by Richard Rubin,

Both candidates were part of administrations that produced growing deficits. Neither is likely to reverse that trend if elected.

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.

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. “We’ve learned we borrowed more than we realized we could,” said Jason Furman, a Harvard economist who was a top aide to President Barack Obama. “And we’ve actually borrowed more than we expected.”

The path ahead 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.

William A. Galston says: The balanced budgets we enjoyed at the end of the 20th century won’t return anytime soon. Fortunately, fiscal sustainability doesn’t require this. As I’ve argued in previous columns, politicians should at a minimum stabilize the national debt as a share of GDP so that the burden of interest payments and debt refinancing grows no faster than the economy. If long-term projections for 2% annual economic growth and inflation rates are accurate, this target would require a cut of about $9 trillion, or 40%, in addition to the debt projected over the next decade. Bringing Social Security and Medicare into balance would be a big step toward this goal, but we would have to do more to meet it. We can’t ignore the deficit and debt indefinitely, even though we like to pretend that we can.

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