这是用户在 2024-9-18 13:16 为 https://www.wsj.com/politics/policy/federal-debt-deficit-trump-harris-5a0d30d2?mod=hp_lead_pos7 保存的双语快照页面,由 沉浸式翻译 提供双语支持。了解如何保存?
  • Listen To Article
  • Conversation
  • What To Read Next

Federal Debt Is Soaring. Here’s Why Trump and Harris Aren’t Talking About It.

Both candidates were part of administrations that produced growing deficits. Neither is likely to reverse that trend if elected.

Alexandra Citrin-Safadi/WSJ
00:00 / 15:14
This article is in your queue.

The U.S. isn’t fighting a war, a crisis or a recession. Yet the federal government is borrowing as if it were.

This year’s budget deficit is on track to top $1.9 trillion, or more than 6% of economic output, a threshold reached only around World War II, the 2008 financial crisis and the Covid-19 pandemic. Publicly held federal debt—the sum of all deficits—just passed $28 trillion or almost 100% of GDP. 

If Congress does nothing, the total debt will climb by another $22 trillion through 2034. Interest costs alone are poised to exceed annual defense spending.

Publicly held debt as a share of GDP

Publicly held debt as a share of GDP

PROJECTIONS

125%

World

War II

Covid

100

Financial

crisis

75

50

25

0

1940

’50

’60

’70

’80

’90

2000

’10

’20

’30

Sources: Office of Management and Budget (actual); Congressional Budget Office (projections)

But the country’s fiscal trajectory merits only sporadic mentions by the major-party presidential nominees, let alone a serious plan to address it. Instead, the candidates are tripping over each other to make expensive promises to voters. 

Economists and policymakers already worry that the growing debt pile could put upward pressure on interest rates, restraining economic growth, crowding out other priorities and potentially impairing Washington’s ability to borrow in case of a war or another crisis. There have been scattered warning signs already, including downgrades to the U.S. credit rating and lackluster demand for Treasury debt at some auctions.

Vice President Kamala Harris, the Democratic nominee, and GOP rival Donald Trump aren’t the same on fiscal policy. She has outlined or endorsed enough fiscal measures—tax increases or spending cuts—to plausibly pay for much of her agenda. He has not. 

Advertisement

Still, both Harris and Trump were parts of administrations that helped produce those deficits. Both have promised to protect the biggest drivers of rising spending—Social Security and Medicare. And both want to extend trillions of dollars in tax cuts set to lapse at the end of 2025, amid bipartisan agreement that federal income taxes shouldn’t rise for at least 97% of households. 

Surpluses/deficits as a share of GDP

Surpluses/decificts as a share of GDP

10

%

PROJECTIONS

World

War II

Financial

crisis

Surpluses

0

Deficits

–10

Covid

–20

–30

1930

’40

’50

’60

’70

’80

’90

2000

’10

’20

’30

Sources: Office of Management and Budget (actual); Congressional Budget Office (projections)

In the past few months alone, Trump has promised to exempt tips from taxation, end income taxes on Social Security benefits, eliminate taxes on overtime pay, lower tax rates for companies that manufacture in the U.S., and create a new deduction for new parents’ expenses, offering more than $2 trillion in tax cuts atop $4 trillion to extend his first-term tax cuts. 

Harris matched Trump’s tips idea and called for an expanded child tax credit, including $6,000 for parents of newborns.  

How did the U.S. fiscal path simultaneously become economically more alarming yet politically less relevant? Federal debt and deficits have blown past various imagined red lines and feared consequences have not materialized. Interest rates, at least until 2022, stayed low. The dollar remains the world’s reserve currency, giving the U.S. far more running room than other major countries. The U.S. of 2024 is not Greece of 2007. There is risk, but there is no fiscal crisis.

“We’ve learned we borrowed more than we realized we could,” said Jason Furman, a Harvard economist who was a top aide to President Barack Obama. “And we’ve actually borrowed more than we expected.”

