With just a day to go before the presidential election, it’s easy to get distracted by emotional controversies over Hillary Clinton’s and Donald Trump’s personal qualities. But don’t forget, we’re also picking a leader whose policy positions will have big implications for our own budgets as well as for Uncle Sam’s.
If you’ve been following the election, chances are you’ve got at least a general sense of what’s at stake: Democratic nominee Hillary Clinton emphasizes education, healthcare, and making the rich “pay their fair share.” Trump, her Republican opponent, favors defense spending and big tax cuts. But it’s a lot more complicated than that. For instance, did you know that Trump, breaking with Republican orthodoxy, has called for spending $500 billion over 10 years to reimburse Americans for child-care costs? Or that Clinton wants to cut small business taxes by $100 billion?
The good news: Last month, Washington’s nonpartisan Committee for a Responsible Federal Budget issued a detailed report, comparing the two candidates’ tax and spending priorities side by side. If you want to read the report in its entirety you can do it here. But we’ve pulled out the highlights and added additional context, to give you a bird’s-eye view of how either a President Clinton or a President Trump might reshape the federal budget.
The National Debt
Taken together, Trump’s proposals would reduce federal tax receipts by $5.8 trillion over 10 years, while cutting spending by $1.2 trillion. Factoring in the effect on interest payments, the Committee for a Responsible Federal Budget estimates implementing Trump’s plan would boost the federal debt by $5.3 trillion by 2026. Clinton’s ambitions are more moderate. She would increase taxes by roughly $1.5 trillion over the next decade, while spending an additional $1.65 trillion. Again, factoring in payments to U.S. bondholders, the CRFB estimates her plan would cost a much more modest $200 billion.
At this point, it’s worth noting, the candidates’ plans are merely campaign promises. Whoever wins in November will face getting their agenda through Congress, which may have very different ideas. All the same, both campaigns have argued their budget plans will drive economic growth, boosting tax receipts enough to cover up any expected shortfalls. Given the much larger price tag attached to Trump’s plan, however, economists on both sides of the aisle have argued that bar would be much higher for him.
Trump has been running on his business record, and a big part of that is a promise to wring unnecessary spending out of the budget. While not specifying department-by-department cuts, his “penny plan” would put strict limits on all so-called discretionary, non-defense spending—essentially everything in the budget except the military and entitlements like Social Security and Medicare. Under Trump’s plan, all other government departments, from Department of Education to the Food and Drug Administration, would be required to cut their budgets 1% a year.
Because those departments are currently slated to gradually increase spending over the next decade, the plan would ultimately end up slashing their budgets by about one-fourth by 2026, or about $750 billion, according the CRFB. Other changes Trump has proposed, such as trimming spending on so-called “unauthorized appropriations” and shrinking the federal workforce through attrition, would save about $25 billion a year over the next decade. By contrast smaller or miscellaneous spending increases under plans Clinton has laid out would cost about $20 billion a year, according to the CRFB.
Hillary Clinton has promised to devote $250 billion directly to projects such as repairing roads, bridges, and airports, which she hopes will create construction jobs in the short term while also greasing the wheels of commerce in the longer run. She would invest an additional $25 billion in an “infrastructure bank” to help subsidize private projects and another $25 billion to improve affordable housing.
In one of the candidates’ rare areas of agreement, Trump has said he also favors infrastructure spending, although as with Clinton’s plans for the defense sequester, the CRFB regards Trump’s proposal as too informal to include. Trump’s plans could be ambitious, though: He said in August that he would “at least double” what Clinton plans to spend.
Higher Education and Childcare
Two of Hillary Clinton’s top domestic spending priorities: Make college more affordable and cap childcare expenses at 10% of parents’ income. She would do that by making tuition at four-year in-state public colleges free for families making less than $85,000 (and $125,000 by 2021), a proposal that the CRFB estimates would cost about $500 billion over the next decade. In addition, she would expand Head Start, make pre-kindergarten free for all families, improve child-related tax benefits and guarantee paid time off to new parents and other caregivers, at a price of roughly another $650 billion.
Trump has also proposed paid time off, although his much more modest plan would apply only to new mothers, costing about $50 billion. While he has no formal college proposal, other childcare proposals—in particular letting parents deduct childcare expenses from their income tax, up to the average cost in their state —would cost roughly $550 billion, according the CRFB.
Defense and Veterans
Trump has called for ending the defense spending freeze known as the “sequester” that Congress put into place after it failed to reach a 2013 budget deal and which is scheduled to kick in fully next year. He has also called for enlarging the Army to 540,000 active-duty troops from about 480,000 today, growing the Marine Corps to 36 battalions from 24, and building roughly 75 new Navy ships and submarines and 100 Air Force aircraft, according to Reuters.
Clinton has also said she would like to get rid of the sequester. However, the CRFB did not factor this into its calculations because, unlike Trump, she has not issued a formal proposal, only mentioned the idea in passing. Clinton has also promised to increase spending on veterans, by expanding tax credits that promote hiring and improving certification and credentialing programs.
Income and Estate Taxes
Hillary Clinton has promised not to raise taxes on anyone making less than $250,000 a year, while ensuring the rich “pay their fair share.” That means a number of new rules aimed at raising rates and eliminating write-offs for the wealthy, such as the “Buffett rule,” a minimum 30% income tax rate on anyone making more than $1 million. The rule is named for billionaire Warren Buffett, who has famously noted that he pays a lower tax rate than his secretary. Clinton would also raise estate tax rates, to a maximum of 65% from 40% today, although that top rate would affect only the very wealthiest: couples with $1 billion or more, or singles with $500 million.
In contrast to Clinton, Trump has promised big personal tax cuts to go with his business tax cuts. He would eliminate the estate tax and the alternative minimum tax, and reduce the number of income tax brackets from the current seven to three, at 12%, 25% and 33%.
One of Trump’s biggest plans for the economy is slashing taxes on businesses, making it easier for them to expand and invest. He’s promised to cut the U.S. corporate tax rate, which at 35% is among the world’s highest, to 15%. He also floated the idea of allowing small businesspeople, such as self-employed doctors and even freelancers, to pay his proposed 15% business rate instead of reporting their profits as regular income, which can be taxed at up to 39.6%. Total price tag: about $2.85 trillion over the next decade.
Clinton hasn’t put forward a comprehensive plan for business taxes. Proposals to discourage companies from relocating abroad and eliminate tax breaks for fossil fuel companies would raise $250 billion over next decade. But this would be partially offset by $100 billion in other cuts aimed at small businesses, such as a new standard deduction similar to what is available to individual filers and quadrupling the tax credit for startups, the CRFB found.
Hillary Clinton wants to further President Obama’s signature policy accomplishment, the 2010 Affordable Care Act, by encouraging more states to expand Medicaid and letting seniors enroll in Medicare at 55 instead of 65. She would also repeal the so-called “Cadillac tax” on premium health plans. Together these ambitious plans could cost as much as $500 billion over 10 years, according the CRFB. However, this total would be partially offset by programs to cut drug costs and let Americans sign onto a government-run health plan, known as the “public option,” to compete with private insurers, saving about $250 billion.
Trump has proposed eliminating Obamacare altogether. That move would actually cost the federal government roughly $500 billion over the next decade because it would do away with not just spending commitments, but also new taxes designed to cover those costs. Another Trump proposal, handing Medicare grants to states rather than reimbursing them for their costs, would save roughly the same amount, however, making his overall plan — costing about $5 billion a year — closer to a wash.