan initiative aims to provide transparent and objective evaluations of presidential proposals, ensuring that fiscal accountability remains at the forefront of political discussions.