Election 2020

Both Biden and Trump Plan to Spend Well Beyond the Government's Means

Whether Biden or Trump wins this November, we're in for big, unaffordable government. How much bigger and how unaffordable are the only real questions.

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Admittedly, comparing the tax and spending proposals of the legacy-party presidential candidates seems a bit pointless in 2020. This isn't an election waged over policy; it's a grudge match between two tribes of mutually loathing partisan drones with incumbent President Donald Trump serving as the living totem of all they respectively love or loathe—cults of personality and anti-personality.

That said, there are differences between what Republican Trump and Democrat Joe Biden threaten to inflict on us in terms of raising revenue and how to spend it. The details are hard to nail down—probably deliberately so on the part of the campaigns—but Trump essentially promises tax cuts (and penalties for those who cross him) while spending too much, and Biden intends to raise taxes while ignoring the idea that spending must be constrained in any way.

When it comes to taxes, Trump continues the Republican Party's traditional interest in reducing the government's take.

"Without further details or clarification, it is difficult to fully analyze President Trump's second term tax policy agenda," Erica York noted last week for the Tax Foundation. "Broad themes of the president's agenda include providing tax relief to individuals and tax credits to businesses that engage in desired activities."

The exception is on the matter of tariffs, given that the president has wandered from his party's long-time support of free trade.

"In his first term, President Trump has imposed more than $80 billion of tax increases in the form of tariffs," adds York. "Recently, the president said he would impose tariffs on companies that do not move jobs back to the United States from overseas. Whether this is a formal policy proposal is unclear, but it indicates the possibility of continued tariffs if Trump wins reelection."

Biden, too, fulfills the role you would expect of his party affiliation as a Democrat.

"Biden has not released a single formal tax plan, but he has proposed many tax changes and increases connected to spending proposals related to issues like climate change, infrastructure, health care, education, and research & development," Garrett Watson and Erica York wrote for the Tax Foundation. "Most of these proposals center around raising income taxes on high earners as well as on businesses."

With a little more detail to analyze, Watson and York "estimate that Biden's tax proposals would raise about $3.8 trillion over 10 years. The plan would also reduce long-run economic growth by 1.51 percent and eliminate about 585,000 full-time equivalent jobs."

Whether or not a government is taxing too little, enough, or too much is relative to how much it plans to spend and how much ruckus taxpayers kick up in response to the legalized mugging. For both legacy-party candidates, lots of spending well beyond the government's means is part of the plan.

In Trump's case, we know he isn't shy about cutting checks. "Under Trump's signature, before any true crisis hit, the annual price tag of government went up by $937 billion in less than four years," Reason's Matt Welch recently wrote.

For his 2021 budget (a theoretical document, since the federal government has given up on formal budgets), President Trump proposed continuously increasing federal spending, though slower growth than was originally forecast.

"The federal deficit would be $2.1 trillion smaller under the President's budget than in CBO's baseline over the 2021–2030 period," the Congressional Budget Office (CBO) projected earlier this year. That certainly sounds like an improvement, but the budget consistently spends more than the government collects to leave the country with a cumulative $11 trillion deficit instead of the baseline anticipated $13 trillion deficit.

Then again, that seems almost realistic when compared to what Trump's main rival, Joe Biden, plans in terms of increased expenditures and benefits.

"From a variety of sources—campaign releases, independent analyses, media stories and the Congressional Budget Office—I have constructed a rough estimate of what it would cost to cover all the new benefits," The Washington Post's Robert Samuelson recently tallied. "The additional 10-year spending totals $7.74 trillion."

"But wait, we're not finished yet," wrote Samuelson. "To these costs ought to be added the projected budget deficits under existing policies. For the period from 2021 to 2030, CBO figures that's another $13 trillion. The grand total comes to $20.7 trillion (the $13 trillion, plus the $7.7 trillion)."

I should add here that the CBO recently admitted that it "has tended to overestimate revenues in its projections—especially those that extend further into the future." That means we should expect deficits to be higher than all of this number-crunching predicts, with larger debt to result.

And all of this is before we take into account the damage wrought by the pandemic and by government-imposed lockdowns.

