Election 2024: The United States Has a Debt Problem

The U.S. government is addicted to deficits and debt. The last time the federal government ran a budget surplus—that is, tax revenue coming into the U.S. Treasury exceeding money going out to pay expenses—was 2001. Even that black ink was an anomaly. Washington has run a budget surplus only four times in the past half century.

The inevitable consequence of repeated government deficits is a growing national debt. The U.S. national debt now tops $35 trillion. That equates to nearly $105,000 for every man, woman, and child living in the United States. Put differently, the national debt is now as large as the entire U.S. economy. The last time the U.S. national debt was this large relative to the U.S. economy was at the end of World War II when the United States borrowed heavily to finance the existential fight against Nazi Germany and Imperial Japan.

What is striking about America’s debt today is how fast it has accumulated. Just fifteen years ago, the U.S. national debt was only about half the size of the U.S. economy. Under Donald Trump, the U.S. national debt grew by nearly $8 trillion, or roughly 25 percent of the debt the United States accumulated during its first 227 years of existence.

Joe Biden hasn’t done much to turn the trendline around. The federal government’s budget deficit for fiscal year (FY) 2023 was $1.7 trillion. The budget deficit for FY 2024, which ends in just twenty-four days, is estimated to be $1.9 trillion. In the absence of major changes in U.S. fiscal policy—that is, what the U.S. government spends and taxes—the debt picture will only worsen. The U.S. government is headed toward a national debt in thirty years that equals 166 percent of the U.S. economy.

The current U.S. economic boom would seem to be the ideal time to shore up America’s fiscal foundation. The reason is simple. Recessions mean more red ink as tax receipts fall and spending grows to stimulate the contracting economy.

The United States, however, shows no signs of embracing fiscal rectitude. It’s certainly not an issue on the campaign trail. In fact, the opposite is the case. Economists at the University of Pennsylvania project that Donald Trump’s proposed tax and spending plans would add $4.1 trillion to the debt over a decade. The comparable number for Kamala Harris is smaller but not small: $2 trillion.

Does any of this matter? Skeptics will point out that deficit hawks have been warning about a debt Armageddon for decades. Despite the finger-wagging, the U.S. economy remains the envy of the world and the U.S. stock market keeps hitting all-time highs. As Alfred E. Neuman might say, “What, me worry?”

The problem with the Alfred E. Neuman school of deficit thinking is that you only know you have overdone something by overdoing it. At that point the fixes won’t be easy or painless. To the contrary, they will be hard and painful.

Even now the pain points are easy to see. Borrowed money needs to be repaid. The United States is now paying back its lenders to the tune of more than $2 billion a day. That might not seem like much. But it means that the United States now spends more on interest on its debt each year than it spends on defense.

Even if defense spending isn’t your favorite federal government expenditure, the general lesson remains the same. Money spent on interest is money that can’t be spent to educate children, support cutting-edge research, or invest in the infrastructure needed to keep the U.S. economy world class.

The scant talk on the campaign trail of debt and deficits makes political sense. Both Harris and Trump want to focus on what they will deliver for voters rather than what they will take away. But their success in ignoring the fiscal math for the moment could provide cold comfort down the road. Whoever wins in November might discover that a flood of red ink will derail much of what they hope to accomplish once they sit in the Oval Office.

Campaign Update

The much-anticipated Harris-Trump debate is now just four days away. After much sparring, the two sides have agreed on the ground rules for the ninety-minute faceoff, which will be held at Philadelphia’s National Constitution Center and be broadcast on ABC. The Harris campaign folded on its demand that both candidates have live mics throughout the debate, while arguing that the decision “will serve to shield Donald Trump from direct exchanges with the Vice President.” Like the June 27 meeting between Joe Biden and Trump, no audience will be present. David Muir and Linsey Davis will moderate the debate, which will have two commercial breaks.

Trump won an important legal victory earlier today. Judge Juan Merchan agreed to postpone the former president’s sentencing on his felony convictions in the New York hush money case until after Election Day. Merchan wrote that Trump’s legal situation “is one that stands alone, in a unique place in this Nation's history” and that “this is not a decision this Court makes lightly but it is the decision which in this Court's view, best advances the interests of justice.” Trump’s new sentencing date is November 26.

