Under President Trump's plan, we estimate debt would grow rapidly over time. Under our central estimate, debt held by the public would rise from 102 percent of GDP at the beginning of FY 2026 to 142 percent of GDP by the end of 2035 - 17 percent of GDP above current law projections.
Under our low-cost estimate of the Trump plan, debt would grow to 128 percent of GDP through FY 2035 - 3 percent of GDP above current law - while under our high-cost estimate, debt would grow to 160 percent of GDP - 35 percent of GDP above current law.
Although our year-by-year estimates are less precise, we also estimate annual deficits would rise under President Trump's plan. Based on data from CBO, we project deficits will grow from 6.5 percent of GDP in FY 2025 to 7.0 percent of GDP in 2035 under current law. Under our central estimate of President Trump's plan, deficits would reach 9.6 percent of GDP in 2035, with a range of 7.6 to 12.1 percent of GDP in other scenarios - the highest levels reached outside of a
Things have surely gone to hell in a hand basket when you have no choice except to vote for a presidential candidate who is an incorrigible economic ignoramus; and especially when his obliviousness to the soaring public debt makes a mockery of the everything the GOP has stood for lo these many decades since FDR started America down the primrose path to fiscal catastrophe.
Yet, here is the Donald's latest expostulation of sheer humbug on the topic of how the nation's current inflationary mess materialized:
Well, no, Donald. You were the chief drunken sailor -- topping all your predecessors by a country mile. Spending grew by the staggering sum of $1.13 trillion in 2020 or by nearly 25%. Even in percentage terms that was far more than LBJ, Jimmy Carter or Barrack Obama.
For want of doubt, here is the annualized rate of Federal spending during Trump's final quarters and under Harris-Biden. The fact is, the Donald pushed up Federal spending from an annualized rate of about $4.8 trillion per year to nearly $9 trillion in Q2 2020. And then the UniParty Dems under Harris-Biden were pleased to keep it a couple of trillion per year below the Donald's peak level and call it a prudent movement toward "deficit reduction" with spending at $6.9 trillion in Q2 2024
Obviously, there was nothing prudent about it, but neither did spending like a "drunken sailor" breakout under Harris-Biden. The Donald took care of that well before November 2020, as is evident in the graph below.
And, no, "the COVID made him do it" excuse doesn't wash, either. Any president with a decent regard for constitutional liberty and property rights would have never, ever ordered the Lockdowns and unleashed the likes of Dr. Fauci and the Scarf Lady in response to a contagion that was not a mortal threat to 95% of the public.
Likewise, any GOP president with a decent regard for fiscal rectitude would never have told the public that "cash is on the way" after he unnecessarily caused a mass layoff of more than 21 million workers in the single month of April 2020.
As it happened, the $2.2 trillion CARES act passed in March 2020 and the $1.9 trillion Christmas Eve special in December 2020 authorized more combined new spending in a sight unseen/no accountability manner than the entirety of the budget for defense, social security, Medicare and interest on the national debt in 2019. That was free stuff on steroids and both bills bore the signature of Donald J. Trump.
Of course, the Donald has no shame, nor any regard for the actual facts. Still, applying the "drunken sailor" metaphor to his political opponents when he was the true culprit does truly give chutzpah a new definition.
Moreover, the Donald's affinity for reckless spending and borrowing was well underway long before the COVID struck in March 2020. Indeed, by the lights of GOP rhetoric there was never a more reckless spender than Barrack Obama, but when you compare average spending in constant 2023 dollars during Obama's second term with the Donald's spending bacchanalia, there is no contest.
The King of Debt wins the contest hands down, averaging 20% per year more than Barry did. Even when you omit 2020, the Trump spending level is 8% higher.
Inflation-Adjusted Average Federal Spending Per Year in 2023 $
And, as they used to say on late night TV, that's not all. When you compare the rate of spending growth in constant dollars going back to Carter, the Donald easily wins the modern spending derby and by a considerable length.