Advertisement

The floor of the New York Stock Exchange in September 2008. Photo: David Karp/Associated Press

If anything, borrowing kept the economy afloat during the 2007-09 financial crisis and pandemic, and lawmakers were rewarded for it. Polls show the public is concerned about the deficit, but they also prefer politicians who dangle tax cuts, stimulus checks and money for the military.  

“No president in history, Republican or Democrat, gets a gold star or a Nobel Prize for reining in spending, the deficits and our debt,” said Rep. Jodey Arrington (R., Texas), chairman of the House Budget Committee. “Nobody gets the golden meat cleaver award.”

Whoever wins in November will soon face two big fiscal tests. One is the need to raise the federal debt limit, likely in mid-2025. In both 2011 and 2023, the threat of default without a debt-limit increase led to compromises that reduced red ink. The other trigger is the looming expiration of much of the 2017 tax law. If Congress doesn’t act by the end of 2025, taxes would rise on most households, a path to deficit reduction that both parties say they don’t want. 

Government spending on interest versus defense

line chart showing that spending on interest expense is projected to overtake spending on national defense.

PROJECTION

$1.0 trillion

0.8

Defense

0.6

0.4

0.2

Interest

0

1980

’85

’90

’95

2000

’05

’10

’15

’20

’25

Sources: Office of Management and Budget (actual); Congressional Budget Office (projections)

The deficit wasn’t always politically dormant. In fact, until the 2010s, it was something leaders of both parties fretted over, if not always acted upon. 

In the early 1990s, when deficits were much smaller, deficit hawks were powerful enough in both parties to produce bipartisan deals that raised taxes and lowered spending. Those agreements helped drive the budget into balance in the late 1990s, aided by a strong economy fueled by baby boomers in the labor force and the so-called peace dividend after the Cold War ended. Federal debt fell to about one-third of GDP. 

Deficits grew again when George W. Bush cut taxes in 2001 and 2003. In 2011 and 2013, though, Obama and congressional Republicans cut deals that, together, let taxes climb on high-income households and trimmed spending, slowing growth in debt. 

Advertisement

Then-President Trump after Congress passed the Tax Cuts and Jobs Act in 2017. Photo: brendan smialowski/AFP/Getty Images

The Trump record

When he first ran for president in 2016, Donald Trump said he would pay off the national debt within eight years. He went in the opposite direction: Debt rose from less than $15 trillion to more than $21 trillion by the time he left office. 

While some of that was due to pre-existing trends and the pandemic, Trump made two major decisions that broke with Republicans in Congress and drove up federal borrowing. 

Republicans had long advocated making Social Security and Medicare less generous and more fiscally sustainable. To appeal to middle-class voters, Trump embraced what had long been a Democratic position and shut down discussion of broad benefit cuts.

Then in 2017, when House Republicans sought to cut tax rates, Trump resisted their attempts to offset the full cost. The Tax Cuts and Jobs Act Trump eventually signed into law was projected then to increase deficits by $1.5 trillion over a decade. 

Once the pandemic started, Trump joined the broad economic consensus that the U.S. needed to pour money into the economy, eventually adding more than $3 trillion to the debt to provide stimulus checks, enhanced jobless benefits and other relief. 

Advertisement

The Biden-Harris record

President Biden and Harris expanded on Trump’s pandemic spending with the $1.9 trillion American Rescue Plan, which included another round of stimulus checks and aid to state and local governments. Their core domestic legislation—the Inflation Reduction Act of 2022, which required Harris’ tiebreaking vote—was originally estimated to reduce budget deficits. But the projected reduction has shrunk or disappeared altogether as estimates of key tax credits, including breaks for electric vehicles, have risen. 

Biden, with Harris’s strong backing, canceled student debt in a series of executive orders that could cost the government more than $1 trillion, according to the Committee for a Responsible Federal Budget. The plan is now stuck in litigation as courts have curtailed Biden’s authority to cancel debt.

President Biden after making remarks on the American Rescue Plan in 2021. Photo: jim lo scalzo/pool/Shutterstock

“I don’t think we’ve seen a president spend nearly as much without Congress as Biden,” said Marc Goldwein, the CRFB’s senior vice president. 

