CRFB Calculates What Donald Trump's Revised Tax Plan Will Do To US Debt

Following the release of Donald Trump's "original" economic plan, his opponents had a field day with his tax proposals and economic agenda, which according to the Committee for a Responsible Federal Budget (CRFB) would boost US Federal debt by $9.25 trillion from the tax cuts alone, while his comprehensive agenda would add over $11.5 trillion to the national US debt. Needless to say, the Fed and other central banks who are desperate to find more securities to monetize, were salivating at the option, although it probably would be difficult to explain a decade from now why US debt is yielding 0%, or negative, with a debt/GDP ratio of over 200%.

Which is why, Trump had no choice but to revise his economic proposal which he did earlier today, in a speech which as we reported was interrupted at least 14 times.

More importantly, moments ago the CRFB scored Trump's adjusted proposal, and found that as a result of the revisions to his tax plan, total US debt would increase by only $2.55 trillion over a decade, nearly five times less than his original proposal, and certainly a far more realistic number to pitch to America's conservatives.

Here is the CRFB's assessment:

CRFB Responds to Donald Trump’s New Tax Plan


In a speech today at the Detroit Economic Club, presidential candidate Donald Trump announced revisions to his tax reform plan, suggesting that details will be provided in the coming days.


It’s encouraging that Donald Trump appears to be modifying his tax plan, which would push America toward an unprecedented level of debt unless it is significantly changed,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget. 


In the June report Promises and Price Tags, the Committee for a Responsible Federal Budget estimated that his original tax plan alone would cost roughly $9.25 trillion over the course of a decade, while his entire agenda would add $11.5 trillion to the national debt, including interest, by 2026.


Based on today’s speech – which proposes individual tax rates of 12 percent, 25 percent, and 33 percent instead of 10 percent, 20 percent, and 25 percent - Trump’s new tax plan is likely to cost significantly less. However, the plan is still likely to add substantially to the debt, particularly the plan to cut business taxes, which we previously estimated would cost about $2.55 trillion over a decade.


This certainly appears to be an improvement over Trump’s previous $11.5 trillion agenda, but we can’t afford to add even a few trillion dollars to the debt – not with our debt already at record-high levels and projected to grow by $10 trillion over the next decade under current law,” MacGuineas continued. "We urge Donald Trump to put forward a tax framework that will cost as little as possible – or preferably generate net revenue – along with a serious suite of new spending cuts and entitlement reforms that would not only pay for any remaining tax cuts but also put the national debt on a downward path relative to the economy.”


In the coming weeks, the Committee for a Responsible Federal Budget will update its analysis Promises and Price Tags to reflect Trump’s new tax plan, Hillary Clinton’s new college and health plans, and any other modifications or additions posted on the candidates’ official websites.

While it goes without saying that such "budgets" are merely static (and thus completely untrustworthy) placeholders until the real tax plan is implemented by either the Trump or Clinton administration - and we eagerly await the rescoring of how much the unprecedented student loan bubble and Obamacare will keep adding to the US debt under president Clinton - it is refreshing to see that someone in the Trump administration finally figured out how to create a simple excel spreadsheet which to sell to the American public. As for the actual presidential race, neither Trump's nor Hillary's economic "plan" will make much of a difference -  ultimately this will be dictated by the corporations and the billionaires who operate behind the scenes and tell their presidential puppets what to do to boost their own disposable income as much as possible.

With regards to what does matter in the presidential race, the answer is two-fold: what Janet Yellen announces in just over two weeks at Jackson Hole (as the trajectory of the market over the next three months will have a far greater impact on the presidential race than financial models), and - of course - the debates between the two candidates, which are set to begin in roughly one month, and which will certainly have a dramatic impact on the ad revenue of major US broadcasters.