The centerpiece of the plan is a $4.4 trillion tax cut over ten years that will go mostly to the rich and corporations.
To keep debt from soaring out of control, the plan is predicated on an average 4 percent growth rate, a number that economists call “fairy dust” and “magical thinking.”
The economy hasn’t grown that fast since the post-World War II economic boom when tax rates on corporations and the rich were significantly higher.
Both Reagan and Bush based their massive tax cuts on the same premise, but the trickle-down cuts failed to stimulate growth as promised, causing the national debt to soar.
Reagan tripled the gross national debt from $900 billion to $2.7 trillion, during his presidency (1980-1988). The deficit soared by more than $6 trillion during Bush’s two terms (2000-2008).
Trump’s economic plan would add $11.5 trillion to the national debt within 10 years, according to conservative think tank, The Committee for a Responsible Federal Budget.
Clinton’s programs would only add $250 billion to the U.S. debt over the same time, the organization said.
What Trump failed to mention in his news conference is the cost to the nation of other promises, such as rounding up and deporting all illegal immigrants.
In 2012, the most recent figures available, 6.8 million illegal immigrants were working in the country, or about 5.6 percent of all employed people. Subtracting them from the economy would cost the private sector as much as $663 billion, according to one economic think tank.
Sectors hardest hit would be agriculture, construction, and leisure and hospitality. Trump has routinely employed illegal immigrants at his own properties.
Deporting all of the estimated 11.8 million illegal immigrants, as Trump has promised to do in two years, would cost the government as much as $600 billion and shrink the national economy by $1 trillion, according to estimates.
Trump has also promised to repeal the Health Care Affordability Act (HCA), also known as Obamacare.
The move would deprive as many as 20 million Americans of their health insurance and allow insurance companies to deny coverage to anyone with pre-existing conditions.
Although he has yet to specify an alternate plan, the most likely would be one espoused by conservatives. It would totally privatized the system and provide families with so-called health care vouchers to offset some of the cost of insurance.
But plans would likely have high deductibles and require individuals and families to shoulder as much as 20 percent of expenses out-of-pocket over their deductible. Insurance companies would also be allowed to cap lifetime costs, which is illegal now under the HCA.
Make no mistake, there are winners under his plan.
Corporations would see their tax rates fall from 25 percent to 15 percent, even though corporations are currently sitting on record amounts of cash.
He initially said small businesses with pass-through income would be included in the tax cut, but has since dropped that part of the plan because of its high cost, according to reports.
Meanwhile, the rich would benefit in various ways.
Trump’s plan would keep that maximum tax rate for high-earners at the current 33 percent rate, but would slash taxes on capital gains.
The capital gains cuts would benefit mostly the richest 1 percent of households, or those with incomes of at least $490,000 per year.
He would also eliminate the estate tax, a move that clearly favors the rich.
Right now, any estate under $5.43 million per person (effectively $10.86 million for a couple) is already un-taxed. The current threshold is designed to preserve family-run farms and small businesses.
Abolishing the the tax would apply to only the wealthiest 0.2 percent of Americans — roughly 2 out of every 1,000 people who die, according to non-partisan Center for Budget and Policy Priorities.
But the cost to the government would be stiff, according to the Joint Committee on Taxation (JCT). It would cost $269 billion in lost revenue and add $320 billion to deficit when counting additional interest on the national debt.
The roughly 5,400 wealthy estates that owe the tax this year would reap a $3 million tax windfall each, according to the center. The 318 estates, including Trump’s, worth at least $50 million or more would receive tax windfalls averaging more than $20 million each.
Some of the windfall enjoyed by the rich will be offset by Trump’s plan to do away with the “Carried Interest Deduction,” which largely benefits hedge fund managers and high-rolling Wall Street investors, but not average workers.
He plans to cut the number of tax brackets from the current seven to just three, set at 12 percent, 25 percent and 33 percent. But the plan hangs the middle class out to dry.
Trump’s bracket changes would boost middle-class family income by 0.5 per cent or less, according to the conservative Tax Foundation.
Trump’s magical thinking doesn’t end there. He says he’ll enact his tax cut without cutting Social Security or Medicare, while at the same time boosting spending on the military and veterans.
On top of that, his new maternity leave plan for women (men are excluded) would cost at least $2.5 billion, most of which would be borne by businesses through higher state payroll taxes. It would be a big incentive to cut full-time jobs.
Trump also said he would reduce costs for families by allowing a full tax deduction for the average cost of childcare spending. But this provision would disproportionately benefit higher-income households. Most lower- and middle-class families don’t itemize returns.
With military spending and entitlements off limits, Trump’s only alternative to cutting costs is to slash or eliminate agencies like the Food and Drug Administration, the Small Business Administration and the Environmental Protection Agency.
But those savings would be minimal while putting families and children at risk of unsafe food and drugs and increased levels of pollution.
His pledge to cut tax rates for the middle-class and working-poor would be offset by his plans to abolish the federal minimum wage and eliminate most tax deductions, including the home-mortgage deduction, long a target of conservatives.
The move would drive millions of working-poor families below the poverty line without health benefits and a dramatically smaller social safety net because of planned cuts in food programs and Medicaid.
Trump has built his campaign on a call for new thinking in Washington, but his economic plan is based policies going back at least 40 years that have been widely discredited during two previous administrations.
The fact is, trickle-down economics just doesn’t work.
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