In an interview with the Washington Post, Republican Party presidential frontrunner Donald Trump insisted that he could eliminate the nation’s $19 trillion national debt within two terms as president.
Of all Trump’s exaggerations, this may be the greatest. Put simply, his stated policies make it impossible.
Earlier in his campaign, Trump introduced a tax proposal that would significantly reform the current tax code.
Analysis by the non-partisan Tax Foundation found that this proposal would cost upwards of $11.98 trillion over the next decade.
Trump disputed these findings in the CNBC Republican debate, declaring that the national debt would not increase when economic growth is factored in. But the Tax Foundation’s analysis also considered his proposal with economic growth factored in. They found that it would still reduce tax revenues by $10.14 trillion dollars over 10 years.
According to the Congressional Budget Office (CBO), the federal deficit will be $544 billion for the 2016 fiscal year, with annual deficits adding an additional $9.4 trillion to the national debt by 2026.
Trump’s tax reform would increase these projections to $19.5 trillion, effectively doubling the current national debt.
In order to finance his proposal—which includes considerable tax cuts—Trump will need to reduce federal expenditures. On their current trajectory, federal expenditures are set to increase by $2.5 trillion by 2026. Of this growth, $708 billion is due to Social Security.
Yet Donald Trump states that he “will do everything within [his] power… to leave [social security] the way it is.”
If Trump stands by this pledge to leave Social Security alone, then significant portions will face insolvency within the a decade. Over the next 10 years, outlays for Social Security will grow from $910 billion to $1.6 trillion, and by 2022 the trust fund for the Social Security Disability Insurance (a part of Social Security for disabled Americans unable to work) will expire.
When it comes to healthcare, Trump proposes the ambitious agenda of fully repealing of the Patient Protection and Affordable Care Act, block granting Medicaid, and enforcing current immigration laws.
But even if Trump successfully repeals the Affordable Care Act, the insurance coverage provision of the law would only create net savings of $1.4 trillion over 10 years. That’s approximately 13.6 percent of the cost of his tax plan and only 7.1 percent of the combined cost of his tax proposal and the current projected growth in the national debt.
In their 2011 analysis of ways to reduce the deficit, the Congressional Budget Office found that by block granting Medicaid to the states and linking the grants to the employment cost index, the federal government could save $287.4 billion over 10 years. But this would only finance 2.8% of Trump’s tax reform.
According to Trump’s campaign page, enforcing the current immigration laws also saves $11 billion in public health costs every year—a claim that is surely disputed.
Total savings from Trump’s healthcare plan amount to approximately $1.8 trillion over the next 10 years, or 17.5 percent of the cost of his tax proposal. This is reduced to 9.1 percent when the projected increase in the national debt is factored in.
With his proposed reforms to mandatory spending (Social Security and healthcare) covering just a fraction of the total expected increase in the national debt, Trump would have to make drastic and unprecedented cuts in discretionary spending—the portion of the federal budget which Congress controls through appropriations—to even come close to paying off the national debt.
The largest portion of the discretionary budget is the Department of Defense—which includes the US military. Other significant appropriations include the Department of Education, Department of Transportation, and the Department of Housing and Urban Development.
The Congressional Budget Office estimates that the discretionary budget will be $1.2 trillion for the 2016 fiscal year, accumulating to $12.9 trillion over the 2017 to 2026 period.
So in addition to his healthcare reforms, Trump will need to cut discretionary spending by a massive 64.4 percent to finance his tax proposal. Even greater cuts would be required when factoring in the projected increase in the national debt.
This would absolutely gut the budget for the Department of Defense, and more.
This is only what would be required to finance Trump’s tax proposal without increasing deficits. It doesn’t include the actual repayment of the existing national debt—currently $19.2 trillion.
Repaying this debt would require an additional $2.4 trillion in revenue or saving every single year for two presidential terms. That is almost all of the mandatory (non-discretionary) expenditures the US will spend this fiscal year.
Donald Trump’s plan to pass his tax package, avoid touching Social Security, maintain a strong national defense, and repay the national debt within two terms as president is simply impossible. Claiming otherwise is pure fantasy.
