National Debt to Swell Under Either Trump Tax Cut or Biden Tax Increase: Report

October 7, 2020 Updated: October 8, 2020

A review of the respective campaign plans of President Donald Trump and Democratic nominee Joe Biden found that, over the next 10 years, both sets of policies would likely lead to the national debt swelling by around $5 trillion.

Biden would get there while raising $4.3 trillion in taxes, while Trump would cutting them by $1.7 trillion, according to a report from a budget policy watchdog.

The Committee for a Responsible Federal Budget (CRFB), a nonpartisan think tank founded by former Democratic and Republican lawmakers, issued a report on Oct. 7, featuring three ranges of estimates for the impacts of Trump and Biden agendas—low-cost, central, and high-cost.

“Under our central estimate, we find President Donald Trump’s campaign plan would increase the debt by $4.95 trillion over ten years and former Vice President Biden’s plan would increase the debt by $5.60 trillion. Debt would rise from 98 percent of Gross Domestic Product (GDP) today to 125 percent by 2030 under President Trump and 128 percent under Vice President Biden,” the committee wrote.

“Based on our low-cost and high-cost estimates, Trump’s plan could increase the debt by between $700 billion and $6.85 trillion through 2030, while Biden’s plan could reduce debt by as much as $150 billion or increase it by as much as $8.30 trillion,” they added.

While both candidates’ tax plans would lead to an increase in interest costs on debt held by the American public—growing by $300 billion under Biden and $250 billion under Trump—the difference between tax intake is stark. Biden would raise $4.3 trillion in taxes, while Trump would cut taxes by $1.7 trillion.

Biden’s tax raise would be accompanied by lower spending by $750 billion on defense and immigration, and higher spending in other areas, the report states. The former vice president would spend an additional $2.7 trillion on child care and education, $2.05 trillion on health care, $1.15 trillion on Social Security and retirement, and $4.45 trillion on infrastructure, environment, and other domestic allocations.

Trump, while lowering taxes, would increase spending on child care and education by $150 billion, security and immigration enforcement by $300 billion, and infrastructure and other domestic allocations by $2.7 trillion, leaving Social Security and retirement spending unchanged, and cutting federal health spending by $150 billion.

The estimates are put forward with the caveat that, “in both cases, considerable policy ambiguity exists,” with the report noting that the Trump campaign’s policy points and platinum plan (pdf) are “relatively vague,” while Biden’s over 800 proposals across 48 different plans contain overlap.

Trump’s tax cut estimates, according to the base case, include a reduction in individual taxes by around $1.25 trillion, tax breaks of around $50 billion, expanding Opportunity Zones that allow investors to reduce taxes by around $50 billion, and increased expensing for essential industries that would reduce taxes by around $350 billion.

Under the other two scenarios, Trump’s tax cut is estimated at either $1.4 trillion or $2.95 trillion.

Biden, who said he wouldn’t raise individual taxes on those earning under $400,000 per year, is estimated in the report’s base case to raise corporate taxes by $1.8 trillion, increase individual taxes by $1.4 trillion, raise the Social Security payroll tax maximum to the tune of $900 billion, establish a “financial risk fee” of $100 billion on big banks, and increase tax revenue by $100 billion by improving tax compliance. Under the other two scenarios, Biden’s tax increase is estimated at either $6.6 trillion or $3.65 trillion.

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