Per Annum Change in Real Federal Spending:
The same league table holds true for average annual deficits relative to GDP. The Donald wins the all-time Federal borrowing derby by a country mile, as well. His average deficit at 9% of GDP was nearly double that of Obama, including the huge Great Recession induced plunge of 2009; and was actually nearly four times the average going all the way back to Eisenhower.
Annual Average Deficit As % of GDP:
With respect to the Donald's above claim that there was "no inflation" on his watch, we stoutly differ as well. Inflation was running at low rates when he took office, but they headed steadily higher throughout his term until the COVID-Lockdown shock of March 2020 and after.
Since the overwhelming force behind inflation run rates is the monetary policies of the Fed and the global macro-context in which they are executed, comparisons of averages during the four years of a presidential term are of limited validity and value. Still, the fairest comparison in terms of underlying cyclical and global trends is between Obama's second term and the Donald's tenure through February 2020 when a whole new level of economic dislocation was introduced by the spenders, regulators and money-printings on the banks of the Potomac.
As it happened, inflation averaged 22% higher during the Donald's first 38 months than it did during Obama's second term. The 2.2% per annum average for Trump is hardly "no inflation" and doesn't compare well at all with Obama's 1.8% per annum average during 2013-2016.
Y/Y Change in 16% Trimmed Mean CPI, January 2013 to February 2020
Needless to say, the Donald has no plans to sober up if reelected. His proposed mix of tax cuts and spending increases would add $10 trillion to the public debt over the next decade, which would come on top of the $25 trillion already built-in to the baseline budget.
Even if you give credit for the estimated $2.7 trillion of new revenue his various tariff plans would generate, along with various spending cut plans which total $1 trillion over a decade, the net impact on the budget is $7.5 trillion of additional red ink. And that assumes that his 10% tariffs on all $3.5 trillion per year of US goods imports and 60% levy on goods from China do not touch off an inflationary firestorm that upends the economy and sends inflation-indexed spending for Social Security and other transfer payments skyrocketing higher.
Still, at best, the public debt would reach nearly $69 trillion by 2034 under the Donald's current fiscal plans, and probably a lot more if the economy buckles under the weight of a renewed breakout of US Treasury borrowing like, yes, a very, very Drunken Sailor.
Here is the detailed build-up of the King of Debt's current fiscal plan.
Former President Donald Trump's 2024 campaign has put forward a number of policy proposals to lower taxes, boost spending on national security, increase tariff revenue, lower health care and housing costs, limit and reverse illegal immigration, and cut regulations and spending.
President Trump's campaign website includes a 20-point platform, which then links to the 2024 GOP Platform: Make America Great Again!. Earlier in the campaign, President Trump posted several Agenda 47 videos and write-ups describing policy proposals (although those are no longer featured on his website), and he has made several policy announcements on the campaign trail.
In total, we find that enacting President Trump's plan would increase debt over the FY 2026 through 2035 period by a total of $7.50 trillion under our central estimate. Under our low-cost estimate, President Trump's plan would increase debt by $1.45 trillion, and it would increase debt by $15.15 trillion under our high-cost estimate.
Under President Trump's plan, we estimate debt would grow rapidly over time. Under our central estimate, debt held by the public would rise from 102 percent of GDP at the beginning of FY 2026 to 142 percent of GDP by the end of 2035 - 17 percent of GDP above current law projections.
Under our low-cost estimate of the Trump plan, debt would grow to 128 percent of GDP through FY 2035 - 3 percent of GDP above current law - while under our high-cost estimate, debt would grow to 160 percent of GDP - 35 percent of GDP above current law.
Although our year-by-year estimates are less precise, we also estimate annual deficits would rise under President Trump's plan. Based on data from CBO, we project deficits will grow from 6.5 percent of GDP in FY 2025 to 7.0 percent of GDP in 2035 under current law. Under our central estimate of President Trump's plan, deficits would reach 9.6 percent of GDP in 2035, with a range of 7.6 to 12.1 percent of GDP in other scenarios - the highest levels reached outside of a war or recession.
