TrendMacro conversation with budget guru Brian Riedl on debt, deficits and Trumponomics

Trump's fiscal track record shows a larger increase in deficits versus the baseline than either Bush or Obama, but half of it was due to the costs of the pandemic. The 2017 tax cuts increased deficits as a first-order effect, but likely contributed to significant offsets in the form of accelerated economic growth. Of all the 2017 tax cuts, the reduced corporate rate is most likely to have paid for itself with growth in the corporate sector and with spillovers to employment. Under Trump, the extension of non-corporate provisions of the 2017 tax cuts in 2025 would add significantly to deficits, but this could be substantially offset by also extending the cap on deductibility of state and local taxes. Proposed tariffs are too small to make a real difference in deficits. The outlook for a Harris presidency is not significantly different at the top-line level, but would be compositionally distinct. The 2017 cuts would likely be allowed to expire, but revenue gains would be offset by eliminating the SALT cap. 30 years out, the federal fiscal situation is worse than unsustainable, due primarily to automatic increase in Social Security, Medicare and Medicaid spending. The only way out is to reform those programs, for which there is presently no appetite in Congress.