The Biggest Loser of the Election: The US National Debt


If fiscal probity is your top campaign issue, there’s no candidate for you this year, according to a new report from deficit hawks in Washington.

the Center for a Responsible Federal Budget estimates that Republican Donald Trump and Democrat Joe Biden would each drive up the federal debt over the next few years. If Trump wins and implements his agenda, it would increase the national debt by $5 trillion by 2030. Biden’s plan, if fully adopted, would increase the deficit by $5.6 trillion. The national debt held by the public is already equal to 98% of GDP. It would reach 125% of GDP under Trump and 128% under Biden.

This kind of analysis is a bit of a political board game, because no president ever puts his entire agenda into law, and sometimes it’s not even clear what his policy is. Trump’s second term program, for example, is nothing more than a 54 bullet list on the campaign website, without quotes or documentation. The CRFB researchers therefore had to look for Republican proposals in Congress or elsewhere that indicate what Trump appears to be proposing.

Biden’s agenda is much deeper, with 48 discrete planes and more than 800 individual proposals. But those aren’t always specified either, with Biden explaining how he would pay for some plans but not others.

Biden wants to increase spending on education, health care, child and elder care, affordable housing and infrastructure. He would pay for much of that with higher taxes on businesses, households earning more than $400,000 a year, and wealthy investors. Overall, Biden described about $7 trillion in new spending over a decade, as well as $4 trillion in new taxes.

Trump’s plan is harder to summarize due to the lack of detail in bullet points such as “return to normal in 2021” and “create 10 million new jobs.” Trump’s main economic idea seems to be to reduce or eliminate payroll taxes, but that’s highly unlikely because those taxes fund Social Security and Medicare. Trump would likely continue to scrap regulations and pressure trading partners such as China for better trade deals.

Democratic presidential candidate former Vice President Joe Biden boards his campaign plane at New Castle Airport in New Castle, Del., Tuesday, Oct. 6, 2020, to fly to Gettysburg, Pennsylvania (AP Photo/Andrew Harnik)

Biden takes the lead

Most analyzes of the two candidates’ plans give Biden an advantage. The point of a good spending and tax plan is to stimulate economic growth and improve the situation of more people. the Penn Wharton Budget Model finds that Biden’s plan would do that, increasing GDP by 1.4% by 2040, while reducing the federal debt by 1.5% to what it would otherwise be.

Moody’s Analytics analyzed four electoral scenarios— a Democratic sweep, a Republican sweep, a Biden win with shared control of Congress, and a Trump win with shared control of Congress — and found that a Democratic sweep would be best for the economy. If Biden was able to largely implement his policies, the research firm found, GDP growth would average 2.9% over the next decade and the economy would create 21.7 million jobs. jobs. In the status quo – with Trump as president and Congress divided – growth would average just 2.4%, with 13.9 million new jobs.

Oxford Economics found that “Joe Biden’s fiscal policy proposals would give the US economy a boost as it recovers from the global coronavirus recession.” Even if Democrats controlled both houses of Congress, Oxford argues that Biden’s full plan could not pass in the Senate, where a narrow Democratic advantage is the party’s best-case scenario. But a more modest ‘Biden lite’ plan might be able to pass, and if it did, it might boost GDP growth by a few percentage points and bring employment back to pre-pandemic levels sooner.

Another element of a Biden presidency would likely be a major stimulus bill in early 2021. Stocks fell on Oct. 6 as President Trump said he was finished negotiating with the Democrats on a fourth stimulus bill, and would now wait until after the election. But if Biden wins and Democrats take the Senate, Congress will likely pass a much larger bill than the one the parties negotiated this fall — most likely similar to the $3.4 trillion package that Democrats in House passed in May. That would skyrocket the 2021 deficit, no doubt. But most economists think it’s better for Uncle Sam to borrow now and revive the economy than risk a chronic recession and the continued misery that comes with it.

Rick Newman is the author of four books, including “Rebounders: How winners go from failure to success.” Follow him on Twitter: @rickjnewman. Confidential information line: Encrypted communication available. Click here to receive Rick’s stories by email.

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