Neither candidate has made debt reduction a priority while in the White House, according to research released Monday by the nonpartisan Committee for a Responsible Federal Budget. The debt grew by $8.4 trillion during Trump’s first term, while Biden so far has added $4.3 trillion, according to the group.
A large portion of the new debt under both administrations came from spending to combat the extreme economic hardship created by the coronavirus pandemic in early 2020. Mainstream conservative and liberal economists say that spending was necessary to prevent greater economic calamity.
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Trump, however, also ran up the debt with other big-ticket items, notably his 2017 Tax Cuts and Jobs Act, which cost $1.9 trillion, and two bipartisan budget laws that cost a combined $2.1 trillion, according to CRFB. Biden’s largest non-covid debt-financed initiatives were the $1.4 trillion spending laws for the 2022 and 2023 fiscal years and $620 billion of student debt relief. But the 2023 Fiscal Responsibility Act that Biden negotiated with congressional Republicans knocked $1.5 trillion off the national debt.
Not counting pandemic spending, Trump added $2.5 trillion more to the debt than Biden has, according to the CRFB report.
“I think the question voters need to be asking is, who would prioritize getting the debt under control? And looking at the records of both candidates, nobody stands out as having been willing to make this an important priority so far,” said CRFB president Maya MacGuineas.
Whomever wins the White House is likely to face a reckoning over the debt, and soon. Early next year, Congress will once again face an approaching deadline to raise or suspend the debt limit, which caps borrowing, or face an economically devastating default. And by December 2025, Congress will have to decide whether to extend the majority of Trump’s tax cuts or let them expire — a move that would increase rates sharply for nearly every American.
A full extension of the tax cuts would add $4.6 trillion to the debt over the next decade, according to the nonpartisan Congressional Budget Office.
Biden has proposed a limited extension of those tax cuts, plus higher rates on the rich and corporations, which his aides say would cut $3 trillion from the debt. Investments in child care, health care and affordable housing would make it easier for working parents, driving more economic growth, his administration says.
“This is a campaign that is just unserious when it comes to fiscal policy,” MacGuineas said.
The legislative battles will take place against a troubling fiscal backdrop. Last week, the CBO projected annual budget deficits of nearly $2 trillion for the foreseeable future. That mismatch between spending and revenue will drive borrowing ever higher, with the debt growing to more than $50 trillion by 2034 — or more than 122 percent of the nation’s overall economy — the CBO said.
Within the next three years, the agency reported that the debt would exceed 106 percent of GDP, blowing past the previous record set in the aftermath of World War II.
“I think this is a very dangerous situation for our country, and I’m not even a debt-phobiac,” said Stephen Moore, an economist at the right-wing Heritage Foundation and a Trump economic adviser. “I’ve done this for 40 years. That [CBO report] was the first one that really scared my pants off. There’s no bending of the curve down at all. It just keeps going up and up and up and up.”
Biden has said he would not consider cuts to Social Security and Medicare, the pension and health-care programs that face looming trust fund shortfalls and will take up larger shares of federal spending in the future. Trump has floated cuts to the programs, but quickly backpedaled and insisted he wouldn’t support reducing benefits.
The Republican Study Committee, a leading GOP caucus in the House, suggested cuts to social safety net programs in its 2024 budget.
Trump aims for the economy to grow its way out of debt troubles, shooting for growth above 3 percent as a way to goose federal revenue, Moore said. In a presentation for House Republicans earlier in June, Moore swapped out the CBO’s long-term economic growth rate of 1.8 percent for an optimistic 3.1 percent. That projection meant enough new revenue that annual deficits began to stabilize, he said.
“You’ve got to get growth up, because growth is what creates the revenues that you need to catch up with the spending,” Moore said.
But the economy grew 1.6 percent on an annualized basis in the first quarter of 2024, according to the Bureau of Economic Analysis, and hitting the rates Moore says would help the budget might be tough. Growth rates would need to be exponentially higher to outpace the United States’ spending and borrowing needs, independent experts say.
“We’re not even paying right now for the things we said we were going to pay for,” said Jason Fichtner, chief economist at the Bipartisan Policy Center think tank.
A lower corporate tax rate would unlock that economic growth, some conservatives say. Trump recently suggested cutting the corporate tax rate to 20 percent, which would add between $150 billion and $200 billion more to the debt, according to federal estimates.
“There is no credible argument that we will be able to grow our way out of the problems that we are facing, and that becomes even harder if we continue to add more debt through further tax cuts or spending increases that are debt-financed,” MacGuineas said.
The Biden administration has accused Trump and Republicans of moving to curb the deficit only when Democrats are in office, running up trillions in debt during GOP control.
“After the prior administration increased the debt by a record $8 trillion and didn’t sign a single law to reduce the deficit, President Biden has signed $1 trillion of deficit reduction into law. While congressional Republicans want to blow up the debt again with $5 trillion in more Trump tax cuts, President Biden’s budget would lower the deficit by $3 trillion by making billionaires and biggest corporations pay their fair share and cutting spending on special interests,” White House spokesperson Jeremy M. Edwards said in a statement.
Biden says his agenda could both fund new programs and trim back the debt. He would offset the spending with large tax increases on the rich and major companies.
The Biden administration sees money-saving policies on Medicare and reduced spending on other “special interests,” such as fossil fuels, as a way to curb federal outlays, said Daniel Hornung, deputy director of the White House National Economic Council, in an interview.
“You’ve got to bring revenues in better line with expenditures,” Hornung said. “Obviously, there are two sides to that equation and the president has proposed a budget that both brings up the amount of revenue we’re raising as a share of the economy through raising taxes on wealthy Americans and large corporations, and also brings down specific outlays that the federal government is making.”
The Trump campaign blasted Biden’s handling of the budget.
“In just three years, Joe Biden’s out of control spending created the worst inflation crisis in generations,” Trump campaign national press secretary Karoline Leavitt said in a statement. “The American people cannot afford four more years of Bidenomics. When President Trump is back in the White House, he will reimplement MAGAnomics and restore an economy that benefits all Americans.”
Independent budget experts are wary of both campaigns’ claims.
“Can I give them both C-minuses on debt policy?” Fichtner said.
The U.S. government owes $34.7 trillion, according to the Treasury, the vast majority of which is held by the public through bonds and other borrowing instruments. The cost of that debt keeps climbing as the government spends more — and must borrow more, because taxes and other revenue don’t cover all the spending.
The CBO projects that the annual U.S. deficit will reach $2.8 trillion by 2034, but that estimate only considers current law, and not Biden’s and Trump’s plans on taxation and spending or other changes that may arise over the next decade.
As the deficit grows, borrowing becomes more expensive through higher interest rates. And as those interest payments take up a larger share of the federal budget, they crowd out other investments Congress and the president could make.
That has the potential of limiting economic growth, which depresses tax revenue — and could force the government to borrow even more, repeating the same cycle. This year, the government is forecast to spend $892 billion on interest payments alone.
“We have all the conditions where the fiscal situation could quickly become very dangerous,” MacGuineas said.
Such an outcome is probably years away, experts say. But the new debt figures are an early warning sign, especially since most economists don’t know the threshold at which lenders will start to balk at the United States’ debt load.
