News
US debt is about to hit $35 trillion. It was barely mentioned at the Republican Party convention.
The national debt is on the brink of a grim milestone, but it’s one of the least discussed topics at this week’s Republican National Convention.
President Joe Biden also didn’t mention the issue much during his campaign tours across the country.
Outstanding public debt was $34.9 trillion ($34,940,154,000,000 to be precise) as of Tuesday, according to the latest data from the Treasury Department.
That’s a debt burden that now represents more than 120% of GDP. Earlier this year, the cost of interest payments alone surpassed the cost of defense spending.
The psychologically important $35 trillion milestone will likely be crossed sometime between this week’s Republican National Convention and when Democrats convene in Chicago in a few weeks — if debt continues to grow on average. about 8 billion dollars a day.
In total, the debt could account for 166% of US GDP by 2054.
However, a Yahoo Finance analysis of this week’s flurry of political commentary — both from Republicans in Milwaukee and from Biden on the campaign trail — highlights a political reality of this election season:This historic debt is not a priority issue.
“We stand for fiscal wisdom, low taxes and debt reduction,” Florida Gov. Ron DeSantis said as he endorsed Republican candidate Donald Trump on Tuesday night.
What the line contained in speed it perhaps lacked in internal consistency. Cutting taxes is likely to increase deficits and debt.
“Our government sold us a false image with the Iraq war and the 2008 financial crisis, increasing our national debt that falls on the shoulders of our generation,” former presidential candidate Vivek Ramaswamy added during his speech.
He ignored how 2017 Tax Cuts and Other Policies Enacted by Trump as president contributed enormously to the current total.
The debt has increased by nearly $8 trillion during Trump’s term. Biden is on track to oversee a similar increase. In total, the national debt has increased by more than 70% in the past 7.5 years, fueled by a flood of new spending as well as obligations that date back decades.
Former President Donald Trump is displayed on a screen during the second day of the 2024 Republican National Convention in Milwaukee. (PEDRO UGARTE/AFP via Getty Images) (PEDRO UGARTE via Getty Images)
In total, the vast majority of major convention speeches so far this week have not mentioned debt or deficits, according to a review of transcripts and videos. Republican platform offers promises to cut “unnecessary government spending” but does not discuss debt or deficits directly.
It’s a notable shift for Republicans who in recent years have campaigned on ideas like a balanced budget amendment and fielded high-profile candidates who rose through the ranks as members of the party’s deficit-fighting wing.
The story continues
That wing of the party still exists, but it was far from prominent this week.
“The fiscal warning signs are really very clear, very loud, and it’s like no one running for office is paying attention,” Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said in a recent interview with Yahoo Finance.
Few mentions of Biden either
The same thing happened, to some extent, on the other side of the aisle this week.
The debt didn’t come when Biden sat down with NBC’s Lester Holt on Monday.
The president spoke about the issue on Tuesday at an economic summit in North Las Vegas.
Before you interrupt your trip after a positive COVID testHe said his plan to make billionaires pay a 25% minimum tax would generate $500 billion over the next decade, “allowing us to do more for child care, elder care, reduce the federal deficit and more.”
But it’s a plan that is unlikely to be approved by Congress, even if Biden wins a second term.
Gallup recently found that federal spending and the budget deficit are collectively something that 51% of respondents care “a lot” about, the sixth biggest issue on the list.
But this issue did not become a campaign focus for either side.
President Joe Biden arrives at Harry Reid International Airport in Las Vegas for a campaign rally this week. (AP Photo/Susan Walsh) (ASSOCIATED PRESS)
Biden has overseen lots of new profits, but he has also overseen shrinking deficits, with The US will have a $1.7 trillion deficit in fiscal year 2023 and on track for a slightly better result this year.
Another positive trend is that debt as a percentage of GDP has stabilized and even decreased slightly in recent years.
Tax cuts that could make things worse
The lack of focus on debt also occurs because there is a huge focus on another issue that can make the problem worse: taxes.
These rates will be a top-of-mind issue in 2025, with key individual provisions of Trump’s 2017 tax cuts set to expire at the end of the year. That means taxpayers could face a significant effective tax increase if Washington fails to act.
The plans on both sides at the moment could add trillions of dollars in losses in the coming years.
Trump has repeatedly promised to extend tax cuts across the board. That could add between $4 trillion and $5 trillion if not offset, estimates the Committee for a Responsible Federal Budget.
Some Republicans are even talking this week about a tax plan the “Project 2025” effort led by Trump allies which could lead to even deeper cuts.
Biden’s plan is to extend the cuts to those earning less than $400,000 a year. That could still cost more than $2 trillion.
Biden has offered detailed plans to offset at least some of those costs with tax increases in other areas, such as his effort to impose a 25% minimum tax on billionaires.
Trump offered far fewer details when asked about the national debt and said he could address it by drilling for oil — which he calls “liquid gold” — without elaborating on exactly how that would work.
“There’s literally a pit in my stomach,” MacGuineas said, discussing the potential trillions of dollars in costs from these cuts. “There’s a pit in my stomach right now just talking about this with you.”
Ben Werschkul is a Washington correspondent for Yahoo Finance. Akiko Fujita contributed reporting.
Click here for political news related to business and money
Read the latest financial and business news from Yahoo Finance