Trump had less success this week in his effort to delay action on the criminal charges he faces in the January 6 case. Federal District Court Judge Tanya Chutkan yesterday directed the office of Special Prosecutor Jack Smith to submit a brief by September 26 on how the government’s revised indictment charging Trump with seeking to overthrow the 2020 election accommodates the Supreme Court’s ruling this summer on presidential immunity. Chutkan gave Trump’s lawyers until October 17 to respond to the government’s brief. They had asked that the submission of the government’s brief be delayed until December to avoid revealing any information that could damage Trump’s candidacy. Chutkan responded that the timing of the election was “not relevant” to the court’s proceedings.

The Department of Justice on Wednesday unsealed an indictment in the Southern District of New York alleging that an unnamed U.S. company accepted nearly $10 million dollars from a Russian source to promote Russian propaganda in the United States. The firm in question was subsequently identified as Tenet Media, a right-wing organization that describes itself as featuring a “network of heterodox commentators that focus on Western political and cultural issues.” YouTube subsequently terminated channels associated with Tenet Media and its founders. The criminal charges filed in New York were part of a larger effort, which included sanctions on Russian organizations and the seizure of more than thirty internet domains, to curb Russian interference in the U.S. election.

Robert F. Kennedy Jr. has sued to get his name off the ballot in Wisconsin. The crux of Kennedy’s legal challenge is that the state’s rules for withdrawing from a race differ for third-party candidates. Democratic and Republican candidates have until the first Tuesday in September to withdraw, while third-party candidates must do so by early August. On Tuesday, a Michigan judge dismissed a lawsuit Kennedy filed to get off the ballot in Michigan.

Jen O’Malley, chair of the Harris-Walz campaign, released a memo last Saturday that sought to lance any overconfidence that might be building among Democrats given how well things have gone for Harris since she entered the race. O’Malley wrote that “we head into the final stretch of this race as the clear underdogs” and noted that the 2020 election “came down to about 40,000 votes across the battleground states.” Polls back up her caution—Harris is behind where Biden stood four years ago with a range of demographic groups. O’Malley did point to one weakness she sees in Trump’s campaign: it “still lags far behind in the infrastructure needed to win in key battleground states.” That edge might persist. Contributions to the Harris-Waltz campaign last month were double those to the Trump-Vance campaign. 

What the Candidates Are Saying

Trump addressed the Economic Club in New York yesterday. In response to a question about how he would lower the cost of childcare, he argued that the answer lies in raising tariffs. In his view, the United States would take in so much money by building a tariff wall that “we’re going to make this into an incredible country that can afford to take care of its people.”

Trump went even further to argue that the tariffs he intends to impose will mean that the United States will have “no deficits in a fairly short period of time.” In making these claims, Trump once again said that tariffs are taxes on foreign countries. They aren’t. They are taxes paid by U.S. importers. Economists at Goldman Sachs this week wrote that Trump’s tariff plans would actually slow U.S. economic growth.

At a campaign event in Pittsburgh on Labor Day, Harris sided with the United Steelworkers union and declared that US Steel “should remain American-owned and American-operated.”

Japan’s Nippon Steel agreed last December to buy U.S. Steel, which has been struggling to succeed in a fiercely competitive global market. Steelworkers and many local politicians have adamantly opposed the sale, even though Nippon Steel has promised to invest $2.7 billion in modernizing U.S. Steel’s facilities, and U.S. Steel executives have warned of job losses if the deal doesn’t go through. Harris likely won’t get to decide whether the deal goes through or not. Biden appears poised to kill the deal on national security grounds.

What the Pundits Are Saying

The New York Times’s Nick Corasaniti explored the many legal challenges likely to unfold before and after Election Day. He notes that lawsuits will be filed in states across the country because each state has its own rules governing elections. “But the likeliest source of trouble at the moment is Georgia, which embodies Republicans’ two-pronged approach: They’ve set up new hurdles to voting and a process to stall—or even outright avoid—certifying the results if Trump loses. (In certification, local election officials are like scorekeepers at a football game, tallying up the points from each quarter to make a final, official score.)”

The Campaign Schedule

The second presidential debate is next Tuesday night (September 10, 2024).

North Carolina began sending mail-in ballots today to all voters who request them. Pennsylvania will allow voters to request mail-in ballots in ten days (September 16, 2024).

The first in-person absentee voting in the nation begins in Minnesota and South Dakota in two weeks (September 20, 2024).

Election Day is sixty days away (November 5, 2024).

Inauguration Day is 136 days away (January 20, 2025).

Shelby Sires assisted in the preparation of this post.