Will Presidential Candidates Address the National Debt Before Elections?

As the U.S. grapples with its soaring national debt, which has surpassed $35 trillion in 2024, the implications of this financial burden are becoming increasingly significant. The national debt is currently increasing at an alarming rate of $62,000 every second, translating to a daily increase of approximately $5.4 billion from January 1 to August 27, 2024 [f40546f7]. The COVID-19 pandemic alone contributed over $4 trillion to the national debt in 2020, pushing the debt-to-GDP ratio above 100% for the first time since World War II [80fdd1ce].

Recent reports from the U.S. Census Bureau indicate a modest increase in median household income, which rose to $80,610 in 2023, reflecting a 4% increase from $77,540 in 2022. This marks the first income gain since 2019, suggesting some positive trends in the economy amidst rising debt levels [660d9641].

However, the Congressional Budget Office (CBO) has projected that the annual budget deficit will increase from $1.9 trillion in 2024 to $2.9 trillion by 2034. Currently, public debt stands at 97% of GDP and is expected to exceed 106.1% by 2027, reaching 122% by 2034 [660d9641]. The U.S. federal debt has increased by $1.9 trillion in less than a year, with estimates suggesting an additional $16 trillion increase by 2034 under the current administration [458bd6e3]. This growing debt is a significant concern, especially as the overall budget deficit during President Biden's administration has reached $6.6 trillion [2d0db60e].

In light of these challenges, the Committee for a Responsible Federal Budget has urged Vice President Kamala Harris and former President Donald Trump to disclose their plans for addressing the national debt before the upcoming election on November 5, 2024. The board emphasized the urgency of the national debt issue, which is projected to exceed 106% of GDP by 2027, and highlighted that federal interest payments this year will surpass spending on national defense and children's programs [aad2397d].

In the first eleven months of fiscal year 2024, the federal government borrowed an astonishing $1.9 trillion, including $380 billion in August alone, which translates to roughly $6 billion borrowed per day [4f789144]. Maya MacGuineas, president of the Committee for a Responsible Federal Budget, has highlighted the urgency for presidential candidates to address the high debt and deficits [94b9ad44][549fc73c].

The economic implications of the candidates' policies are also noteworthy. Former President Donald Trump's policies could add approximately $5.8 trillion to the national debt, while Vice President Kamala Harris's proposals are estimated to contribute an additional $1.9 trillion to $2.2 trillion [660d9641][458bd6e3]. This context is critical as voters consider the candidates' economic platforms during the debate.

In terms of investments, the Tax Cuts and Jobs Act (TCJA) led to a 20% increase in U.S. investments, indicating a positive impact on the economy despite the rising deficits [660d9641]. Additionally, 75% of Americans in their 40s are reportedly earning more than their parents, suggesting some upward mobility in income levels [660d9641].

On the productivity front, nonfarm productivity rose by 2.5% in the second quarter of 2024, with artificial intelligence expected to automate 25% of tasks, potentially boosting productivity by 9% [660d9641]. However, Trump's tariffs are projected to reduce household incomes by $1,800 in 2025, illustrating the trade-offs involved in economic policy decisions [660d9641].

The article warns that the U.S. dollar's status as the world's reserve currency is at risk due to fiscal excess, with declining international demand for U.S. dollars and a daily interest expense that has escalated to $3 billion [458bd6e3]. As the debate approaches, these economic indicators will likely play a significant role in shaping public perception and voter decisions, highlighting the balance between income growth and fiscal responsibility in the current political climate. Gene Dodaro, U.S. Comptroller General, has called for Congress to act on the growing federal debt, which threatens the economy and public safety [549fc73c].

Moreover, the current structure of the national debt reveals that approximately 70% is held domestically while 30% is owned by foreign entities, with Japan and China each holding over $1 trillion in U.S. Treasury securities. Interest payments on the national debt exceeded $660 billion in FY 2023, raising concerns among economists about the long-term effects of such high debt levels [80fdd1ce].

In light of these challenges, experts have proposed several strategies for managing the national debt. These include lowering interest rates, making household debt tax-deductible, and even considering a radical 'Debt Jubilee' to erase national debt entirely. Historical precedents for debt forgiveness, such as the Jubilee 2000 coalition and the London Debt Agreement of 1953, illustrate that such measures have been implemented in the past [1415d9a1]. Furthermore, the yield curve inverted on September 4, 2024, signaling potential recession risks, although some analysts predict a soft landing with no recession until late 2025 [1415d9a1].

As the U.S. continues to borrow and print money, the global debt has reached a staggering $312 trillion by the end of Q2 2024, with an increase of $2.1 trillion in the first half of 2024. This surge is driven by significant borrowing in the U.S. and China, and the Institute of International Finance (IIF) forecasts that government borrowing will rise from $92 trillion to $145 trillion by 2030, potentially exceeding $440 trillion by 2050 [bc6fab72]. The global debt-to-GDP ratio has stabilized around 328%, with developed markets' ratio at its lowest since 2018 and emerging markets' debt ratio exceeding 245%, up 25 percentage points since the COVID lockdowns [bc6fab72]. The ongoing debate over the U.S. debt ceiling continues to create political tension, with potential solutions including increasing tax revenues, reducing spending, and implementing structural reforms [80fdd1ce].

Political deadlock hampers discussions on fiscal responsibility, especially as upcoming elections shift focus away from the national debt. Advocacy groups are pushing for legislative reform, and with a new fiscal year starting on October 1, 2024, budget negotiations are ongoing, raising concerns about a potential government shutdown that could disrupt essential services [6bbc88b3]. Economists warn that investor confidence may be at risk if fiscal issues remain unresolved, and proposals for tax reforms face significant resistance [6bbc88b3]. Aging demographics threaten the sustainability of Social Security, making education on fiscal issues crucial for informed decision-making [6bbc88b3].