On Thursday, Donald Trump promised to kickstart a decade of economic growth if elected president. During a discussion at the New York Economic Club, he said, “Over the next 10 years, our economic team estimates that under our plan the economy will average 3.5 percent growth and create a total of 25 million new jobs.” But it remains murky how he’d accomplish those goals. “You can visit our website to see the math,” he insisted.
Here is that math, according to Trump’s campaign: The candidate says that his policies, which include a simplified, three-bracket tax plan, a capping of corporate tax rates at 15 percent, and a new child-care plan (which as of now would only cover married parents ) will result in a $4.4 trillion reduction in revenues over 10 years. But Trump said that this reduction should be revised down to $2.6 trillion in order to account for the growth he’d spark in the economy. These losses would be made up for by $1.8 trillion in savings from reworked trade agreements, energy savings, and regulatory reform, he said. And what about that remaining $800 billion gap? That can be taken care of by what he termed “common-sense reforms”: “If we save just one penny of each federal dollar spent on non-defense and non-entitlement programs, we can save almost $1 trillion over the next decade,” Trump told the audience. “This is spending that does not touch defense, and that does not touch entitlements.”
On top of that, he promised growth that would average 3.5 percent. If his plan managed to exceed that and hit, say, 4 percent (a relatively rare feat in the postwar era) the deficit would be further reduced, he said. And those 25 million jobs? They would get Americans off unemployment and welfare rolls, and back to work, he says. That economic growth, he said, would be obtained through a combination of policies he has put forth before: shrinking industry regulations, reviving manufacturing, and reigning in trade with China, for example.
While much of his plan remains the same as when he discussed it in August, Trump has changed some of the details over time. Trump recently increased the individual taxation levels in his plan after critics said that his economic plan would cause debt to rise by nearly $10 trillion. After Trump increased the tax brackets on his plan from 10 percent, 15, percent, and 25 percent to 12 percent, 25 percent, and 33 percent, experts at the Tax Foundation, a bipartisan think tank, noted that this would certainly help mitigate the estimated loss in revenue. According to Bloomberg, one economist from the Tax Foundation tentatively reduced the new loss estimate to $3 trillion, down from $10 trillion, but the group has also said that it can be hard to estimate precisely how much would be saved without more information.
Other outside organizations have been similarly skeptical. In June, the Committee for a Responsible Federal Budget, another bipartisan think tank, analyzed both candidates’ economic plans, and found that in order to be sustainable, Trump would have to cut spending by between 27 to 37 percent, increase all tax rates by between 15.5 to 20.5 percentage points, or provide a plan that produced ludicrous economic growth, to the tune of 160 to 390 percent. They noted that some combination of the three would also suffice. Taking into account his refusal to cut defense or entitlement spending, the Committee for a Responsible Federal Budget concluded that Trump would need to cut spending on all other programs by 50 to 67 percent, which it deemed “a clearly unrealistic magnitude of spending cuts, particularly given Trump’s other goals that would likely result in spending increases.”
Even with the tweaks that Trump has made to his economic plan since first revealing a version of it over a year ago, it still seems unlikely that he could manage to fulfill his promises without touching spending on some of the budget’s largest future expenses, such as defense and entitlements. This latest iteration of Trump’s economic plan could well be supplanted by yet another, but it’s doubtful that any revisions will do much help—so far, his campaign’s economic policy adjustments appear to be stemming from political placation rather than fiscal reality.