Our estimates focus on policy areas identified in the 2024 GOP platform or major policy announcements made after the release of the platform. Where the platform or announcements provide insufficient detail, we use information from the Agenda 47 posts, speeches, discussions with the campaign, past proposals (including from the Trump presidency), and other similar proposals to determine possible meaning. We have reached out to the Trump campaign, which provided some helpful feedback but did not affirm or deny our understanding of their overall plan. Our wide range of estimates reflects both possible estimating differences and different interpretations of the proposals themselves.
Former President Trump has called for a number of tax cuts and spending increases, both through the 2024 GOP platform, policy announcements in subsequent campaign speeches, and social media posts. Based on our best understanding of these proposals, we estimate they would add $6.80 trillion to $15.65 trillion to primary deficits from FY 2026 through 2035, with a central estimate of $10.20 trillion.
Large parts of the 2017 TCJA - including lower rates, a larger Child Tax Credit and standard deduction, a smaller estate tax, and numerous limits on deductions and exemptions - are scheduled to expire at the end of 2025. President Trump has proposed to "Make [the] Trump Tax Cuts Permanent," and has clarified on social media and in public events that this would not include extending the $10,000 State and Local Taxes (SALT) deduction cap. President Trump has also proposed restoring full expensing (bonus depreciation) for investments in equipment as well as research and experimentation "solely for companies that make their product in America." We estimate these changes would increase deficits by a combined $5.35 trillion over ten years in our central estimate, with $5.10 trillion coming from extending all expiring individual and estate tax provisions besides the SALT cap and $250 billion from one possible structure for restoring expensing for equipment and research for domestic producers only. Our $4.60 trillion low-cost estimate assumes faster economic growth would reduce revenue loss through dynamic feedback, while our $5.95 trillion high-cost estimate assumes the extension of corporate tax provisions would apply to virtually all corporations and would also include loosening the recently-tightened limit on corporate interest deductibility.
Those who work more than 40 hours per week at a single job are often eligible for overtime pay, where their wage increases to 150 percent of its normal rate. President Trump has proposed exempting overtime pay from federal income and payroll taxes. The Trump campaign has communicated to us that policy guardrails would help limit fraud, discourage pay re-arrangements to take advantage of the tax break, and generally ensure this tax break primarily benefits those it is intended for. However, the campaign did not specify how those guardrails would be structured. In a recent analysis, we estimated ending all taxes on overtime pay would reduce revenue by $1.70 trillion from FY 2026 through 2035 on a static basis and by $6.00 trillion in the extreme case that all workers switch to hourly pay to take advantage of the tax break. We also modeled several potential guardrails that would limit the tax cut based on occupation, income, and hours worked. Our low-cost estimate of $500 billion assumes the tax cut would be limited to 10 hours of overtime per month - similar to the laws in Austria and Belgium - and that the revenue loss would be halfway between the static and extreme behavioral estimates (assuming TCJA extension). Our high-cost estimate of $3.00 trillion assumes the tax cut is available to anyone eligible for overtime pay under the Fair Labor Standards Act. Our central estimate of $2.00 trillion assumes policymakers institute an income limit of $150,000 based on current rules for exemptions regarding highly compensated employees. This also represents the rough mid-point between a 'no guardrails' scenario and the strictest guardrail we modeled. These estimates are particularly uncertain.
Under current law, 50 to 85 percent of Social Security benefits are subject to the income tax for seniors making over $25,000 ($32,000 for couples), and that revenue is used to help support the Social Security and Medicare Hospital Insurance trust funds. President Trump has proposed eliminating taxation of these benefits, which we estimate would reduce revenue by $1.30 trillion over ten years, assuming full extension of the TCJA. Our high-cost estimate of $1.45 trillion is based on underlying data from the Social Security and Medicare Trustees (as opposed to CBO), and our low-cost estimate of $1.20 trillion relies on an estimate that incorporates dynamic feedback.
