In the wake of Trump’s victory, pundits have been wondering what kind of economic policy he would implement.
Trump has made no promises about how the United States would respond to its economic woes, but it’s clear that he would make good on his campaign promise to slash taxes on corporations and the wealthy and to use those revenues to reduce the deficit.
That would likely leave the country with less money in the bank than it had a year ago.
So why would he keep that promise?
How does a president who campaigned on a promise to cut taxes on the wealthy get elected?
And why would anyone want to be part of that plan?
The tax cuts have been a central part of Trump and his populist economic message.
He promised to cut the corporate tax rate from 35% to 15%, and he promised to bring back millions of manufacturing jobs that have disappeared.
Trump’s promise to end the estate tax has also become a central component of his economic policy.
He wants to lower the estate rate to just 5% from the current rate of more than 70%.
But how would Trump actually reduce the federal deficit?
The tax cut hasn’t been as big as promised, but there’s a big reason for that.
The government is already spending a lot more money than it takes in.
The federal debt, as a share of GDP, is now roughly half what it was in 2016, when Trump ran for president.
If Trump keeps those promises, and does his part to reduce tax receipts, the deficit will shrink by more than $1 trillion over the next decade, according to the Congressional Budget Office.
Trump has made the argument that he will do that by making a few big changes to the tax code.
For example, he’s promised to reduce taxes on companies by $1.5 trillion over 10 years.
But how do those changes actually get passed?
And how much would the tax cuts actually reduce taxes?
The Congressional Budget Board, which analyzes the economic impact of federal tax policies, has a report that details the different ways Trump could make the tax cut larger or smaller.
It’s based on what economists call a “fiscal multiplier.”
For example, if the tax bill increases the federal budget deficit by $800 billion, it would boost revenue by $600 billion.
But if the deficit is raised by $900 billion, the tax increase would reduce revenues by $700 billion.
Trump would need to spend more money on the economy to reduce his deficit, and if he wants to pass those tax cuts, he would need Congress to pass a budget resolution that would include more spending.
“If you look at the fiscal multiplier, you have to have $1,000 in order to make the deficit smaller,” says Eric Rosengren, director of the Center for Economic and Policy Research at the Heritage Foundation.
The Treasury Department’s Office of Management and Budget, which is part of the Treasury Department, has similar numbers.
They estimate that Trump would only need to raise $600 to reduce deficits by $300 billion.
And the White House says that Trump’s budget would be $1 billion smaller than the CBO’s estimate.
But Rosengen says the CBO does a better job of projecting how much money the tax plan would increase the federal debt.
A tax cut would increase taxes on some people and decrease them on others, but only on people who are higher income.
That means that the tax rate on those with higher incomes would fall.
If the tax were applied to everyone, people with higher income would pay more in taxes than they do now.
The CBO’s analysis also shows that the impact of a tax cut on the deficit would be small because there are many other things that the federal government could spend on.
The Tax Policy Center estimates that the reduction in the deficit could be offset by more money going to the poor and middle class.
That money could come from expanding the Earned Income Tax Credit or extending unemployment benefits.
What about those corporate tax cuts?
The corporate tax cut is big news because it would affect companies across the board.
It would affect them not just in the United Kingdom, where Trump won the election, but also in France, Canada, Australia, Germany, New Zealand, Mexico, Spain, Sweden, Italy, Japan, and Singapore.
The Treasury Department estimates that roughly half of the $600 trillion in the corporate income tax cuts would go to corporations.
But that means that half of that tax cut goes to corporations with fewer than 500 employees.
That’s not exactly a lot of money.
And Trump has not yet made that decision.
The American Enterprise Institute, a conservative think tank, estimated in March that Trump has cut the tax burden on companies at the rate of just $1 in 2020.
That was after Trump signed the tax legislation into law.
But even then, the Tax Policy Council, an independent think tank that has been a staunch supporter of the tax package, said it would take some time for companies to adjust to the new rules.
And many companies are already making major changes