It’s free. That was the headline in the Wall Street Journal. Hillary Clinton’s new, more generous college subsidy plan “offers free tuition to millions.”
Of course commentators immediately added quotes around “free” to indicate some dissatisfaction. Nothing is free, they said. Clinton proposes to offer “free” tuition to students attending public universities in their home state, if their family income is $85,000 or less. The threshold will rise to $125,000 in 2021. The skeptics immediately noted that not even the president of the United States can declare something of value to be “free.” At best, they can make arrangements to have someone else pay for it, now or later. For her previous, presumably less expensive college subsidy plan, Clinton’s website said it would be “fully paid for by limiting certain tax expenditures for high-income taxpayers.” In other words, Clinton makes use of a tried and true political technique for buying votes. To translate: I will take their money and give it to you, she tells college students. It has definite appeal.
With every act of political benevolence there comes, eventually, a bill. The Committee for a Responsible Federal Budget recently issued an analysis of the promises of Clinton and presumed Republican nominee Donald Trump, and how they would impact the national budget deficit and debt, if enacted. It is not pleasant.
Start with the baseline. The publicly held national debt currently stands at $14 trillion, the highest since World War II, and at 75 percent of gross domestic product nearly twice the historic level. Interest on this debt is a growing share of the federal budget. The Congressional Budget Office estimates that, if current law does not change, the debt will rise by $10 trillion over the next decade. The drivers are health care, Social Security and interest payments.
Clinton promises to expand health care and college subsidies; raise spending for education, infrastructure, energy research, paid family leave; and raise various taxes on businesses and the wealthy. She would add $1.45 trillion in spending in a decade, and raise revenue $1.2 trillion, said the committee. The net: $250 billion added to the national debt in 10 years, pushing it to 87 percent of GDP by 2026.
Clinton is sober and sensible relative to Trump. He has promised to reform and reduce taxes by about $10.5 trillion in a decade, rebuild the military, add veterans benefits, deport 11 million undocumented immigrants, and cut discretionary spending by relatively small amounts. In all, the committee estimates net spending would rise by $1 trillion in 10 years, and $11.5 trillion would be added to the debt, pushing it to 127 percent of GDP.
It is a hard thing, balancing the budget. Trump has promised it. Under his policy proposals – large tax cuts, no change to Social Security or Medicare – the committee estimates it would require spending cuts of 50 percent to stabilize the national debt and 67 percent to balance the budget. “It is hard to imagine how these levels of reductions would be achievable,” the committee said.
Clinton – with, as promised, no change to Social Security – would require an 11 percent cut in spending to stabilize debt and 28 percent to balance the budget.
Fixing it all with tax hikes is no easier. Under Clinton’s plan, to balance the budget with increased taxes on households making $250,000 or more, would require raising the top rate to 64 percent.
That wouldn’t work for Trump. His plan would require a top rate over 100 percent. He’d have to borrow the money, which means he promises to take money from your children and give it to you. Clinton is slightly more realistic, but not much.