Trump and the National Debt. Instead of Eliminating the Debt, Trump Will Add $8.3 Trillion
During the 2016 presidential campaign, Republican candidate Donald Trump promised he would eliminate the nation’s debt in eight years. Instead, his budgets would add $9.1 trillion during that time. It would increase the U.S. debt to $29 trillion according to Trump's budget estimates.
Trump’s Two Strategies to Reduce the Debt
Candidate Trump had two strategies to reduce the U.S. debt. He promised to grow the economy 6 percent annually to increase tax revenues. But once in office, he lowered his growth estimate to 3.5 percent to 4 percent.
These projections are above the 2-3 percent healthy growth rate. When growth is more than that, it creates inflation. Too much money chases too few good business projects. Irrational exuberance grips investors. They create a boom-bust cycle that ends in a recession. Trump’s Fiscal Year 2020 budget lowered annual growth rates down to between 2.4 percent and 2.9 percent annually.
Trump promised to achieve 4 percent growth with tax cuts. In his first 100 days, he released the outline of would become the Tax Cuts and Jobs Act. It cut the corporate tax rate from 35 percent to 21 percent beginning in 2018. The top individual income tax rate drops to 37 percent. It doubles the standard deduction and eliminates personal exemptions. The corporate cuts are permanent, while the individual changes expire at the end of 2025.
But Trump's tax cuts won't stimulate the economy enough to make up for lost tax revenue. According to the Laffer curve, tax cuts only do that when the rates were above 50 percent. It worked during the Reagan administration because the highest tax rate was 90 percent.
https://www.thebalance.com/trump-plans-to-reduce-national-debt-4114401