Economic activity "appeared to have declined at a historically rapid rate in the second quarter," the Federal Reserve conceded in July, adding that "the pace of declines in the unemployment rate, over the second half of this year were expected to be somewhat less robust than in the previous forecast."

A smaller, struggling economy in which people are scrambling to rebuild businesses, jobs, and wealth isn't going to surrender as much revenue as government types would like. It's also likely to be more vulnerable than a thriving economy to burdensome taxes and tariffs.

But perhaps I'm reading too much into ambitious-yet-vague promises of tax reductions and grandiose vows to fund everything under the sun. Nobody is really expected to shift their votes based on these schemes. Instead, this election is about flag-waving as Team Red and Team Blue rally the faithful and prepare for electoral combat—or literal combat, given the country's recent direction. The specifics of campaign promises are beside the point.

Whoever wins the presidency—realistically, either Biden or Trump—we're in for big, unaffordable government. How much bigger and how unaffordable are the only real questions.

NEXT: The CDC's Eviction Moratorium Threatens Landlords With $100,000 Fines, a Year in Jail for Noncompliance

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    2. I wrote this up a about decade ago. It’s missing the last 10 years, but the message is still accurate.

      *********************************************************

      According to the Federal Budget History files, 2010: At the end
      of WW2 the debt load was almost 122% of GDP. It went down under
      every president, war and peace, recession or prosperity, liberal
      or conservative, republican or democrat, until Reagan. When
      Reagan took office it was around 33%.

      Under Reagan it started back up, under Clinton it started back
      down again. Under Bush II it went back into climb mode.

      In 1981, 32.6%, in 1989, 53.1%, in 1993, 66.2%, in 2001 57.4%,
      in 2009 90.4%.

      So, Obama was handed an economy that was at risk of another
      depression, and a debt load that is headed for crushing.

      If the country went into depression the GDP could drop as much
      as 50%. The debt would not drop, so the debt load would become
      horrendous. 90% jumps to 180%. Higher than this country has ever
      seen. If the GDP dropped 25% that still pushes up the debt load
      to around 130%. That is a crushing debt. And that is why we
      might well not be able to get out of another depression.

      When Obama took office he was facing a national debt of about
      $12 trill. That debt had built up in the 232 years before his
      inauguration. Yet almost 80% of that debt had built up under 3
      presidents, Reagan, Bush I and Bush II.

      Around 10% under Clinton, though he spent his first term working
      to control the debt, and his second to eliminate the deficit and
      stop the growth of the debt.

      All other presidents combined produced about 10% of the total
      debt.

      80% of the national debt Obama inherited produced under the last
      three republican presidents. And 100% of the growth in the post
      WWII debt load.

      Obama inherited a rolling disaster, and the right is determined
      to undermine anything he attempts to deal with it.
      According to the Federal Budget History files, 2010: At the end
      of WW2 the debt load was almost 122% of GDP. It went down under
      every president, war and peace, recession or prosperity, liberal
      or conservative, republican or democrat, until Reagan. When
      Reagan took office it was around 33%.

      Under Reagan it started back up, under Clinton it started back
      down again. Under Bush II it went back into climb mode.

      In 1981, 32.6%, in 1989, 53.1%, in 1993, 66.2%, in 2001 57.4%,
      in 2009 90.4%.

      So, Obama was handed an economy that was at risk of another
      depression, and a debt load that is headed for crushing.

      If the country went into depression the GDP could drop as much
      as 50%. The debt would not drop, so the debt load would become
      horrendous. 90% jumps to 180%. Higher than this country has ever
      seen. If the GDP dropped 25% that still pushes up the debt load
      to around 130%. That is a crushing debt. And that is why we
      might well not be able to get out of another depression.

      When Obama took office he was facing a national debt of about
      $12 trill. That debt had built up in the 232 years before his
      inauguration. Yet almost 80% of that debt had built up under 3
      presidents, Reagan, Bush I and Bush II.

      Around 10% under Clinton, though he spent his first term working
      to control the debt, and his second to eliminate the deficit and
      stop the growth of the debt.

