US election: Potential growth and deficit impacts
The 2024 U.S. election has placed the potential economic impacts of the candidates' proposals in the spotlight, with particular focus on growth prospects and fiscal deficits, News.Az reports citing Investing .
Analysts at Deutsche Bank have provided a detailed examination of the fiscal implications that may arise depending on which candidate secures the presidency and how Congress is structured post-election.
Former President Donald Trump and Vice President Kamala Harris have both advanced proposals that diverge in terms of their economic impact.
Deutsche Bank’s baseline scenario assumes the full extension of the Tax Cuts and Jobs Act of 2017 and measures both candidates' plans against this benchmark.
Trump’s platform, as detailed by Deutsche Bank, includes reducing corporate taxes to 15%, eliminating taxes on Social Security benefits, and de-regulating industries.
However, his trade policy, particularly the proposed 10% universal tariff and a potential 60% tariff on Chinese goods, presents considerable risks to growth.
While the revenue from tariffs could offset some tax reductions, the overall impact could still lead to slower growth.
In the absence of tariffs, Trump's policies are expected to provide a short-term boost to GDP, but this fades as the deficit widens, resulting in a negative impact on growth by 2028.
Harris, on the other hand, proposes raising corporate taxes back to 28%, increasing the top marginal income tax rates for high earners, and expanding social benefits like child care and paid family leave.
These policies are more focused on redistribution, and though they generate revenue to fund social programs, they are likely to exert a drag on economic growth in the near term, especially if implemented in full.
Analysts at Deutsche Bank have provided a detailed examination of the fiscal implications that may arise depending on which candidate secures the presidency and how Congress is structured post-election.
Former President Donald Trump and Vice President Kamala Harris have both advanced proposals that diverge in terms of their economic impact.
Deutsche Bank’s baseline scenario assumes the full extension of the Tax Cuts and Jobs Act of 2017 and measures both candidates' plans against this benchmark.
Trump’s platform, as detailed by Deutsche Bank, includes reducing corporate taxes to 15%, eliminating taxes on Social Security benefits, and de-regulating industries.
However, his trade policy, particularly the proposed 10% universal tariff and a potential 60% tariff on Chinese goods, presents considerable risks to growth.
While the revenue from tariffs could offset some tax reductions, the overall impact could still lead to slower growth.
In the absence of tariffs, Trump's policies are expected to provide a short-term boost to GDP, but this fades as the deficit widens, resulting in a negative impact on growth by 2028.
Harris, on the other hand, proposes raising corporate taxes back to 28%, increasing the top marginal income tax rates for high earners, and expanding social benefits like child care and paid family leave.
These policies are more focused on redistribution, and though they generate revenue to fund social programs, they are likely to exert a drag on economic growth in the near term, especially if implemented in full.
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