Donald Trump and Hillary Clinton are like chalk and cheese in many respects. The biggest difference between the Republican and the Democrat is the way their proposals will affect the US fiscal trajectory in the light of debt, spending and taxes. One factor is common though: debt will be increased in both of them.
According to the Committee for a Responsible Federal Budget, a bipartisan organization, the proposals made by Trump will increase debt by a huge amount. The ostensible reason for such a conjecture is Trump’s proposal for one of the costliest tax plans in the world. It is estimated by the CRFB that money will be reduced by a staggering $10.5 trillion to be sent to federal treasury in the first decade. The Republican presidential nominee has also said his intention of increasing the government spending by approximately $650 billion. The money will go to enforcing tough immigration plans and to provide services for veterans.
Under the Trump plan, debt would increase by about $11.5 trillion with the first ten years. The total debt would be about 127 percent of economy, a rise from the projected 86 percent if the present laws continue to be applicable. If the Trump campaign is to be believed, the new president’s tax plans will generate sufficient growth in the economy to pay by itself. However, even in the CRFB makes the necessary allowances for probable growth, it can be surmised that the tax plan will result in deep tax revenue losses.
The proposals by Clinton, in contrast, will increase the debt by about $250 billion, making it 87 percent of the GDP at the end of decade. This would be near to where it is supposed to be in case there are no changes. The reason for this is that Clinton’s proposal envisages spending about $1.4 trillion more than current projections. This is applicable for everything from the college education to the infrastructure. It also includes other initiatives like paid family leave. Clinton has proposed to pay the new spending by increasing the taxes to the tune of $1.2 trillion. This will be imposed on businesses and the high income taxpayers.
Both Clinton and Trump have proposed many plans to tackle the debt and they have not discussed much about spending money on large entitlements, like Medicare- a key driver of burgeoning debt. Trump wold find it much harder than Clinton to achieve fiscal sustainability.