WASHINGTON—The U.S. government and the Federal Reserve this spring implemented unprecedented monetary and fiscal stimulus to address the economic fallout from the pandemic. The federal government is expected to pass more stimulus after the election as both President Donald Trump and presidential candidate Joe Biden have proposed additional actions to respond to the health and economic crises.
A new paper by the Committee for a Responsible Budget shows the sharp contrast between the costs of proposals from Trump and his Democratic opponent Biden.
Trump proposes additional spending and tax relief to address the pandemic and its economic effects. Trump’s proposal would cost between $530 billion and $870 billion, with a central estimate of $650 billion, according to the paper.
Meanwhile, Biden’s proposal to address COVID-19 requires additional spending of $2 trillion to $4.2 trillion, with a central estimate of $3.1 trillion, nearly five times more than the cost of Trump’s plan.
The analysis is based on “proposals specifically put forward by the candidates” and doesn’t include the amounts expressed in recent negotiations between Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi (D-Calif.). It also doesn’t include the original $3.4 trillion HEROES Act passed by House Democrats and backed by Biden.
The paper focuses only on the proposals made on the campaign websites, social media, or by candidates themselves.
Accordingly, the paper identifies five specific policy proposals in Trump’s COVID-19 response plan. These include efforts to combat the virus, forgiving deferred payroll taxes, providing a second check for individuals and families, extending Paycheck Protection Program (PPP) to small businesses, and providing additional payroll support to airlines.
Similar to the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) passed in March, direct payment of $1,200 to every American, with an extra $500 per dependent child, would cost $300 billion, according to the paper, making up about half of Trump’s COVID-19 response plan.
Forgiving deferred payroll taxes would cost about $140 billion based on Joint Committee on Taxation estimates. In August, Trump took executive action allowing employers to defer the withholding of payroll taxes for employees and also instructed the Treasury secretary to explore avenues to forgive any deferred taxes.
Another big-ticket item in Trump’s plan is to provide additional PPP loans, which would cost $135 billion.
Including interest costs, Trump’s plan would add nearly $700 billion to the nation’s debt by 2030 under the central estimate, according to the paper.
In contrast, Biden’s plan, which mostly mirrors proposals made by House Democrats, would add nearly $3.3 trillion to the nation’s debt by 2030.
The paper lists 15 policy proposals backed by Biden as part of his COVID-19 response plan, which includes extending expanded unemployment insurance ($600 per week), providing funding to state and local governments, issuing a second round of checks, supporting small businesses, offering $10,000 of student loan forgiveness, and expanding the child tax credit.
Under the central estimate, extending the supplemental unemployment insurance would cost $600 billion.
The additional $600 a week that unemployed Americans had received as part of the $2.2 trillion CARES Act expired in July. Republicans opposed extending the $600 benefit due to fears that it would discourage people from returning to work.
Other big-ticket items in Biden’s plan include providing $435 billion to state and local governments, $375 billion for a second round of checks, and $370 billion for the so-called restart package to support small businesses.
COVID-19 response measures proposed by both Trump and Biden would mostly be temporary and are designed to address the current crisis, however, they have a significant impact on the budget. During this election cycle, the presidential candidates didn’t explain how they would address the nation’s debt load.
“It is indeed troubling that none of our political leaders are addressing the issue head-on,” Maya MacGuineas, president of the Committee for a Responsible Federal Budget, told The Epoch Times.
“It is not the time to make changes to our debt trajectory—other than possibly enlarge it to fight the pandemic and recession; but it is certainly the time to set the stage for the fact that those changes will have to be made once the economy is strong enough,” she said in an email.
The recent Monthly Treasury Statement released by the Department of Treasury for fiscal year 2020 showed a record total deficit of $3.1 trillion and a debt of $21.0 trillion, which is roughly 102 percent of the economy.
“Over the past year, debt has grown from about 80 percent of economic output to roughly the size of the economy,” the paper stated.
“Under the candidates’ full proposals, debt could rise further, to 127 percent of GDP under Trump or 137 percent under Biden” by 2030.
Correction: A previous version of this article misstated the cost difference between Democratic presidential candidate Joe Biden’s and President Donald Trump’s plans. The Epoch Times regrets the error.