      All other presidents combined produced about 10% of the total
      debt.

      80% of the national debt Obama inherited produced under the last
      three republican presidents. And 100% of the growth in the post
      WWII debt load.

      Obama inherited a rolling disaster, and the right is determined
      to undermine anything he attempts to deal with it.
      ******************************************************
      Continuation for the 21st century:

      Obama brought the deficit down by 2/3rds, Trump returned to GOP policies, and sent the debt way up. It is way past time to understand, tax cuts for the rich do not enrich the nation. It’s time to run the taxes on the rich to about 50%, which is where the Laffer curve shows to be the ultimate point for revenue, and increase the minimum wage to a living wage, which will improve the economy over all.

      Tuition free public education will just put things where they have been sin public education became public policy around 1615.

      Universal health care under any of the plans in place in any of the industrialized democracies will free up enough money to bring this country up to where it should be.

      1. Obama dealing with the debt, that ‘s a good one.

        1. He inherited a deficit of nearly $1.5Trillian, brought it down by about 2/3rds.

          That is in the record.

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  3. No one can stop it.

    Buy gold and bitcoin I guess.

    1. Yep. They are going to inflate it all away, so plan accordingly.

  4. Maybe they’re both big spenders. But the Biden economy will be stronger because he’ll implement the Koch / Reason policy of unlimited, unrestricted immigration.

    #VoteBidenForOpenBorders

    1. No way in hell is Biden going to put in open borders.

      No democrat has since we started restricting immigration, and none will.

      Has the GOP rule that gave priority to those who bring $1 million to invest on immigration even been repealed? That would be a good one to remove.

      1. Go back to the debate and get the still of all the major Democrat contenders raising their hands to free health care for illegal immigrants.

  5. They’ll both spend too much. But with Trump, the country won’t be turned into the totalitarian socialist state of Kamalia.

    1. One, that’s a horribly stupid comment.

      Two, the debt will grow IMMENSELY if Trump wins again. Lest we forget that even before covid the deficit DOUBLED to over a trillion and the debt itself grew by 10 PERCENT.

      Just shows how horribly hypocritical republican voters are in all of it.

      If nothing else, the Dems will spend but at least they try to cover it somewhat.

      1. One, you’re a fucking idiot.

        Two, you’re a fucking idiot.

        1. No he is correct. You may not like taxes, but the Democrats are more likely to pay with taxes rather than borrowing.

          1. This is very true. At the end of the day spending needs to be decreased and taxes need to be increased. Such a required solution is never going to pass muster on either side.

            1. Increase taxes to whatever you want, they’ll never bring in more than 15-20% of gdp.
              But lower taxes lead to higher gdp, higher taxes lead to lower gap.
              So what’s the rational choice?

              1. Sorry but this lower taxes bring in more revenue is wearing thin. It a hypothesis that has not proven itself.

                1. Not proven itself? How about failed miserably?

                  Taken to it’s extreme, if lower taxes mean more revenue, then abolishing taxes completely should result in infinite revenue.

                  Anyone who looks at the Laffer curve should see, the curve shows lower taxes increase revenue down to 50%. Below that revenue decreases.

                  Oh, and the Laffer curve only applies to the upper economic strata. The lower strata has no choice but to work as much as necessary no matter what the tax level is, just to survive.

                  1. Thanks for that explanation. I think the Laffer Curve get misrepresented far too often and people forget it is a curve. Meaning it has limits and can not be applied across the board to all situations.

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                2. Lower taxes always bring in more revenue.
                  Higher taxes can bring in more or less, depending on how severe the hike is.
                  But current revenues are far more than the government needs to carry out its basic functions.

      2. This comment is premised on the idea every taxpayer dollar is the governments and them letting you keep some is spending.

        1. Wearingshit is part of the “tax cuts are spending” asylum.

        2. No it is premised on the idea that a government should tax enough to cover the services it provides.

          1. Maybe the government should only spend what it collects in taxes. You’re going to say that’s the same thing. It’s not.

            1. Then the government would need to tax more. Listen the Republicans have had control of the Presidency and Congress from 2017 to 2019 and they cut almost nothing. Nobody wants to cut. Part of the reason for that is that people have no idea what government costs because they are undertaxed for the services they receive.

