Ben Werschkul·Washington Correspondent
Thu, Jul 18, 2024
The national debt is on the cusp of a grim milestone, but it’s one of the least discussed topics at the Republican National Convention this week.
President Joe Biden hasn’t mentioned it much either as he has campaigned across the country.
Outstanding government debt stood at $34.9 trillion ($34,940,154,000,000 to be somewhat more precise) as of Tuesday, according to the latest data from the Treasury Department.
That’s a debt load that now represents over 120% of GDP. Earlier this year, the cost of interest payments alone passed the cost of defense spending.
The psychologically important $35 trillion milestone will likely be crossed sometime between this week’s Republican National Convention and when the Democrats gather in a few weeks’ time in Chicago — if debt continues to grow by an average of about $8 billion a day.
All told, the debt could represent 166% of America’s GDP by 2054.
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Yet a Yahoo Finance review of this week’s flood of political commentary — both Republicans in Milwaukee and Biden on the campaign trail — underlines a political reality of this election season: This historic debt is simply not a front-burner issue.
“We stand for fiscal sanity, for low taxes, and for reduced debt,” said Florida Gov. Ron DeSantis as he endorsed Republican nominee Donald Trump on Tuesday night.
What the line contained in snappiness it perhaps lacked in internal consistency. Lowering taxes is likely to increase deficits and debt.
“Our government sold us a false bill of goods with the Iraq war and the 2008 financial crisis loading up our national debt that falls on our generation’s shoulders,” added former presidential candidate Vivek Ramaswamy during his speech.
He overlooked how 2017 tax cuts and other policies enacted by Trump as president have contributed mightily to the current total.
The debt rose by nearly $8 trillion during Trump’s time in office. Biden is on pace to oversee a similar rise. In total, the national debt has ballooned by more than 70% over the last 7.5 years, fueled by a flood of new spending as well as these obligations stretching back decades.
All told, the vast majority of the major convention speeches so far this week haven’t brought up debt or deficits at all, according to a review of transcripts and videos. The Republican platform offers promises to cut “wasteful government spending” but doesn’t discuss debt or deficits directly.
It’s a notable shift for the Republicans who in years past campaigned on ideas like a balanced budget amendment and fielded major candidates who rose through the ranks as members of the deficit hawk wing of the party.
That wing of the party still exists but was far from prominent this week.
“The fiscal warning signs are really just so bright, so loud, and it’s as though nobody who’s running for office is paying attention,” said Maya MacGuineas, the president of the Committee for a Responsible Federal Budget, in a recent Yahoo Finance interview.
Few mentions from Biden as well
The same has been true to a certain extent on the other side of the aisle this week.
The debt didn’t come up when Biden sat down with NBC’s Lester Holt on Monday.
The president did talk about the issue Tuesday at an economic summit in North Las Vegas.
Before cutting his trip short after a positive COVID test, he said that his plan to make billionaires have to pay a minimum tax of 25% will generate $500 billion over the next decade, “allowing us to do more for childcare, eldercare, bring down the federal deficit, and so much more.”
But it’s a plan unlikely to pass Congress, even if Biden wins a second term.
Gallup recently found that federal spending and the budget deficit are collectively something 51% of respondents worry “a great deal” about, the sixth highest issue on the list.
But that issue hasn’t translated into a campaign focus for either side.
Biden has overseen mounds of new red ink but has also overseen decreasing deficits, with the US running a $1.7 trillion deficit in fiscal year 2023 and on pace for a slightly better result this year.
Another positive trend is that debt as a percentage of GDP has stabilized and even declined slightly in recent years.
Tax cuts that could make it worse
The lack of focus on debt also comes as there is massive focus on another issue that could make the problem worse: taxes.
These rates will be a top-tier issue in 2025, with major individual provisions of the 2017 Trump tax cuts set to expire at the end of the year. That means taxpayers could face a significant effective tax hike if Washington doesn’t act.
The plans from both sides at the moment could add trillions more red ink in the years ahead.
Trump has repeatedly promised to extend the tax cuts across the board. That could add between $4 trillion and $5 trillion if not offset, estimates the Committee for a Responsible Federal Budget.
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Some Republicans this week are even talking about a tax plan from the “Project 2025” effort led by Trump allies that could lead to even deeper cuts.
Biden’s plan is to extend the cuts for those making under $400,000 a year. That could still cost over $2 trillion.
Biden has offered detailed plans to offset at least some of these costs with tax increases elsewhere, like his effort to put a minimum tax of 25% on billionaires.
Trump has offered far less detail when confronted with questions about the national debt and said he could take care of it with drilling for oil — which he calls “liquid gold” — without elaborating on exactly how that would work.
“There is literally a pit in my stomach,” MacGuineas said, discussing the potential trillions of dollars in costs of these cuts. “There’s a pit in my stomach right now just talking about it with you.”
Ben Werschkul is Washington correspondent for Yahoo Finance. Akiko Fujita contributed reporting.
Original Source: https://finance.yahoo.com/news/the-us-debt-is-about-to-hit-35-trillion-its-barely-come-up-at-the-gop-convention-134447204.html?.tsrc=fin-notif
