Donald Trump’s tax and spending proposals would boost the economy in the near term, while Kamala Harris’s would slow economic growth immediately, according to an influential analysis released this month.
Over the longer term, both candidate’s proposals would result in slower growth than a baseline estimate—but growth under Harris would be much lower, the Penn Wharton Budget Model found.
Harris’s proposals would result in gross domestic product being 1.3 percent lower by 2034 than it would be under current law. Thirty years from now, the economy would be four percent lower. Her tax plans would depress capital investment and result in fewer working hours, with the effect being wages being lower by 0.8 percent in 2034 and by 3.3 percent in 2054.
By contrast, Trump’s plans are seen as increasing GDP in the near term compared with what is expected under current law. But the model sees a drag from higher deficits resulting in GDP being 0.4 percent lower by 2034 and 2.1 percent lower by 2054. During Trump’s presidency, capital investment and working hours would increase, falling in later years, according to the model. This would average wages unchanged in 2034 and lower by 1.7 percent in 2054 compared with current law.
In other words, the long term drag of Harris’s policies are seen as twice as big as Trump’s.
Harris’s plans are seen as hiking both taxes and government spending. Her tax increases would bring in $1.1 trillion more, according to the model. But this would be overwhelmed by her proposed spending increases of $2.3 trillion, resulting in a $1.2 trillion higher deficit.
Trump’s opposed tax cuts are seen as shrinking revenue by $5.8 trillion over the next 10 years but because of additional growth, the ;primary budget deficit is seen as growing by just $4.1 trillion.
While Trump’s proposals are seen as benefitting Americans of every income level, Harris’s proposals hurt the wealthy and benefit only the middle and lower income households, according to the model.