Corporations currently pay a 21 percent tax on their net profits, down from 35 percent (taxed on a narrower base) prior to the enactment of the 2017 TCJA. President Trump has called for further reducing the corporate tax rate from 21 percent to 15 percent, but only for "companies that make their product in America" and not for companies that "outsource, offshore, or replace American workers." While the campaign has not clarified how this policy would be designed in practice, one option would be to reintroduce the domestic production activity deduction (199), which was repealed in 2017, at a level that would lower the effective corporate income tax rate to 15 percent for domestic manufacturers. We estimate this policy would reduce revenue by about $200 billion over a decade. Our low-cost estimate of $150 billion incorporates potential dynamic feedback, while our high-cost estimate of $600 billion assumes the 15 percent corporate rate applies much more broadly.
While tipped income is currently treated as wage income for tax purposes, President Trump has called for removing taxes on tips, and the GOP platform declares "we will eliminate Taxes on Tips for millions of Restaurant and Hospitality Workers." Assuming this exemption applies to income and payroll taxes but has guardrails to prevent extreme abuse, we estimate this policy would reduce revenue by $300 billion over ten years. Actual revenue loss could be much higher to the extent it leads to increasing amounts of income being reclassified as tips. Our high-cost estimate of $550 billion assumes large behavioral effects and substantial abuse. Our low-cost estimate of $100 billion assumes the policy applies to income taxes only with little abuse and strong guardrails.
The 2024 GOP platform states that "Republicans will ensure our Military is the most modern, lethal, and powerful Force in the World." It also promises to increase soldier pay and build an "Iron Dome Missile Defense Shield," which President Trump has mentioned several times on the campaign trail. It is difficult to quantify the spending required to achieve these goals, but President Trump's rhetoric suggests it would be above projected current law defense spending. In the past, President Trump has called for other NATO countries to spend at least 4 percent of GDP on defense, and several Trump allies have called for similar levels of U.S. military spending - which would cost $2.45 trillion if the increase was phased in over four years and indexed to inflation thereafter, as assumed in our high-cost estimate. Our low-cost estimate assumes that President Trump is able to modernize the military and increase soldier pay within the current projected defense budget but would spend roughly $100 billion more to help build a U.S. missile defense system. Our central estimate of $400 billion assumes President Trump would hold defense spending at about 3.2 percent of GDP over his four-year term, matching the percentage proposed for defense spending in the first year of his final FY 2021 budget.
President Trump has, in speeches and the 2024 GOP platform, called for the "largest deportation program in American history." The platform also proposes improving border security (including finishing the border wall), strengthening Immigration & Customs Enforcement, increasing penalties for illegal entry and overstaying visas, reinstating "remain in Mexico" and similar policies, cutting funding to sanctuary cities, ending taxpayer benefits for unauthorized immigrants, and increasing travel restrictions, among other policies to reduce illegal immigration. While many of these policies would have offsetting budgetary effects, the result of deporting large numbers of immigrants would almost certainly be to increase federal deficits - chiefly by reducing the number of people paying federal taxes. Our central estimate assumes President Trump would effectively reverse half of the recent and projected immigration surge - reducing the projected size of the U.S. population by almost 4.4 million people - and as a result increase deficits by $350 billion over ten years on a conventional basis, based on CBO figures. Our high-cost estimate of $1.00 trillion assumes a full (effective) reversal of the recent immigration surge and accounts for additional economic effects of immigration. Our low-cost estimate effectively ignores any population effects of these immigration policies, as under strict static scoring, and assumes all other changes are offsetting.
The 2024 GOP platform calls for making housing more affordable and promoting homeownership through tax incentives, such as a tax credit for first-time homebuyers. While the Trump campaign has not provided specifics on these tax credits, one option would be to revive the $8,000 first-time homebuyer tax credit that was in effect in 2009 and 2010. Our central estimate of $150 billion over ten years assumes that credit would be over $10,000 to account for inflation since 2010. Our low-cost estimate assumes the credit is revived at its nominal 2010 level of $8,000, while our high-cost estimate assumes President Trump embraces a permanent $25,000 first-time homebuyer credit similar to the one proposed by Vice President Harris.
