Even with the federal government projected to add trillions of dollars of debt during the next decade, neither Democratic presidential candidate Hillary Clinton nor Republican Donald Trump has offered a detailed plan to curb the rapidly growing federal deficits.
Although economists are divided on how quickly the next president must deal with the deficit issue, most of them agree it will eventually imperil the nation’s economic growth if allowed to get too big. Yet Clinton and Trump have paid far less attention to the deficit than past presidential nominees, and each has presented plans that have potential for dramatically increasing the nation’s debt.
During his economic speech in suburban Detroit last month, Trump made just one passing reference to the federal debt. And last week, in what was billed as a major speech before the Economic Club of New York, Trump mentioned the deficit three times yet proposed no specific plan for dealing with it, other than saying if his plans produce enough growth the deficit will be reduced.
Clinton’s sole allusion to the deficit during a major economic address last June in North Carolina was to accuse Trump of favoring “reckless ideas that will run up our debt.”
Instead, Clinton has proposed raising taxes by $1 trillion during the next decade to pay for new spending on education, roads, bridges and science while simultaneously “protecting and expanding Social Security.”
By contrast, Trump has outlined a major tax cut that independent budget analysts say would deprive the federal government of trillions of dollars of revenue during the next decade while also insisting he would not be “cutting your Social Security.” Tax-cut advocates argue the economy will improve if people and businesses have a lower tax burden, but plenty of economists question whether deficit reduction can be achieved through tax cuts alone.
The spending proposals from Clinton and Trump have alarmed some budget analysts, who warn that growing numbers of retiring baby boomers will lead to dramatic increases in federal entitlement programs. The big three are Medicare, which pays health costs for the elderly; Medicaid, which provides health care for low-income people; and Social Security, the biggest program of all and the most financially insecure.
Just this summer, in a report signed by Treasury Secretary Jack Lew and Health and Human Services Secretary Sylvia M. Burwell, the board of trustees for federal retirement programs warned that unless changes are made, the Social Security system will be able to pay the full benefits promised only until 2035.
“Neither of these candidates is coming anywhere close to talking about what needs to get done to get the budget on a sustainable track,” said Robert Bixby, executive director of the Concord Coalition, a non-partisan organization in Washington that champions reducing the deficit.
“This is the worst I have ever seen it,” Bixby said. “I’ve been involved in this since the 1992 election and in all of those prior campaigns, candidates talked about reducing the deficit or tax reform and Social Security reform. That is not happening now. It’s odd because the problem is arguably worse.”
Testifying last week before the congressional joint economic committee, former White House budget director Mitch Daniels warned “when today’s young Americans learn the extent of the debt burden we have left them, they may question the premises of our self-government.”
Others offer less dire warnings. Harry Stein, director of fiscal policy for the Center for American Progress Action Fund, a Democratic leaning non-profit in Washington, agreed the deficit is long-term issue, but added: “This is not the most pressing issue the next president is going to confront,” insisting greater emphasis on sparking the economy by federal spending on roads, bridges, education and worker training.
Deficits are not some esoteric statistic. In particular, large deficits caused by ever-increasing spending Social Security, Medicare, and Medicaid have a disproportionate impact on younger people. They make it difficult for Congress to cut taxes or make college loans more affordable, pay for badly needed roads and bridges, and protect the environment.
“The unchecked explosion of entitlement spending, coupled with debt service, is squeezing every other federal activity — from the FBI to basic scientific research to our national parks to the defense on which the physical survival of the country depends,” Daniels testified.
Politicians often pin their deficit-reduction strategy on eliminating “wasteful” spending. In a primary debate last February Trump said the federal budget has “waste, fraud and abuse all over the place.”
But while few would argue there is no waste in the federal budget, the cause of the deficit goes far beyond wasteful spending, says former White House budget director Alice Rivlin, who also testified before the joint economic committee.
Rivlin, who occupied the post during the Clinton administration, told the committee: “The drivers, as everybody knows, of future debt are the entitlement programs.”
By 2020, nearly two-thirds of the expected $4.6 trillion federal budget will be consumed by Social Security, Medicare, Medicaid and interest on the debt, according to projections by the nonpartisan Congressional Budget Office.
The annual deficit has declined dramatically in recent years — from $1.3 trillion in 2011 to $438 billion last year. But CBO projects it will climb to $590 billion this year and steadily grow throughout the decade.
By 2025, the CBO calculates the publicly held debt, such as treasury bonds and notes sold to private and public investors, will climb to 84 percent of the gross domestic product, a percentage not seen since the post-World War II era.
“We can handle this large debt now,” Rivlin testified. But, she warned, “It’s a threat to sustainable growth.”
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