              1. Well stated.

              2. Then the government would need to spend less tax more.

                FTFY

        3. Absolute nonsense! Perhaps paranoid nonsense.

      3. Two, the debt will grow IMMENSELY if Trump wins again. Lest we forget that even before covid the deficit DOUBLED to over a trillion and the debt itself grew by 10 PERCENT.

        And Biden will be better? Or worse? Go from his public comments.

        1. Pretty sure if wearingit actually read the article he would see Biden is projected to be almost $10 trillion dollars worse by the CBO because the additional Biden spending far exceeds the tax revenues.

          1. Don’t be so sure that wearingshit can read.

          2. The CBO is supposedly non-partisan, but how real that is depends on who runs the CBO.

            Those dedicated to truth will value an independent CBO, those who possess ultimate truth don’t need an independent anything. The GOP possess ultimate truth under their god Trump.

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    1. Cool. Maybe you can help pay the debt.

  7. Yeah no shit, the government debt is well past the point of being able to be paid back. At this point buying it makes you a sucker.

    Also, how does the same argument that is applied to free trade with countries that subsidize their products not apply to government spending done on debt? If some poor smchuck chooses to throw their money away subsidizing “free” stuff for americans, why should we care? The bill quite literally can’t come due at this point. All that can happen is that people stop loaning money to an entity that can’t pay it back. Then what? We either live within our means or we print money and tank our dollar. The latter options is sucky, but we’re fooling ourselves if we think any attempt to get the debt under control wouldn’t involve the exact same actions.

    1. I mean, if there actually was a libertarian moment at some point and congress and the prez slashed the federal government to the bone doing little more than national defense and debt servicing then it’s possible they could eventually dig their way out

      hahahahahaha

    2. At this point interest rates should be far higher to price in expected inflation, but the Fed is artificially forcing them low to prop up the teetering stock market.

  8. There’s no such thing as “taxing too little”

  9. Good thing Trump and Biden aren’t the only people on the ballot this fall. There is another choice, and if enough drops of water make it they will be an ocean.

    1. Jorgensen’s chances are slim and coronavirus, but I wouldn’t wish that even on Trump and Biden.

  10. If I did business in the same manner as government does, and forced strangers to give me money, would you consider me a criminal?

    1. If I took a service or product from you without paying for it would you consider me a criminal? Roads, schools, police, fire, national defense, emergency assistance all cost money.

      1. LOL. I didn’t ask for any of that. They’re all there, whether I like it or not, and government’s got a de facto monopoly on them. And if I pay for private security or private schools for myself and mine I am still forced to pay for the government versions, even though I don’t want them and I am not using them.

        1. Services are there because you live in a country of over 300 million people and the government is obligated to meet the needs of all its people and not you alone. I am guessing that you want to live in a first world country and have all the comfort surrounding and available. Well first world countries cost money. You could move to a third world nation with not health care, no roads, no police nor schools. Your taxes would be lower.

      2. Other than national defense none of that is federally funded (and defense is about 1/4 of the federal budget)

        There are plenty of people who pay Social Security and Medicaid taxes but then never use the service. There are billions of dollars in subsidies that don’t help the taxpayers who pay fro them

      3. and how are you not supposed to use public roads? trespass on private property, on foot or motorbike? jet pack everywhere?

        schools are not benefiting me, but I’m still forced to pay for them.

        the police and fire departments help somewhat, but get far more generous pay and pensions than a free market would give them.

        national “defense” wastes more money than anything else, and generally makes us less safe by giving terrorist radicals some pretense to take offense.

  11. When California gets too expensive you can always move to Texas, when the whole country becomes California where you gonna go?

    1. Part of the problem here is that you want to live in a first world nation. You could go to a third world nation that provides almost nothing for their citizens and pay less taxes. My guess is you will have to pay bribes to local officials, but that not really taxes.

      1. Just wait a few more years. The whole West Coast is becoming a third world nation.

  12. By the way, there’s a name for the system whereby businesses are rewarded or punished based on how well they serve the purposes of the government.

