Trump turns to outlandish promises to offset $7 trillion in tax cuts

Former President Donald Trump has outlined policies that could add trillions of dollars to the rising national debt if he wins in November, and analysts are skeptical of the new claims and proposals he says would mitigate their fiscal impact.

In a speech at the Economic Club of New York on Thursday, Trump promised “trillions” of dollars in spending cuts from a new government commission that budget experts largely regard as unrealistic, while floating a new U.S. sovereign wealth fund that members of his party have traditionally opposed. Trump also insisted that a new round of tax cuts would lower the debt – a claim disputed by most mainstream economists, and undermined by the actual budgetary effects of the tax cut he signed into law during his administration.

The new or exaggerated claims come as Trump faces scrutiny over numerous tax pledges – from ending taxation on Social Security payments for seniors to extending his 2017 tax law – that would collectively cost as much as $7 trillion over the next decade. Trump had previously said these plans would be paid for in part by revenues from massive new tariffs on imports and unspecified spending cuts. But before an audience of business leaders who tend to be concerned about the more than $35 trillion federal debt burden, Trump attempted to outline with fresh detail how he would also work to rein in the nation’s red ink.

“We’re going to have so much money coming in. We’re going to work on national debt,” Trump said. “We have to get that down.”

But budget experts say Trump’s promises, although vague and difficult to precisely define, appear on balance to add trillions of dollars to the national debt.

As a candidate in 2016, Trump promised not just to reduce the deficit – the annual gap between spending and revenue – but to eradicate the nation’s outstanding debt balance over eight years, which at the time he was sworn in was roughly $20 trillion. Instead, the debt jumped to roughly $28 trillion by the time he left, a 40% increase. Bipartisan spending deals during the pandemic accounted for most of the rise, but the budget was also strained by Trump’s $2 trillion tax cut and pre-pandemic increases in overall government spending.

Now, Trump is vowing to make permanent the measures from his first tax law, which could add another $4 trillion to the debt. Many of those tax provisions are otherwise set to expire next year. Several other plans endorsed by Trump, including eliminating taxes on tips and a further reduction in the corporate tax rate, would bring his total tax cut plans above $6 trillion and as high as $7 trillion, according to nonpartisan budget experts. Bloomberg has estimated the price tag at $10 trillion; that figure includes a $5,000-per-child tax credit called for by Sen. JD Vance (R-Ohio), Trump’s running mate, which Trump has not endorsed.

Trump has promised not to cut Social Security or Medicare, while also calling for increasing the defense budget and rejecting new tax hikes – the measures budget experts say are necessary to meaningfully alter the nation’s fiscal trajectory. The national debt is now projected to rise above $50 trillion by 2034, surpassing its historic high as a share of the U.S. economy, according to the latest projections by the nonpartisan Congressional Budget Office.

“Trump is proposing $10 trillion in tax cuts over the decade and looking to pay for it with grandstanding and gimmicks that will save little money,” said Brian Riedl, senior fellow at the Manhattan Institute, a center-right think tank. “If you really want to address the deficit, you really have to make the tough decisions on Social Security, Medicare, the defense and middle class taxes.”

Vice President Kamala Harris has also not yet released a detailed explanation of how she would pay for her proposed tax cuts and spending increases. Harris released a roughly $1.7 trillion spending plan focused on housing subsidies and a larger child benefit, and she endorsed President Joe Biden’s $5 trillion in proposed tax hikes on the rich and corporations. But she walked back some of Biden’s proposed tax hikes on the highest earners this week and has embraced extending trillions of dollars of the Trump tax cuts for Americans earning under $400,000 per year, as Biden did. That has left her exact budget math hard to discern. The White House says Biden’s proposed budget would reduce the debt over the course of the next decade.

Trump goes well beyond Harris, however, in defying the prior convention for presidential candidates to articulate how they’d pay for their spending plans.

“The American people deserve a president who will actually cut costs for them,” said Joseph Costello, a Harris campaign spokesman.

On Thursday, Trump formally endorsed a plan to put billionaire executive Elon Musk in charge of a commission that would identify thousands of cuts to government spending programs and regulations. Trump said the commission would develop an “action plan” within six months to “totally eliminate” fraud and improper payments.

Trump said the new commission would save “trillions of dollars – trillions. It’s massive. For the same service we have right now.”

Experts are highly skeptical that such spending reductions could be achieved without touching federal health programs Trump has vowed to spare – and, even then, would almost certainly require cutting other programs that many Americans would not consider waste or fraud.

Marc Goldwein, senior vice president of the Committee for a Responsible Federal Budget, a nonpartisan think tank, said trillions of dollars in cuts could be found only by a commission with a broad mandate – both to expansively define waste and fraud and to target the federal health programs.

Trump has been adamant he will not do that, though as president, he proposed budgets that included significant cuts to health care, housing and nutritional assistance programs for the poor.

It is also not clear why, if such potential savings exist, Trump could not identify them – during his campaign now, or why he did not identify trillions of dollars in federal waste during his four years as president. His budgets called for a few hundred billion dollars in cuts to waste and fraud over a 10-year period, Goldwein said.

“From a purely mathematical perspective, if you’re talking about cutting trillions in spending, you are talking about cutting Medicare, Social Security or veterans benefits. There’s no other way to make that math work,” said Bharat Ramamurti, who served as deputy director of the White House National Economic Council under Biden. “And alongside that he’s talking about providing trillions of tax cuts for the very rich.”

Trump also said Thursday that his first administration “proved that targeted tax cuts do not increase the deficit” but instead “reduce the deficit by growing the economy and raising revenue,” arguing that tax receipts were higher after his tax cuts than before. But nonpartisan forecasters have said it’s clear that revenues would have been even higher without the tax reductions, noting that the economy overall had grown.

“Tax cuts increase the deficit,” Goldwein said. “The right tax policy can strengthen economic growth, but there’s almost no circumstances where that growth pays for more than a fraction of the tax cut – let alone get into deficit reduction territory.”