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lite.cnn.com - on gopher - inofficial
ARTICLE VIEW:
7 ways a Trump administration could affect your finances
By John Towfighi, CNN
Updated:
5:59 AM EST, Sat November 16, 2024
Source: CNN
President-elect Donald Trump promised Americans he’d bring down
consumer prices, make health care more affordable and protect Social
Security. Now he has to follow through.
Concerns about inflation and the cost of living were central to
Trump’s victory in the US presidential election. According to CNN ,
68% of voters said the economy was either poor or not good.
Much of the president’s ability to impact economic policy depends on
approval from Congress. Nonetheless, when Trump is inaugurated on
January 20, he will be on the hook to make good on his promises.
Here are seven ways a Trump administration could affect your personal
finances.
Child care
On the campaign trail, Trump suggested expanding the child tax credit,
which provides financial assistance to parents in the form of tax
breaks. The linked on his website mentions expanding the child tax
credit but does not include further details.
During Trump’s first term, the 2017 Tax Cuts and Jobs Act temporarily
expanded the child tax credit from $1,000 to $2,000. That credit is set
to expire at the end of 2025, but with approval from Congress, Trump
could extend the 2017 tax cuts or introduce a new policy.
Vice President-elect JD Vance has suggested expanding the child tax
credit to $5,000. Trump has not commented on the proposal.
Maria Castillo Dominguez, a certified financial planner and founder of
Valoria Wealth Management, told CNN that extending the credit is
“vital” for many households — particularly those with young
children — to be able to manage child care costs.
Karoline Leavitt, a spokeswoman for the Trump-Vance transition, said in
a statement that Trump will make good on his campaign promises.
“The American people re-elected President Trump by a resounding
margin giving him a mandate to implement the promises he made on the
campaign trail,” Leavitt said. “He will deliver.”
Taxes
The Trump administration is expected to focus on extending tax cuts
introduced by the Tax Cuts and Jobs Act that are set to expire in 2025.
The move will require approval from Congress.
Extending Trump’s 2017 tax cuts would lower taxes by an average of
$2,000 in 2026, according to an analysis by the . However, nearly half
of the tax break benefits would go to the top 5% of households who
make over $450,000.
For example, extending the tax cuts would save the top 1% of
households about $70,000, or 3.2% of their income, according to the
Tax Policy Center. By comparison, the tax cuts would save middle-income
families about $1,000, or 1.3% of their income.
On the campaign trail, Trump touted ending double taxation on US
citizens who live overseas but has not mentioned the topic much since.
Additionally, he has not elaborated on his promise to make interest
rates on auto loans tax-deductible.
Trump has suggested eliminating federal income tax entirely in favor of
revenue from tariffs. Alan Auerbach, a professor of economics at UC
Berkeley, told CNN that the proposal does not make financial sense.
Revenue from tariffs is not enough to replace revenue from federal
income tax, he said. “The numbers don’t work for this.”
Social Security
Trump promised not to “cut one penny” from Social Security,
according to his policy platform.
But he has proposed eliminating federal taxes on Social Security, tips
and overtime pay. Tax revenue is used to fund federal aid programs like
Social Security.
Eliminating the taxes would provide short-term relief but deplete funds
for Social Security, according to the , leading to reduced benefits for
workers.
Households making $32,000 or less would not benefit from the federal
tax cut because the majority of their Social Security income is not
taxed, according to the Tax Policy Center.
Under Trump’s proposal, the fund reserves for Social Security would
run dry by 2031, according to the . Additionally, there would be a 33%
decrease in benefits for enrollees by 2035.
Student loan debt
Key aspects of the Biden administration’s plan for student loan debt
forgiveness hang in the balance, meaning the Trump administration could
influence the outcome for millions of Americans who hope to have their
debt canceled.
Efforts to forgive student loan debt — as attempted by the Biden
administration — will likely be scrapped under Trump, according to
Berkeley’s Auerbach.
As of August, some of President Joe Biden’s initiatives to relieve
student loan debt remained blocked by a .
“Republicans have been challenging those things in court, largely
successfully, and I’m sure the sentiment in the Trump administration
is going to be similar to that,” Auerbach said. “They’re not
really that interested in providing student loan relief.”
Trump’s policy platform does not mention student loan debt. In his
first term, to end the Public Service Loan Forgiveness program.
Prices and inflation
Concerns about inflation helped send Trump back to the White House. Yet
under his proposed policies, inflation could come roaring back.
Inflation ticked up to 2.6% in October, its first increase in six
months, according to the Consumer Price Index. The bump up was in line
with expectations, but it was also a signal that the beast of inflation
is not entirely tamed.
Trump’s proposed 10% to 20% tariffs on imports would lead to an
increase in everyday consumer prices, according to a by the National
Retail Federation. For example, $90 athletic shoes could cost $106 to
$116 under Trump’s tariffs.
Additionally, Trump’s proposal for mass deportations could increase
food prices. Auerbach noted that undocumented immigrants often work in
agriculture or food processing, portending for a labor shortage if they
are deported.
Auerbach told CNN that the president-elect’s plans for tariffs and
mass deportations could have the most significant impact on peoples’
finances.
“If those things actually come into effect as proposed, there are
going to be big increases in the cost of living,” he said.
Health insurance
On the campaign trail, Trump went back and forth on his approach to
changing the Affordable Care Act. He has said he has “concepts of a
plan” for health care.
The Trump administration wants to “promote choice and competition”
and make health care more affordable, according to his policy platform.
Yet it does not provide further details.
Americans enrolled in the ACA marketplace will likely see increases in
health care costs after a key tax credit from the pandemic expires at
the end of 2025.
As part of the 2021 American Rescue Plan Act, enhanced premium tax
credits were introduced to decrease out-of-pocket costs for eligible
ACA enrollees. These tax credits were expanded through 2025 as part of
the 2022 Inflation Reduction Act.
A Republican-led Congress is likely to let the enhanced personal tax
credits expire, according to , a nonprofit health policy group. The
credits save enrollees about $700 a year, according to KFF, and if they
expire, about 19.7 million Americans will see spikes in health care
expenses.
“Forthcoming policy proposals are likely to raise people’s costs
for health coverage, roll back protections for people with pre-existing
conditions and increase the number of people without coverage,” said
Sarah Lueck, a vice president at the Center for Budget and Policy
Priorities, a think tank.
Regarding Medicare, Trump will not “cut one penny” from the
program, according to his policy platform.
“I think, at least in the short run, I don’t expect any major cuts
in Medicare benefits,” Auerbach said, noting that Trump recognizes
it’s a popular program.
Housing
Trump’s policy platform says his administration will promote
homeownership “through tax incentives and support for first-time
buyers.” It also mentions opening “limited portions” of lands
owned by the federal government for “new home construction.” Trump
has not elaborated on his platform.
The Trump administration will likely cut red tape to encourage business
and real estate developments. Housing costs are often most impacted by
local regulations instead of national policy, said Berkeley’s
Auerbach.
Trump’s plan for mass deportations could shrink the labor force in
the construction sector, putting strain on an already tight supply of
housing and in turn causing higher prices, Auerbach said.
As for mortgages, more affordable rates could stem from the Federal
Reserve’s decisions on where to set interest rates, Auerbach said.
The Fed’s benchmark interest rate sets the cost of borrowing between
banks and influences the interest rates paid by consumers on loans,
credit cards and mortgages.
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