We the people of the United States, in order to ensure the welfare and prosperity of ourselves and our posterity, do demand that the 2016 presidential candidates submit plans to reduce the runaway federal budget deficit.
That is the message voters should deliver loud and clear to Hillary Clinton and Donald Trump, each of whom has so far responded to the growing deficit with promises that would actually increase it.
Shortsighted. Irresponsible. But true.
The federal budget deficit had faded into the background of political discussion recently because it had been decreasing since 2009. But a sharp change in direction is occurring this year. A new Congressional Budget Office projection shows the deficit growing to $590 billion by the end of the year, up more than 33 percent from last year. Furthermore, CBO projections show annual deficits continuing to rise to $1.3 trillion by 2026, equal to 86 percent of the value of all the goods and services the country produces in that same year.
Our national debt, the accumulation of annual deficits, is already $19.5 trillion. For a family of four, the share of the debt is almost a quarter of a million dollars — and growing.
Some policymakers have downplayed the deficit by pointing out that we owe the national debt to ourselves. There is some truth in that. Taxpayers owe the money to bondholders. About two-thirds of the bonds are held by U.S. entities, ranging from Social Security trust funds to pension funds to the Federal Reserve. Foreign buyers hold the other third of bonds.
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But if the government continues to run deficits, as though the debts never need to be paid, two things happen. First, taxpayers are hit with ever-higher interest payments, socking each generation with higher costs. About 14 cents of your tax dollar already goes to interest payments. Second, bondholders lose confidence, and the country faces a day of reckoning.
The better option is to reduce deficits through lower spending and increased tax collections. The longer we wait, the more drastic the tax hikes and spending cuts must be, and the worse the consequences for future generations.
Yet, Trump and Clinton are proposing to not only wait, but also make things worse, according to independent analyses. Trump is proposing a tax-cut plan, which he says will stimulate economic growth and increase tax collections. However, the tax cuts are so steep that, even accounting for increased economic growth, his plan would add $10 trillion to the debt over the next 10 years, a sum that cannot be overcome by his promises to close tax loopholes and eliminate waste and fraud.
Clinton proposes increasing tax collections by about $1.5 trillion over 10 years. But she also promises $2.2 trillion in new spending for a net debt increase of more than $700 billion.
As irresponsible as their campaigns have been on deficit reduction, they are typical of politicians who disdain the long-term health of the nation in favor of what they believe will get them elected now. Voters won’t get anything better unless they demand it.