While Ted Cruz is running for president as a fiscal conservative, his campaign plans would massively expand the federal debt, according to a new analysis published Monday by an outside group.
The Committee for a Responsible Federal Budget estimated that the plans made available by the Texas senator would add $12.3 trillion to the federal debt, including interest costs, over 10 years.
For comparison, the current federal debt held by the public is $13.7 trillion. Cruz’s tax and spending plans would result in the debt growing from around 75 percent of economic output to roughly 131 percent by 2026, according to the nonprofit group, well above the rise to about 86 percent that is expected today.
The Committee for a Responsible Federal Budget, which advocates for lower annual deficits and cutting the accumulated federal debt, judges in its analysis that it would be difficult for Cruz’s presidential agenda to lower the debt, even if his reforms would accelerate economic growth as much as he has promised on the campaign trail.
It would require “unprecedented levels of sustained economic growth” for Cruz’s promises to add up in fiscal terms, the analysis concludes.
While acknowledging that Cruz’s tax reform and Obamacare repeal proposals could boost growth, the report warns that far faster growth would be needed to avoid a massive accumulation of debt. Specifically, Cruz’s reforms would need to generate 6.8 percent real annual output growth, year after year, just to avoid adding to the deficit. Such a target is unrealistic, given that the Federal Reserve sees long-term growth of about 2 percent.
The most costly policy contemplated by the conservative Texan, from the Treasury’s point of view, is his sweeping tax reform proposal, which the committee estimates would add $8.3 trillion to the debt. The other big items would be $2.4 trillion in new defense spending, $400 billion from repealing Obamacare, and $1.7 trillion in added interest on the debt. Offsetting those policies would be $500 billion in spending cuts.
The analysis researched what size spending cuts would be needed to make Cruz’s plans add up. Setting aside areas in which Cruz has proposed spending increases, such as the Pentagon, spending would need to be cut by about half across the board to prevent the debt from growing even faster than currently anticipated. Alternatively, Cruz could adjust his tax plan by raising the business flat tax he has proposed, a form of value-added tax, from 16 percent to 24 percent.
