Home stretch to elect the next tenant of the White House and the economic programs of Donald Trump (Republican Party) like that of Kamala Harris (Democratic Party) tiptoed throughout the campaign. Indeed, the two projects suggest a deterioration of the country’s public accounts but, according to the Budget Model panel of the Penn Wharton Business School, at the University of Pennsylvania, Donald Trump’s economic program would increase the primary budget deficit (which includes debt payments). up to 5.8 trillion dollars (5.3 trillion euros) in a decade.
The U.S. deficit closed 2023 at 7.1% of GDP and forecasts suggest it will reach 7.6% this year. In fact, the International Monetary Fund recently warned about the debt problem facing the world. Something the United States is no stranger to, although it wasn’t even mentioned during the campaign.
“The US budget deficit will be reduced only slightly and will remain around 6.1% in 2029, and about half of this deficit will reflect interest rate spending. With current policies, the United States public debt will not stabilize and will reach almost 134%. % of GDP in 2029,” says the organization.
Trump’s economic plan proposes another second round of tax cuts, as well as a permanent extension of the Tax Cuts and Jobs Act of 2017 (TCJA). It’s a tax break for businesses and citizens that the Committee for a Responsible Federal Budget, a nonprofit dedicated to analyzing candidates’ proposals, says “would be a costly mistake.” , or 1.2 trillion dollars in a decade.
To this must be added taxes on social security benefits and the reduction in the corporate rate (the equivalent of our corporate tax) from 21% to 15%.
“Permanently extending the expiring personal income tax provisions of the TCJA would add 3.4 trillion dollars in deficits (before interest charges) for the next ten years. Reinstating the TCJA’s original business investment tax regime adds an additional $623 billion, bringing the total cost of the TCJA expansion to more than $4 trillion,” Penn experts said Wharton.
As he assured during the campaign, Trump intends to finance this enormous tax cut with a universal tariff of 10%. That is, taxing any goods coming from anywhere in the world, which would be in addition to new customs duties on Chinese products above the 60% already imposed by the Joe Biden administration, including also those of 100% for electric vehicles.
ING economists James Kinghtley, Dimitri Dolgin and Padhrai Garvey also agree with Pnn Wharton. They said in a memo that the extension of the 2017 tax cuts ($4 trillion alone), as well as additional tax cuts offset by revenue from tariffs, will lead to higher deficits by approximately $5.5 trillion compared to the Congressional Budget Office (CBO) baseline scenario. .”
Garett Watson, senior policy analyst and head of modeling at the Tax Foundation, told elEconomista.es Currently in the United States, it is possible to reduce taxes, but doing so “would require broadening the tax base by eliminating individual and business tax deductions, credits, and other expenses that deviate from an efficient and growth-friendly tax base.”
Harris will increase ‘red numbers’ to less than half of Republican’s
Far from resolving the pressing problem of the gloomy fiscal future that the country will face by 2030, it seems that the candidates want to exacerbate it since, although to a lesser extent, Harris’ economic program would also involve an increase in the public deficit of 2.1%, less than half that of the Republican, but it would still be worrying.
Building on Joe Biden’s 2025 budget, the Democrat seeks to introduce tax benefits for middle- and low-income households within the American tax system. At the same time, it is studying the possibility of subsidizing the acquisition of the first home. Of course, to pay for all of this I would use a corporate tax increase from 21% to 28%.
Among the measures proposed to families, we find the expansion of the tax credit per child, from $1,700 set in 2024 (with a forecast that it would fall to $1,000 in 2026) to $3,600 per child of five years or younger and $3,000 for those over 5 years old. five years to 17 years. Additionally, families with newborns would receive a $2,400 credit during the first year of life. So the maximum value would be $6,000 total.
For those buying their first home, Harris offers a $25,000 down payment grant.
“The tax credit expansions proposed by the Harris campaign would cost more than $2.1 trillion over the next ten years. Down payment assistance for first-time homes would add another $140 billion, which , we estimate, would help 1.4 million homebuyers per year Raising the corporate tax rate to 28 percent would generate about $1.1 trillion in new revenue, offsetting just under half of the. cost of housing,” they tell Penn Wharton.
Bloomberg warns that each delay in the solution “makes stabilization more difficult” and that makes it more likely that financial markets will “question the government’s solvency.”