The 2024 GOP platform calls for improvements to chronic disease management, long-term care, access to primary care, and at-home senior care - including through a tax credit for unpaid family caregivers. More recently, President Trump has promised that "under the Trump administration, your government will pay for, or your insurance company will be mandated to pay for, all costs associated with IVF treatment...we will also allow new parents to deduct major newborn expenses from their taxes." Although the Trump campaign has not provided specific details regarding many of these policies, support for long-term care could resemble the bipartisan Credit for Caring Act - which would offer a tax credit of up to $3,000 for family caregiving expenses - or could resemble recent proposals to expand Medicaid home- and community-based services funding. We estimate the combination of an In-Vitro Fertilization (IVF) coverage mandate (with coverage in Medicaid), tax deductibility of newborn health care costs, and plausible investments in other areas could reasonably cost about $150 billion over a decade. Our low-cost estimate of $50 billion assumes only the IVF mandate and newborn deduction, while our high-cost estimate of $300 billion assumes IVF costs are fully covered by the federal government and other investments are somewhat larger.
President Trump has called for several spending reductions and revenue increases through the 2024 GOP platform, subsequent campaign speeches, and other campaign material. Based on our best understanding of these proposals, we estimate they would reduce primary deficits by $2.55 to $5.50 trillion from FY 2026 through 2035, with a central estimate of $3.70 trillion.
President Trump has made increasing tariffs on imports a central part of his campaign plan. The 2024 GOP platform calls for "rebalancing Trade, securing Strategic Independence, and revitalizing Manufacturing," including by increasing import tariffs and punishing unfair trade practices. President Trump has specifically called for a "universal baseline tariff on most imported goods,", reciprocal tariffs on countries that impose tariffs on American goods, and a 60 percent tariff on all Chinese imports. President Trump has generally said his baseline tariff would be set at 10 percent but has sometimes said 20 percent. We estimate these tariffs would raise $2.70 trillion over a decade in our central estimate, with $2.50 trillion from a 10 percent universal baseline tariff. Our low-cost estimate of $4.30 trillion assumes a 20 percent baseline tariff. While our central and low-cost estimates do not incorporate macrodynamic effects of tariffs on the overall economy, they do account for changes in trade behavior. Our high-cost estimate of $2.00 trillion also incorporates revenue loss from potential dynamic effects - the Tax Foundation estimates the 10 percent universal tariff and 60 percent Chinese import tariff would reduce GDP by roughly 1.2 percent. Importantly, such a significant change to trade policy could have economic and geopolitical repercussions that go beyond what a standard tax model would estimate. Due to the novelty of this policy, the true economic impact is hard to predict.
The 2024 GOP platform calls for "Unleashing American Energy," including by "terminating the Socialist Green New Deal," expanding domestic energy production, and canceling various regulations (including "the electric vehicle mandate"). President Trump has also said he would rescind any unspent funding from the Inflation Reduction Act (IRA). Based on these proposals, we assume President Trump would end the energy-related tax credits and spending under the IRA and repeal the Biden Administration's vehicle emissions rule. In an Agenda 47 post, President Trump promises to "DRILL, BABY, DRILL" and to "free up the vast stores of liquid gold on America's public land for energy development." We estimate these changes would save $700 billion over ten years in our central estimate, which assumes IRA credit repeals similar to those in the Limit, Save, Grow Act. Our low-cost estimate of $750 billion in savings assumes a somewhat more aggressive repeal, whereas our high-cost estimate of $550 billion assumes President Trump only repeals IRA credits related to energy and electricity production, electric vehicles, IRA spending provisions, and the vehicle emissions rule.
O n his campaign website, President Trump promises to "cut waste, fraud, and abuse everywhere that we can find it," while the 2024 GOP platform includes a commitment to "reining in wasteful spending." President Trump has also called for establishing a "Government Efficiency Commission" to identify this waste. In addition to improper payments made throughout government, there is arguably a huge amount of waste in the federal budget, particularly when it comes to overpayments in Medicare, Medicaid financing schemes, inefficiencies in the defense budget, and waste in the tax code. However, the Trump campaign has not identified specific policy changes to cut waste, fraud, and abuse. For purposes of our estimate, we turned to proposals put forward in President Trump's previous budgets. His FY 2020 budget included a number of ideas for reducing fraud and abuse and targeting various benefits toward their intended beneficiaries - including more frequent Medicaid eligibility redeterminations, restrictions to categorical eligibility for nutrition benefits, and more information reporting and sharing across numerous programs. Our central estimate assumes he would implement these proposals, saving roughly $100 billion over ten years. Our low-cost estimate of $250 billion assumes an additional $150 billion in savings based on a placeholder estimate for reducing improper payments government-wide from President Trump's FY 2019 budget, while our high-cost estimate assumes no savings due to lack of detail. It is possible the Government Efficiency Commission could identify billions or trillions of additional dollars of savings, but these cannot be estimated until they are presented.