Still, something important has changed for the fiscal outlook since the pandemic and the Democratic legislation: Inflation and interest rates have risen, and that creates a more dangerous dynamic going forward.

Trump’s plans

What happens if Trump wins depends on Congress. If Republicans also control the House and Senate, his next term could look a lot like his first—occasional talk about debt and deficits paired with tax cuts that expand both.

Advertisement

Fiscal Outlook Under Trump

How proposals by Donald Trump could affect deficits over 10 years

INcrease Deficit

Reduce

Lower corporate

rate for some

No tax on tips

No tax on overtime pay

No tax on Social

Security benefits

Extend expiring

tax cuts

Total

Repeal clean energy subsidies

Tariffs

Total

$6 trillion

$4

$2

$0

$2

$4

Notes: Selected proposals. Analysis doesn’t include missile defense and mass deportation programs. Lower end of range shown for overtime proposal, which Tax Foundation estimates could be $1.1 trillion or more, depending on details.
Sources: Piper Sandler analysis of campaign proposals; Tax Foundation (overtime tax)

“There’s nothing that Republicans I think will be able to cut under Trump in a meaningful way,” said Don Schneider, a former House GOP aide now at investment bank Piper Sandler

In his acceptance speech at the Republican National Convention, Trump said, “We’ll start paying off debt and start lowering taxes even further.” 

Nonpartisan experts say there’s virtually no chance of that. Paying off debt would require the U.S. to shift from massive deficits to surpluses. Tax cuts would work in the opposite direction. Low tax rates can encourage growth and generate some revenue, but not enough to offset the loss of revenue, economists in both parties acknowledge.

Trump has indicated that he wants to extend the pieces of his 2017 tax law that expire after 2025 and lower the 21% corporate tax rate to 20%, and 15% for some companies. His recent proposals—eliminating taxes on workers’ tips, overtime pay and retirees’ Social Security benefits—dig a deeper hole. He’s also made other proposals that would entail significant new spending, including a mass deportation program and a domestic missile-defense system. 

In Congress, Republicans are still debating whether to extend all of the tax cuts and whether to pair them with spending cuts or tax increases. If Democrats hold the House or Senate, they might object to extending all of Trump’s cuts. A full extension would produce “a $4.6 trillion increase in the debt in a manner that is heavily biased towards big corporations and very high income and high net worth individuals,” said Sen. Sheldon Whitehouse (D., R.I.), chairman of the Senate Budget Committee.

Trump has touted several ideas that could reduce deficits. One is impoundment, in which the president refuses to spend money Congress has appropriated. That’s legally and constitutionally dubious. 

Advertisement

The other is tariffs. Trump wants to impose a tariff of 10% to 20% on all imported goods and even higher on Chinese products. That could raise about $2.8 trillion over a decade, according to the Tax Policy Center. 

Shipping containers at the Port of Oakland in California in May. Photo: Justin Sullivan/Getty Images

House Republicans have proposed capping federal spending growth at a level lower than inflation, though the party is split and some want significant increases in the defense budget. 

Arrington, who is helping cobble together Republicans’ agenda if they have full control of Congress, said they need to tackle spending and entitlement programs and hopes Trump, despite his statements to the contrary, could be open to that. “We have an opportunity to live up to what we claim we believe when we campaign and why almost every Republican member was sent here to Congress by their constituents,” he said.

Arrington said he’s also open to a bigger deal with Democrats that would have higher taxes and lower spending on the table. 

Harris plans 

Harris has called for reviving and expanding the child tax credit that was in place during 2021 and for implementing new subsidies for first-time home buyers.  

Fiscal Outlook Under Harris

How proposals by Kamala Harris could affect deficits over 10 years

Reduce

INcrease Deficit

Housing policies

Paid leave

ACA premium credits

Child care and pre-K

Other proposals

Child tax credit expansion

Extend expiring tax cuts

Total

Quadruple buybacks tax

Prescription drug policies

International corporate taxes

Capital gains and taxes

on very wealthy

Higher tax rates on

top earners/investors

Corporate tax rate increase

Other proposals

Total

$6 trillion

$4

$2

$0

$2

$4