It turns out Donald Trump the presidential candidate loves debt as much as Trump the real estate developer.
If enacted, Trump’s fiscal policies would pile on $5.3 trillion to the US government debt by 2026, calculates the Committee for a Responsible Federal Budget in a new report. That’s more than 26 times higher than the amount the bipartisan budget watchdog group estimates that Hillary Clinton’s plans would increase the debt.
Right now, publicly held government debt is just over $14 trillion, equal to a little less than 77% of the US economy. Under Clinton’s plan, the debt-to-GDP ratio would rise to about 86% by 2026, says CFRB. Trump’s vision would result in the government owing the public a whopping 105% of GDP by 2026.
Why should anyone care? Well, when the government has to use huge sums of taxpayer dollars to pay interest, it’s wasting money that could go toward productivity-boosting investments. That will hamper growth. At one-fifteenth of government revenue in 2015, these costs aren’t a huge burden right now. But adding to the debt means adding to those interest payments.
Then again, a basic tenet of Keynesian macroeconomics is that governments should run deficits when the economy is weak, and tighten spending once it’s become strong again. Since the US economy isn’t very strong right now (GDP grew 1.1% in the second quarter), and interest rates are so low, it’s probably as good a time as any for the government to borrow.
That’s provided, however, that that borrowing funds things that make the economy stronger. Clinton’s plan would increase investments in education, health, and child wellbeing—things that should help improve the quality of the US labor force and make it easier for families to work. The plan proposes to offset some of that spending through tax increases on the wealthy and on businesses, as well as through enacting immigration reform. (Although the CFRB doesn’t touch on the subject, making it easier to employ immigrants would also help juice growth).
Trump’s plan is built on the opposite approach, the supply-side logic that cutting taxes on rich people and businesses will reduce the deficit by boosting growth. History has roundly proven that this idea does not work, and Trump’s plan is no exception.
Here’s CFRB’s breakdown of both candidates’ plans:
Some of the plans these estimates are based on haven’t been fully fleshed out yet—which could change the calculation considerably. (For instance, taking into account “unspecified revenue” from Clinton’s business tax reform plan would mean that her plan would reduce deficits.)
They also don’t account for the impact of each candidates’ plans on economic growth. This would likely be a femur-sized bone of contention for the Trump camp, given his recent promise to boost average annual GDP growth for the next decade to 3.5%. (At other times, Trump says he’ll boost growth even higher).
The Trump campaign hadn’t responded to request for comment at time of publishing.