Federal Debt Is Soaring. Here’s Why Trump and Harris Aren’t Talking About It.

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The U.S. isn’t fighting a war, a crisis or a recession. Yet the federal government is borrowing as if it were.

This year’s budget deficit is on track to top $1.9 trillion, or more than 6% of economic output, a threshold reached only around World War II, the 2008 financial crisis and the Covid-19 pandemic. Publicly held federal debt—the sum of all deficits—just passed $28 trillion or almost 100% of GDP.

If Congress does nothing, the total debt will climb by another $22 trillion through 2034. Interest costs alone are poised to exceed annual defense spending.

But the country’s fiscal trajectory merits only sporadic mentions by the major-party presidential nominees, let alone a serious plan to address it. Instead, the candidates are tripping over each other to make expensive promises to voters.

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In the past few months alone, Trump has promised to exempt tips from taxation, end income taxes on Social Security benefits, eliminate taxes on overtime pay, lower tax rates for companies that manufacture in the U.S., and create a new deduction for new parents’ expenses, offering more than $2 trillion in tax cuts atop $4 trillion to extend his first-term tax cuts.

Harris matched Trump’s tips idea and called for an expanded child tax credit, including $6,000 for parents of newborns.

How did the U.S. fiscal path simultaneously become economically more alarming yet politically less relevant? Federal debt and deficits have blown past various imagined red lines and feared consequences have not materialized. Interest rates, at least until 2022, stayed low. The dollar remains the world’s reserve currency, giving the U.S. far more running room than other major countries. The U.S. of 2024 is not Greece of 2007. There is risk, but there is no fiscal crisis.

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Whoever wins in November will soon face two big fiscal tests. One is the need to raise the federal debt limit, likely in mid-2025. In both 2011 and 2023, the threat of default without a debt-limit increase led to compromises that reduced red ink. The other trigger is the looming expiration of much of the 2017 tax law. If Congress doesn’t act by the end of 2025, taxes would rise on most households, a path to deficit reduction that both parties say they don’t want.

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When he first ran for president in 2016, Donald Trump said he would pay off the national debt within eight years. He went in the opposite direction: Debt rose from less than $15 trillion to more than $21 trillion by the time he left office.

While some of that was due to pre-existing trends and the pandemic, Trump made two major decisions that broke with Republicans in Congress and drove up federal borrowing.

Republicans had long advocated making Social Security and Medicare less generous and more fiscally sustainable. To appeal to middle-class voters, Trump embraced what had long been a Democratic position and shut down discussion of broad benefit cuts.

Then in 2017, when House Republicans sought to cut tax rates, Trump resisted their attempts to offset the full cost. The Tax Cuts and Jobs Act Trump eventually signed into law was projected then to increase deficits by $1.5 trillion over a decade.

Once the pandemic started, Trump joined the broad economic consensus that the U.S. needed to pour money into the economy, eventually adding more than $3 trillion to the debt to provide stimulus checks, enhanced jobless benefits and other relief.

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President Biden and Harris expanded on Trump’s pandemic spending with the $1.9 trillion American Rescue Plan, which included another round of stimulus checks and aid to state and local governments. Their core domestic legislation—the Inflation Reduction Act of 2022, which required Harris’ tiebreaking vote—was originally estimated to reduce budget deficits. But the projected reduction has shrunk or disappeared altogether as estimates of key tax credits, including breaks for electric vehicles, have risen.

Biden, with Harris’s strong backing, canceled student debt in a series of executive orders that could cost the government more than $1 trillion, according to the Committee for a Responsible Federal Budget. The plan is now stuck in litigation as courts have curtailed Biden’s authority to cancel debt.

“I don’t think we’ve seen a president spend nearly as much without Congress as Biden,” said Marc Goldwein, the CRFB’s senior vice president.

Still, something important has changed for the fiscal outlook since the pandemic and the Democratic legislation: Inflation and interest rates have risen, and that creates a more dangerous dynamic going forward.

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“There’s nothing that Republicans I think will be able to cut under Trump in a meaningful way,” said Don Schneider, a former House GOP aide now at investment bank Piper Sandler.

In his acceptance speech at the Republican National Convention, Trump said, “We’ll start paying off debt and start lowering taxes even further.”

Nonpartisan experts say there’s virtually no chance of that. Paying off debt would require the U.S. to shift from massive deficits to surpluses. Tax cuts would work in the opposite direction. Low tax rates can encourage growth and generate some revenue, but not enough to offset the loss of revenue, economists in both parties acknowledge.

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Harris has called for reviving and expanding the child tax credit that was in place during 2021 and for implementing new subsidies for first-time home buyers.

She also largely endorsed Biden’s last budget, which calls for $3 trillion in deficit reduction over the next decade. But that plan comes with two big asterisks.

First, while the budget would raise taxes on the rich and corporations, the revenue isn’t enough to deliver the claimed deficit reduction, pay for Harris’ child tax credit and home-buyer subsidy proposals, and cover the Biden-Harris proposals to extend expiring cuts to prevent tax increases on households earning less than $400,000.

Second, the chances Congress would agree to such a plan are slim, even in the unlikely event Democrats control both the House and Senate. Biden couldn’t get centrist Democratic senators to pass his tax increases in 2022. Harris could face similar opposition and already dialed back Biden’s proposed capital-gains tax increase.

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Not including interest, the U.S. government will spend $1.21 for every $1.00 it collects in revenue this year. Add interest and that climbs to $1.39.

Voters often support balanced budgets in theory, but they also like the low taxes and higher spending of the past few decades. At least at some level, they prefer getting government at a discount. And politicians know that the reward for fiscal discipline can just be giving their successors more room to run up deficits.

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