​The candidates: debt and deficit

When voters talk about issues that matter, they often point to the economy as their number one issue—polling suggests many view the economy as the biggest problem facing the country. Ronald Reagan, Bill Clinton and Mitt Romney all seized this opportunity and asked voters to consider whether or not they were better off at the time of their elections than when the incumbent took office. The issue of the economy has several factors that often get lost amidst candidates’ oversimplified platitudes that typically amount to “bringing back jobs.” 

One such component is the federal debt and deficit, an issue to which neither Donald Trump nor Hillary Clinton has given much attention on the campaign trail or on national television. Despite its lack of airtime, the federal debt and deficit is a matter of concern to all Americans. It is certainly a hard sell to voters who have seen stifling income inequality and a loss of manufacturing jobs, concerns that are frequent talking points of Clinton and Trump, respectfully. Nevertheless, this is an issue that demands immediate attention and action.

The federal debt and deficit hamper our ability to respond to financial crises. Historically speaking, fiscal and monetary policy have been indispensable to the United States when it has come to adapting to economic downturns. By the time the next president takes office, monetary policy will be almost exhausted, as interest rates, pending any massive rate hike, will continue to remain historically low. Fiscal policy will likely be much more impactful in terms of mitigating the effects of a GDP contraction, which, according to numerous economists, is growing increasingly likely to occur during the next presidential term. As debt mounts, discretionary stimulus packages like the one passed in 2009 will become more expensive and less affordable. The Congressional Budget Office has sounded this alarm, as interest on the debt is supposed to be among the fastest growing types of spending over the next ten years. A study done by the Committee for a Responsible Federal Budget has shown that “fiscal space,” a metric of a government’s financial capacity to respond to crises, has faced a dramatic decline since 2007. Unless we take measures to sustainably reduce our federal deficit and in turn, chip away at our national debt, we will become less flexible should a military or economic crisis grip our nation.

How little the candidates factor in their debt should be a matter of serious concern to any voter worried about the nation’s economic outlook. Trump has proposed a “Penny Plan” which could finance about one fifth of his proposed $5.3 trillion tax cut by cutting all non-defense programs by one percent below the previous year’s total each year during appropriations. The rest will be paid for apparently by economic growth and regulatory reforms. If that reeks of the “fuzzy math” George W. Bush once mentioned, note that this doesn’t even include the money required to build a wall to enhance border security—right, Mexico will pay for that. Trump has further suggested that, as the “king of debt,” he would not worry about paying back our monetary obligations by printing money and inflating away our debt. Trump’s lack of interest in corralling the national debt make’s Hillary Clinton’s plan—which would add approximately $0.2 trillion to the debt over 10 years—seem fiscally wise and borderline debt-neutral. 

Nevertheless, Clinton also has no marketable plan to reduce the federal debt and deficit. Perhaps she doesn’t need one considering the 2013 sequester—mandatory cuts in discretionary spending implemented by Congress and the Obama administration—has reduced the federal deficit by two-thirds since President Obama took office. The only reason Trump’s plan will increase the debt 26 times more than hers is because she actually has plans to pay for the vast majority of her policies—she proposes to raise taxes on billionaires estates and capital gains, while eliminating deductions for the wealthiest Americans. Trump has hinted at ending deductions for hedge fund manager—a common talking point among progressives and populists—even though doing so would barely make a dent towards paying for his colossal spending proposals.

While neither major candidate has made significant debt reduction proposals, it is unsurprising that they both seek to protect, if not expand the largest drivers of federal spending: non-discretionary programs such as Social Security, Medicare, and Medicaid, none of which require Congressional reauthorization. After all, these programs are quite popular—polling suggests majorities of Americans do not want to cut them even to reduce the deficit. Such hostility to change ignores the now-obscure bipartisan Simpson-Bowles commission, which put forth a set of policy recommendations that reconciled economic growth with sustainable budgeting practices. 

In an election year, it is all but certain the major candidates will seize on such popularity and oppose any effort to reduce benefits to current and future leaders, even at the cost of sustainability. It’s no wonder that Gov. Chris Christie, the one candidate in the race who ran on making ever-so-slight reductions and structural changes to Medicare and Social Security was one of the first candidates to exit the stage during the primary.

In spite of their differences and mutual animosity, both Trump and Clinton will spend the home stretch skirting the key issue of the federal debt and deficit. Their plans are geared towards investing in the present, assuaging current fears, and appeal to today’s voters in the political climate of the day. They will not acknowledge the effects of debt on our ability to respond to crises, and while Clinton campaigns on debt-neutral policy goals, Trump plans to put the government on a spending binge. The American voter whose number one issue is “the economy” should proceed cautiously, for the economy of today may not resemble the economy in ten years.