In his speech to the Economic Club of New York, Trump predicted his updated package to reduce taxes, curb government regulation and take a tougher stance on negotiating trade agreements would produce annual economic growth of 3.5 percent.
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The GOP nominee also addressed what he called the “Penny Plan”, named for the idea that “if we save just one penny of each federal dollar spent on non-defense, and non-entitlement programs, we can save nearly $1 trillion over the next decade”. He said the plan would not touch programs like Social Security and Medicare.
Along with hitting Democratic opponent Hillary Clinton as a nominee who would help only “the donors and special interests” as president, Trump continued to push his own proposal as a family affair – crediting daughter Ivanka Trump not just on her role in creating his childcare plan but also for her help on his economics plan as a whole.
In the question and answer period with Mr. Paulson, Mr. Trump also ruled out any plan to default on the US debt. But when Jeb Bush proposed a similar goal previous year, he was roundly criticized by economists across the political spectrum, because the pledge does not take into account structural changes in the USA economy that make that sort of growth much less likely.
Now Trump is adding insult to injury by making the same promise that was a key component of Bush’s economic plan-a pledge to more than double the United States’ current economic growth levels to 4%.
Earlier in his campaign, Trump proposed a $10 trillion tax cut over 10 years that was so large and costly that several Republican economists laughed when asked about it.
Trump said that lifting restrictions on energy production, which are in place for environmental protection, would increase GDP “by more than $100 billion per year” and add 500,000 jobs.
But that kind of sustained, rapid economic growth is relatively rare.
Trump offered some specifics of his tax plan during his speech, reiterating again that individual income tax brackets would be reduced to three: 12 percent, 25 percent, and 33 percent. The nonpartisan Congressional Budget Office estimates that the labor force participation rate will be 60.2 percent in 2026, down from 62.8 percent today, based partly on population trends. Democrat Hillary Clinton, who will face Trump in the November 8 election, denounced it as catering to the very wealthy and ignoring the working class. Few businesses now pay the full 35 percent rate, taking advantage instead of many deductions in the existing tax code. Trump said significant growth would cut down the deficit. Still, he said, the lowering of tax rates, plus Trump’s previously announced idea to repeal the estate tax and alternative minimum tax, would nonetheless still end up disproportionately benefiting higher-earning individuals.
Some economists also questioned the assumptions underpinning the plan he outlined on Thursday.
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More than doubling the standard deduction, which is mostly used by middle-class tax filers, to $15,000 for individuals and $30,000 for couples.
