But now, as the dangers of a widening deficit and mounting debt grow, former President Donald Trump and Vice President Kamala Harris are making little effort to address it. Quite the opposite: Both their economic policy agendas, if enacted, would add to the ever-growing deficit, several nonpartisan groups project.
That’s a major problem, though, and Americans cannot afford to have a president who takes the issue lightly, with everything from your ability to afford buying a home to the government’s ability to deal with emergencies like Covid on the line.
A budget deficit occurs when a country’s spending exceeds what it collects in revenue, primarily through taxes. The government makes up the difference by borrowing money through sales of securities like Treasury bonds and notes. The deficit is expected to widen under the status quo and could get even worse under proposals by both Harris and Trump, if enacted.
Already, the US is knee-deep in debt. At $28 trillion, publicly held federal debt is worth almost as much as the entire US economy.
Even Federal Reserve Chair Jerome Powell, who seldom weighs in on what elected officials should do, is concerned.
“It’s probably time, or past time, to get back to an adult conversation among elected officials about getting the federal government back on a sustainable fiscal path,” Powell said in a “60 Minutes” interview earlier this year.
During the Trump-Harris presidential debate earlier this month, the budget deficit was mentioned just twice, when Harris jabbed Trump for his proposals, which are expected to add considerably more to the deficit than hers. However, neither she nor Trump spoke about trying to reduce the deficit, and the moderators of the debate didn’t ask about it.
No matter who wins the presidential election, there will be a “mandate to make things worse unless something changes,” said Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget. The debt contributions both candidates’ plans carry would undermine “every part of their agendas about helping American families,” she said.
It wasn’t always like this
During the third presidential debate leading up to the 2008 election, then-Senator Barack Obama said, “There is no doubt that we’ve been living beyond our means, and we’re going to have to make some adjustments.”
“I have been a strong proponent of pay-as-you-go,” he added. “Every dollar that I’ve proposed (spending), I’ve proposed an additional cut so that it matches.”
The government had just wrapped up a fiscal year where it ran a $450 billion deficit, not adjusting for inflation. Still, that’s one-fourth the $1.9 trillion deficit the country is running for the 2024 fiscal year.
When Obama sought a second term, now-Senator Mitt Romney, then the Republican presidential nominee, said at one of their debates, “My number one principle is there’ll be no tax cut that adds to the deficit.” Obama and Romney even spent a good chunk of a debate butting heads over whose plan would be better for the deficit.
In fiscal year 2017, when Obama left office, the nation’s deficit clocked in at $670 billion, about half as large as when he arrived in 2009. But that’s mainly a result of moving past the Great Recession, which meant the government didn’t spend as much on social safety net programs and far fewer funds were expended on propping up financial institutions.
In 2016, Trump briefly mentioned the deficit in his second debate with Democratic nominee Hillary Clinton, saying, “I will bring our energy companies back and they will be able to compete and they’ll make money and pay off our national debt and budget deficits, which are tremendous.” (The country’s debt is an accumulation of the deficits it has run over time.)
But after Trump took office in 2017, the deficit gradually widened, and the national debt levels grew each year before both skyrocketed in 2020 as government spending ramped up to deal with the health crisis and stimulate the economy. In the 2021 fiscal year, during which Trump left office, the country ran a $2.8 trillion deficit.
Why you should care about the size of the deficit
Wider deficits tend to go hand-in-hand with owing more money to people who buy US debt, creating more risk for the people who loan us money and likely making them demand higher interest returns from the US government. In turn, since banks and other lenders often base interest rates on US bond yields, that could make it more expensive for everyday Americans to get a mortgage.
Additionally, when the government spends more money to pay interest on its debts, there’s less money available to, for instance, invest in new infrastructure. Case in point: The government is set to spend more on interest payments than on national defense, Medicaid and programs dedicated to supporting children, according to Congressional Budget Office projections for the 2024 fiscal year, which ends September 30.
Powell summed it up in his “60 Minutes” interview: “We’re borrowing from future generations,” he said, when instead we “should pay for those things and not hand the bills to our children and grandchildren.”
All the borrowing taking place is slowing economic growth, MacGuineas told CNN. It also may be creating “a national security risk,” since the US has become increasingly dependent on foreign countries like China and Japan to buy our debt, she said.
There’s also a risk that inflation will ramp up if the widening deficit prompts the Fed to “print more money” to help the government pay off its debt, said Kent Smetters, a professor at the University of Pennsylvania’s Wharton School who studies the budget.
If it’s such a big problem, why aren’t Trump and Harris addressing it?
“Politicians love to deliver gravy and not the spinach,” said Smetters, the faculty director of the Penn Wharton Budget Model, a nonpartisan research initiative that forecasts the effects of fiscal policies.
There’s also a game of chicken going on, he said. “Both sides want to get their stuff in there before sacrifices have to be made.” For Republicans, that means solidifying more tax cuts; and for Democrats, getting more government spending out the door. But, eventually, the country risks reaching a point where it can’t continue to borrow more money to get by, which will force elected officials to make tough choices about where to cut spending and levy higher taxes.
Covid and the Great Recession have also made Americans “numb” to thinking about the problems associated with rising debt levels, Smetters told CNN. “In most people’s minds, people are much more likely to see the government borrowing money as a positive effect if it helped us get through a crisis.”
Yet voters fail to recognize that the economy would grow faster and social safety net programs would be funded for longer if the debt burden were reduced, MacGuineas said.
“If there’s deficit denial at the top, what voter is going to say, ‘Please raise my taxes and cut my spending’ if their leaders aren’t even saying it’s a problem?”
