Well, it was nice while it lasted. But America is about to go on another borrowing binge and neither Hillary Clinton nor Donald Trump is going to do a thing about it.
The federal deficit has shrunk every year since 2009, from $1.4 trillion at the height of the recession to $438 billion last year.
Now the annual shortfall is going back up, the nonpartisan Congressional Budget Office said Tuesday, with no end in sight. It will jump by more than a third to $590 billion in 2016. It will then climb almost every year for the next 10 years, the CBO says, hitting more than $1.2 trillion in 2026.
Over almost all of the next decade, the deficit will be higher than the average deficit of the past 50 years, relative to the economy.
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All that new borrowing will add $8.6 trillion to the nation’s $19 trillion debt, the CBO said. Ten years from now, publicly held debt will be 86 percent of GDP, more than double the average over the past 50 years.
That’s some serious red ink. It’s being driven mostly by Medicare, Medicaid, Social Security and interest payments. Two-thirds of the budget is spent on those and other “mandatory” things; only a third goes to everything else, and half of that goes to the military. Congress could eliminate every dollar spent on everything else and still run a deficit.
“It’s aging baby boomers, mostly,” the Concord Coalition’s Bob Bixby told the Observer editorial board Tuesday. “It’s basically a case of aging and health care. The deficit isn’t going up again because of a sudden influx of ‘waste, fraud and abuse’. … There’s a built-in mismatch between the entitlement programs and revenues.”
(Tuesday’s CBO update was actually relatively good news. The projections were slightly better than previous ones as the CBO decided that low interest rates would reduce payments on the debt and other costs more than earlier believed.)
So any American concerned about the nation’s mounting debt might be interested to know what Clinton or Trump would do about it. The answer? Make it worse.
Trump proposes dramatic tax cuts but vague and small spending cuts. His original plan called for a top personal income tax rate of 25 percent, a corporate tax rate of 15 percent and a much larger standard deduction. Experts have said his plan would add about $12 trillion to the debt over 10 years.
Clinton has proposed raising taxes on the rich, but she would spend the new revenue on all kinds of programs, from education to infrastructure to social programs. Her proposals would add to the deficit, too, though at $750 billion over 10 years, far less than Trump’s. This is notable, given that her spouse was the last president to balance the budget.
Even Bixby, who dedicates his life to advocating for fiscal responsibility, acknowledges that the issue is forgotten in this year’s presidential campaign.
“If you have gridlock and deficits go up again,” he says, “then maybe people will begin to notice.”
When, Mr. Bixby, not if.