  13. Wait a minute. We are already near $27 trillion beyond our means which means that there are no means to consider. Both parties will spend into eternity to save the corruption from imploding. Since there are no immediate consequences for creating electronic pesos into forever, there are no limits to spending. It’s like having a credit card with no limits. By the time all this debt matters, Trump and Biden and most of both parties will be dead and buried. Therefore, what they spend today, won’t make any difference into far into the future.

    1. Trump might still be alive. That future is only a few years away now.

  14. There is literally no political capital in cutting spending. Not a single politician will even bother because of it. To propose spending cuts is to propose that someone loses their job, that the country is put at “risk,” or that someone doesn’t get “needed” benefits. And the person’s political opponent will rail on that in every ad, which will cause the majority of Americans to go, “oh, that’s terrible, how can [insert name] be so cruel and awful.”

    This isn’t a politician problem, this is an American public problem.

    1. Well said.

  15. Both Biden and Trump Plan to Spend Well Beyond the Government’s Means

    There are still people in the US who remember that all spending bills must originate in the House of Representatives, right?

    The House controls the purse strings, not the President.

    The House is currently controlled by Democrats….

    1. The Senate has a trick they can pull that allows them to originate spending bills too. I’m not sure if its been used recently but that’s how they passed the Affordable Care Act

      1. The Republicans used it in 2017 to pass a tax cut for the wealthiest Americans.

    2. McConnell won’t allow any votes on any House bills. Not even to save the economy from a depression. Do you think this means he thinks he’s gonna lose his majority and wants to leave Biden with the worst possible conditions out of soulless mindless spite? Could be.

  16. Government is reactive not proactive. The debt will be addressed one day after no one will buy our bonds anymore. The first thing that will be done is to point fingers at the other side.

    Useless article. Jorgenson won’t get 25% the votes that Gary Johnson did, there are no Libertarian nor libertarian leaning candidates that appear likely to win in any house or senate races.

  17. So where is my pony?

  18. Is this where we pretend not to know that Biden’s deficit would be far larger than Trump’s?

    1. So he’s to be the first exception in modern memory to the rule that Republicans always spend more? Based on what?

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  20. If there is no political cost to endless spending, why is the country’s economy currently being held hostage by about 20 senators who refuse to vote for any bill that raises deficits? Even during a massive national crisis!

    Is it principle? The principle that saving the economy during a national crisis would be terrible for their philosophy that government spending is never a better investment than doing nothing and praying to the market leprechauns?

    1. The “market leprechauns” are free people freely deciding what to spend or save or invest their own money on, so yes.

      The government leprechauns are thieving, scheming packs of psychopaths, demagogues, lobbyists and grifters.

      1. And if the people have no money to spend because the economy crashed due to a pandemic?

  21. I think the most tragic thing about the comments here is the tribal beliefs being bandied about thinking one team is in the right on this issue and one team is in the wrong on this issue. If you haven’t noticed, Dems and Repubs are equally culpable when it comes to spending. Trying to play the game of my team is bad, but not as bad as your team is intellectually dishonest at this point.

    1. You’re normally right, based on the recent historical record. But Biden is on record pushing trillions more spending than Trump, and other Democrats are even worse.

      1. Yeah, but this position really doesn’t change the situation. You are now just simply saying, “this time, the Dems appear that they will more likely be worse than Repubs.”

        At the end of the day, it is still playing the “my team isn’t as bad as your team” game.

  22. Yeah, I wouldn’t vote for either one. Spending needs to be cut by 50 percent or more, but there’s no political advantage now in cutting spending by even 10 percent.

    The stock market is tanking today, but still not pricing in the likelihood of a Biden victory. Company profits would be much lower without the Trump tax cuts, and Biden is sure to roll them back at least partially, as well as imposing new costly regulations.

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  24. The economy is going to crater sooner or later, and my prediction is sooner rather than later. When the economy reopens and we again have demand the “stimulus package” could no deliver, we will have massive inflation leading to a bubble the quickly pops. The party that wins this elections will probably be the loser for a long, long, long time to come, if it can survive at all.

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