Please see the below daily update article from EPIC Investment Partners received this morning 08/10/2024:
A recent report by the non-partisan Committee for a Responsible Federal Budget (CRFB) indicates that Donald Trump’s economic proposals would more than double the increase in US debt compared to Kamala Harris’s plans. Both presidential candidates have put forward new tax and spending initiatives aimed at attracting voters. However, budget analysts are struggling to keep up with these rapidly evolving proposals, and further details may emerge before the November 5th election. According to CRFB estimates, Trump’s plans could raise the national debt by USD 7.5tn by 2035, compared to a USD 3.2tn rise under Harris.
Trump’s proposals include sweeping tax cuts for individuals and businesses, higher tariffs on imports, increased military spending, and the deportation of millions of immigrants, all of which are expected to greatly inflate the national debt. Harris’s approach, on the other hand, focuses on expanding tax credits for small businesses and families, paired with higher corporate taxes.
A key distinction between the two candidates is their stance on the 2025 expiration of Trump’s individual tax cuts. Trump has vowed to make these cuts permanent, including for high earners, which could reduce federal revenues by USD 3.3tn to USD 4tn over ten years. Harris would extend the 2017 cuts only for those earning less than USD 400,000, potentially adding USD 2.5tn (from the currently estimated USD 2tn) to the deficit over a decade, according to the CRFB report.
Trump has suggested using tariffs and economic growth to mitigate some of the debt increase, but we remain doubtful. His proposed 10% global tariff and 60% tariff on Chinese imports could generate up to USD 3.8tn over a decade, but these tariffs would harm the economy and fail to fully offset the debt increase.
Harris’s platform includes revenue-raising measures, such as lifting the corporate tax rate to 28%, to help finance her plans. Overall, her approach is viewed as more fiscally responsible than Trump’s, although both candidates’ policies are expected to contribute to significant rising national debt in the long term.
The CRFB report, published just weeks ahead of the election, underscores the substantial fiscal challenges awaiting the next president. The Committee cautions that national debt could climb to as high as 133% under Harris, while Trump’s plans could push it to a substantial 142%, by 2035.
The CRFB warns that: “Our large and growing national debt threatens to slow economic growth, boost interest rates and payments, weaken national security, constrain policy choices, and increase the risk of an eventual fiscal crisis.”
Please continue to check our blog content for advice, planning issues and the latest investment, market and economic updates from leading investment houses.
Charlotte Clarke
08/10/2024