The 2024 GOP platform proposes a number of education reforms, and includes calls to support universal school choice and close the U.S. Department of Education. Although the Department of Education will spend almost $60 billion from its discretionary budget in FY 2024 (excluding Pell Grants), we assume that closing the department would mean diverting most of that money to be spent by states or other agencies, especially for school choice vouchers to allow Americans to send their kids to public or private schools. One analysis from the Heritage Foundation suggests that ending the Department of Education could save about $200 billon over a decade, assuming Title I and other funding streams were retained in another form. Our central and low-cost estimates assume all $200 billion of savings, while our high-cost estimate assumes these savings are recycled into school vouchers or otherwise diverted to support elements of the education plan.
Assuming all policies are implemented beginning in 2026, President Trump's campaign plan would increase deficits through FY 2035 under all three of our estimate scenarios. Higher deficits would result in higher interest payments. Under our central estimate, President Trump's plan would increase interest costs by $1.00 trillion from FY 2026 through 2035. Under our low-cost estimate, ten-year interest costs would increase by $150 billion, and they would increase by $2.05 trillion under our high-cost estimate. These estimates do not account for any effect President Trump's plans might have on interest rates.
Whoever wins the 2024 presidential election will face an unprecedented fiscal situation upon taking office. The national debt is projected to reach a new record high as a share of the economy only three years from now, well within the next presidential term. Already, the cost of servicing our high and rising national debt has eclipsed the cost of defending our nation or providing health care to elderly Americans. Three important trust fund programs are on track to become insolvent within the next 12 years, putting Americans' retirement and health care at risk and limiting our ability to continue to update our aging infrastructure.
In the first year of their term, the next President will also face the return of the debt limit, the expiration of the Fiscal Responsibility Act spending caps, and the expiration of several tax and spending provisions that would prove extremely costly to extend.
All these factors raise the stakes of the upcoming presidential election. America desperately needs a leader with the wisdom and courage to make correcting our unsustainable fiscal trajectory a major priority.
Yet, both the Republican and Democratic candidates for President have put forward campaign plans that would, at best, maintain the status quo and, at worst, add tremendously to our debt and deficits. Neither has a plan to fix the imbalances in the major trust funds.
Vice President Kamala Harris has put forward a campaign plan that, if implemented, could add $3.50 trillion to our national debt, sending it to 133 percent of GDP by the end of FY 2035. Meanwhile, former President Donald Trump has put forward a campaign plan that could add $7.50 trillion to the debt, sending it to 142 percent of GDP by the end of 2035.
While it's plausible that the Harris plan could be roughly budget neutral, it is also plausible that her plan could add $8.10 trillion to the debt. The Trump plan could add $1.45 trillion to the debt but could also add as much as $15.15 trillion.
Even in the best case scenario, neither candidate's plan would be sufficient to put debt on a downward path and point America toward a more secure and sustainable fiscal future. Simply not adding more to the debt is no longer sufficient. Going forward, policymakers should make significant deficit reduction a major focus and priority, especially the Commander in Chief.
Editor's Note: The amount of money the US government spends on foreign aid, wars, the so-called intelligence community, and other aspects of foreign policy is enormous and ever-growing.
It's an established trend in motion that is accelerating, and now approaching a breaking point. It could cause the most significant disaster since the 1930s.
Most people won't be prepared for what's coming. That's precisely why bestselling author Doug Casey and his team just released an urgent video with all the details. Click here to watch it now.