Economists are sounding the alarm over the economic proposals put forward by former President Donald Trump and Vice President Kamala Harris, warning that their plans would continue to inflate the nation’s already massive budget deficit. Despite the rising concern, neither candidate appears to prioritize fiscal responsibility, leaving many experts questioning their long-term strategies.
Both Trump and Harris have yet to release concrete policy plans specifically targeting the growing deficit. Trump’s 16-point plan, found on his website, only mentions the deficit in passing. On the other hand, Harris’ economic platform references the deficit several times, claiming she is “committed” to addressing it, but primarily proposes increasing taxes on the wealthy and corporations as a solution.
“I think the reason neither candidate is really talking about fiscal responsibility is because neither candidate is fiscally responsible,” said Erica York, senior economist at the Tax Foundation. “Both have left a lot of details unspecified, so there’s questions still about how Harris’s spending policies would stack up. Would Trump really repeal all of the green energy tax credits? Would he really impose all of the tariffs he’s promised?”
York went on to say that the candidates need to “get real” about the deficit, emphasizing that neither has offered a comprehensive approach to the fiscal challenges facing the U.S.
“We face several challenges on the fiscal policy front, from debt and deficits to the need to compete with China, to the need to encourage entrepreneurship and work, and neither of the tax policy visions being outlined right now really come close to providing an answer to those challenges,” she added.
Economists like Kimberly Clausing from the Peterson Institute for International Economics agree, expressing frustration at the lack of focus on the deficit during this campaign season. Clausing suggested that the candidates might be catering to what voters want to hear, rather than addressing the pressing issue of fiscal responsibility.
“I don’t know whether to blame the candidates or the American attention span,” Clausing noted. “Candidates have an incentive to cater to what the population wants to listen to, but there doesn’t seem to be a big drumbeat in favor of fiscal responsibility.”
So far, the government is running a $1.9 trillion deficit for fiscal year 2024, according to the Bipartisan Policy Center’s “Deficit Tracker.” While revenues have increased by 11%, primarily due to higher individual and corporate taxes and rising interest rates, Trump’s economic proposals, including extending tax cuts and reducing the corporate tax rate, are not expected to compensate for the revenue losses they would create.
Research from the Tax Foundation estimates that Trump’s plan could increase the deficit by roughly $4 trillion over the next decade.
However, Richard Stern, an economist with the Heritage Foundation, argues that government spending, not tax cuts, is the primary driver of the deficit. “Though tax cuts can increase the deficit, it returns that money to the people that earned it. Deficit increases from more spending, on the other hand, means that the government is stealing even more and suppressing growth even more intensely,” Stern explained.
Stern further emphasized that not all deficits are created equal, suggesting that tax cuts, by growing the economy, could reduce deficits as a share of the economy, whereas more spending stifles economic growth.
The Biden-Harris administration’s fiscal year 2024 budget has also come under scrutiny for proposing the highest sustained levels of spending in U.S. history. According to Republicans on the House Budget Committee, the administration’s plan to add $82.2 trillion in spending over the next decade is 18% higher than the historical average of the last 50 years.
Harris, now the Democratic nominee for president, has advocated for policies like $25,000 housing subsidies for first-generation homebuyers, $100 billion in tax credits for the manufacturing sector, and an expansion of small business tax credits. She has also proposed increased government spending to support child care and expand the child tax credit.
The Tax Foundation estimates that Harris’ proposals would increase the deficit by about $1.5 trillion over ten years.
Clausing warned that the growing deficit could have serious consequences, such as higher interest rates and reduced creditworthiness for the country, especially in times of global uncertainty. “If a new crisis comes along, whether it’s a pandemic or a national security crisis or a big recession, those kinds of crises are really difficult to respond to without fiscal space,” she said. “If you’re starting from a point where you’re kind of maxing out the credit card, it’s a little harder to respond to these emergencies.”
As the U.S. grapples with its financial future, both candidates are facing mounting criticism for their lack of concrete solutions to the ballooning deficit. While Trump’s camp has stayed relatively quiet on the issue, Harris’ campaign has drawn endorsements from over 400 left-leaning economists and policymakers, who believe her platform offers a better chance at balancing the national budget than Trump’s.
Despite these endorsements, the question remains: will either candidate rise to the challenge of addressing the deficit head-on?
