As U.S. debt, deficits mount, presidential candidates sweep them under the rug
WASHINGTON (Reuters) - In four hours of debate among Democratic contenders for the U.S. presidency, the word “deficit” was never uttered and the government’s debt was mentioned only once.
The reality is that Democrats are reluctant to make a campaign issue out of one of America’s most vexing problems — the ballooning annual budget deficits and overall debt under President Donald Trump.
That’s because some of their most popular policies going into the 2020 election would present significant budget challenges of their own, including expanding Medicare health coverage and offering government help to cut college costs and reduce student debt.
While Democrats insist they have workable plans that will cover the costs of these proposals, Republicans counter that their tax-the-rich solutions are not realistic.
On their side of the political divide, Republicans are equally interested in keeping mum on the subject, having happily backed Trump’s massive tax cuts and a surge in military spending - two key drivers of the deficit blow-out - after championing fiscal conservatism for years.
By supporting Trump, many Republican lawmakers have essentially abandoned an already fading commitment to balanced budgets and cutting the national debt.
“I don’t think in this election cycle there seems to be much of an interest in addressing the issue,” lamented Senator Rob Portman, a former White House budget director.
Portman, a Republican, is seen as a hawk on government spending, although he was also a strong defender of the 2017 tax-cut law that will drive up the national debt by at least $1 trillion over 10 years.
TERMITES UNDER THE PORCH
Many economists worry rising debt will bring higher interest costs, increasing the pressure on future governments to make deep spending cuts or even causing the United States to default on its debt payments, which could wreak havoc on a global scale.
It’s like having termites underneath the porch, said Bill Hoagland, a senior vice president at the Bipartisan Policy Center, a Washington think tank focused on fiscal policy: “You step on the porch and everything’s fine... Then one day, you fall through.”
When he was running for president, Trump told The Washington Post he would pay off the national debt in about eight years. Instead, it has increased by $2.45 trillion since he took office in January 2017.
The total debt outstanding, amassed over many years of deficits, is now $22.4 trillion, its highest level ever, equal to about $68,000 of debt for every American.
The deficit has jumped from $666 billion in fiscal 2017, the final year President Barack Obama’s administration had an impact on budgets, to an expected $900 billion this year, and is projected to exceed $1 trillion a year by 2022.
“The prospect of such high and rising debt poses substantial risks for the nation,” the non-partisan Congressional Budget Office said last month in its latest long-term outlook.
With the U.S. economy expanding, inflation and unemployment low and the stock market near record levels, the government could be expected to take advantage of the strong fundamentals to reduce deficits. But the opposite is happening.
Asked about rising deficits last month, White House economic adviser Larry Kudlow last month downplayed concerns: “It doesn’t bother me right now.”
LOOKING FOR ANSWERS
At least some Democratic voters are yearning for answers.
On a campaign stop in Marshalltown, Iowa, former Vice President Joe Biden last Thursday accused Republicans of running up the nation’s debt as a pretext for seeking cuts to federal retirement and healthcare benefits later.
“Folks, this is a sham,” said Biden, who has led most polls in the early days of the Democratic primary race.
Marlene Rush, a Marshalltown community organizer, said Biden was “the first Democrat I’ve heard actually mention the deficits.”
“I appreciate that. Deficits matter. For Republicans, it seems, they only care about the deficit when Democrats are in the White House,” she said.
The first set of Democratic primary debates on June 26-27 in Miami passed with none of the 20 candidates offering up ideas to control debt or deficits.
A moderator asked Senator Kamala Harris whether Democrats should explain how they would pay for the expansion of public benefits if they win the White House.
“I hear that question, but where was that question when the Republicans and Donald Trump passed a tax bill that benefits the top 1 percent and the biggest corporations in this country?” Harris responded, as the other candidates on the stage stayed silent on the matter.
Although Republicans portray Democrats as the party of big spending, the last time the budget was balanced was under Democratic President Bill Clinton in 1998 and for the next three years.
That run ended under Republican George W. Bush, who slashed taxes and fought wars abroad while presiding over large domestic spending increases.
Obama, another Democrat, ran deficits way up at the start of his presidency to address a deep recession, then trimmed them in his final years in office as the economy picked up.
Now neither party shows any interest in offering detailed policies to tackle the debt in the 2020 campaign, preferring to focus on healthcare, immigration and climate change.
It is “an era of hyper-partisanship with both parties engaging in free lunchism to try to appeal to voters,” said Maya MacGuineas, head of the Committee for a Responsible Federal Budget, a nonpartisan group focused on budget reform.
Last year, the House of Representatives and Senate formed a special bipartisan panel to examine ways to improve how budgets are written. It failed to make any recommendations, but its operating expenses added about $500,000 to the national debt.
Reporting by Richard Cowan; additional reporting by John Whitesides in Marshalltown, Iowa; Editing by Kieran Murray and Sonya Hepinstall