With the US presidential election just weeks away, both candidates, Donald Trump and Kamala Harris, are rolling out their proposals on the economy, in the hope of standing out. On Thursday, September 5, the billionaire spoke before the Economic Club of New York, which brings together economic figures and representatives of major American companies.
The Republican candidate pledged to them to drastically reduce corporate taxes and regulations: “I promise low taxes, low regulations, low energy costs, low interest rates, secure borders, very, very low crime,” Donald Trump said, quoted by Bloomberg.
The former White House tenant took advantage of the event to announce that he would launch an “audit” on government spending, with a view to a “profound” reform, relays Agence France Presse (AFP). And it would be none other than billionaire Elon Musk, boss of Tesla and SpaceX, and close to Donald Trump, who would be at the head. “On the advice of Elon Musk […] “I will establish a government commission to conduct a comprehensive audit of the finances and performance of the entire federal government, with a view to making recommendations for drastic reforms,” the former US president said.
Fiscally “untenable”
The key point of his proposals to seduce the economic elite: the reduction of corporate tax to 15% (compared to 21% currently), while his rival, Kamala Harris, intends on the contrary to increase it to 28% and strengthen the taxation of the rich in order to lighten the tax burden on the middle classes. According to AFP, the Biden administration announced on Friday that it had collected nearly $1.3 billion since the end of 2023 by recovering unpaid taxes owed to the US Treasury by wealthy taxpayers. “Under the administration of Donald Trump, as the number of audits of high-income taxpayers decreased, the share of audits on taxpayers with incomes below $200,000 increased,” the US Treasury emphasizes.
The Republican candidate – who has yet to release a detailed plan for how he plans to pay for his measures – also plans tax breaks for individuals. These could be achieved by increasing trade and customs duties on foreign countries, in order to encourage companies to produce in the United States. However, his program is considered unsustainable in its entirety, according to Bloombergwhich estimates that it would increase the American deficit by 10.5 trillion dollars over ten years – “a colossal sum, which would exceed the combined budgets of all national federal agencies,” continues the economic media.
Key topic of the election
Between August 2023 and July 2024, the US deficit rose to $1.6 trillion for a federal debt exceeding $35 trillion. Federal Reserve Chairman Jerome Powell warned that the rise in public budget deficits was “on an unsustainable trajectory.”
Donald Trump has also promised to cut interest rates – held at historically high levels since July 2023, in order to control inflation – although he does not, in reality, have control over them. This lever belongs in fact to the Federal Reserve, which lowers or raises its key federal funds rate to influence the borrowing costs to banks.
The economy is expected to be a defining issue in the U.S. election. According to a Bloomberg News/Morning Consulting poll conducted in late August in seven key states, more than half of likely voters believe they were better off financially under Trump than under Joe Biden.