President-elect Donald Trump made significant promises during his campaign regarding various aspects of the economy and personal finances. Now, as he prepares to take office, it remains to be seen how he will fulfill these promises and what the implications will be for Americans.
Trump's Promises and Their Implications for Your Wallet
Child Care
During the campaign, Trump suggested expanding the child tax credit, which provides financial assistance to parents. The 2017 Tax Cuts and Jobs Act temporarily increased the credit from $1,000 to $2,000, but it is set to expire at the end of 2025. Vice President-elect JD Vance proposed expanding it to $5,000. Maria Castillo Dominguez emphasized the importance of extending the credit for many households with young children. Karoline Leavitt stated that Trump will fulfill his campaign promises.This could have a significant impact on families' ability to manage child care costs. It could provide much-needed financial relief and help parents make ends meet.Taxes
The Trump administration aims to extend the tax cuts introduced by the Tax Cuts and Jobs Act, which are set to expire in 2025. This would lower taxes by an average of $2,000 in 2026, but nearly half of the benefits would go to the top 5% of households. For example, the top 1% of households could save about $70,000. On the campaign trail, Trump touted ending double taxation on overseas citizens but has not mentioned it much since. He also proposed making interest rates on auto loans tax-deductible but has not elaborated. Alan Auerbach pointed out that the proposal to eliminate federal income tax in favor of tariffs does not make financial sense.These tax policies could have a wide-ranging impact on different income groups and the overall economy.Social Security
Trump promised not to cut Social Security and proposed eliminating federal taxes on it. However, this would deplete funds and lead to reduced benefits. Households making $32,000 or less would not benefit from the tax cut. Under his proposal, the fund reserves for Social Security would run dry by 2031, and there would be a 33% decrease in benefits by 2035.This poses a significant challenge for the future of Social Security and the financial well-being of retirees.Student Loan Debt
The Biden administration's plan for student loan debt forgiveness is in doubt, and the Trump administration could influence the outcome. Berkeley's Alan Auerbach believes efforts to forgive debt will likely be scrapped under Trump. President Joe Biden's initiatives to relieve student loan debt have been blocked by the Supreme Court. Trump's policy platform does not mention student loan debt, and he failed to end the Public Service Loan Forgiveness program in his first term.This could have a major impact on millions of Americans hoping to have their debt canceled.Prices and Inflation
Concerns about inflation played a significant role in Trump's victory. His proposed 10% to 20% tariffs on imports would lead to an increase in consumer prices. For example, $90 athletic shoes could cost $106 to $116. Additionally, mass deportations could increase food prices due to a potential labor shortage in the agriculture and food processing sectors. Alan Auerbach warned that these plans could have a significant impact on people's finances.Inflation and its potential effects on everyday life are a major concern.Health Insurance
On the campaign trail, Trump was unclear about his approach to changing the Affordable Care Act. His policy platform focuses on promoting choice and competition and making health care more affordable but provides no further details. Americans enrolled in the ACA marketplace will likely see increases in health care costs after a key tax credit expires at the end of 2025. A Republican-led Congress is likely to let the enhanced personal tax credits expire, which could save enrollees about $700 a year. Sarah Lueck warned that forthcoming policy proposals could raise costs and roll back protections. Regarding Medicare, Trump promised not to cut it.The future of health insurance and its affordability remains uncertain.Housing
Trump's policy platform emphasizes promoting homeownership through tax incentives and support for first-time buyers. It also mentions opening limited portions of federal lands for new home construction. The administration aims to cut red tape to encourage business and real estate developments. Mass deportations could shrink the labor force in the construction sector, leading to higher housing prices. Mortgage rates could be influenced by the Federal Reserve's decisions on interest rates.These policies could have a significant impact on the housing market and homeownership rates.