It has been two decades since America balanced its budget. Wars, tax cuts and a pandemic have all been paid for with deficit spending, using borrowed money. The next president might face a reckoning as a result.
The federal debt is “soaring” but Donald Trump and Kamala Harris “aren’t talking about it,” said The Wall Street Journal. America is $28 trillion in the hole — about the size of the entire economy — and that number is on track to increase by $22 trillion over the next decade. That’s a lot of money: “Interest costs alone are poised to exceed annual defense spending.” But the debt gets only “sporadic attention” from the candidates, who instead are making “expensive promises” to voters. The next president will quickly have a chance to make an impact: Trump-era tax cuts expire in 2025. Letting them lapse, though, is a “path to deficit reduction” that neither party seems to want.
Some financial leaders are concerned. Bank of America CEO Brian Moynihan is urging leaders to take action on the debt “while the economy is on solid footing,” said Axios. “We’ve got to balance the budget like anybody, any company, any person, any household,” Moynihan said.
What did the commentators say?
“Neither Trump nor Harris has a plan to fix the deficit,” Ian Salisbury said at Barron’s. The debt has grown steadily “no matter who was in office” and that has become a problem: America now owes so much that it could “slow growth” of the economy. Both candidates have put forward proposals that would result in “more, not less borrowing.” For example: Trump and Harris both have said they want to expand the Child Tax Credit and eliminate taxes on tips. There is no crisis, yet. But over the longer term, “additional borrowing would more likely be bad news.”
The nation’s debt and deficit were “referenced just twice” in this month’s presidential debate, Natasha Sarin said at The Washington Post. That’s too bad because the issue “is pressing.” Neither Trump nor Harris has offered a “fully satisfying plan to fix the debt,” but there is a “huge” difference between the two candidates: Trump’s proposals would add at least $4.5 trillion to the deficit over the next decade, while Harris’ plans would amount to “less than one-fifth of the Trump total.” One fundamental difference: “Harris supports raising taxes on high-earners and large corporations. Trump supports lowering them.”
What next?
“The U.S. government has to start paying for things again,” Dylan Matthews said at Vox. While there’s “no magic number” that makes the debt a crisis, the “trajectory we’re on is worrisome.” Without tackling the debt, it will be harder to spend the money needed to address other problems “from child poverty to housing costs to climate change.” The obvious first step is to use tax hikes to cover spending increases, and spending cuts to offset tax cuts. But that approach has “hardly been the norm in Congress lately.”
Finding solutions to the debt challenge “can only be bipartisan,” Consumer Technology Association CEO Gary Shapiro said at Fortune. Shapiro proposes a National Commission on Fiscal Responsibility and Reform to “encourage fiscal sustainability.” But he may be in the minority. There’s little reason, said The Wall Street Journal, to “expect a dramatic change in direction as a result of this fall’s election.”