Thomas Donlan of Barron’s devotes his latest editorial commentary to the 2016 presidential election’s likely impact on American fiscal policy.
The deficit spending prompted by the financial crisis of 2008-2010 has become the new normal.
The baseline increase in debt held by the public—what we get if politicians do nothing over the next 10 years—is $9 trillion, according to the computer models of the Congressional Budget Office. That’s more than the $8.2 trillion added to the debt between fiscal 2008 and fiscal 2017, which included four years of attempts to spend our way out of the great recession.
Nothing—or nearly nothing—is the policy we’re likely to get, even if the polls are wrong and one party dominates the election to control the White House and both houses of Congress. As we should have learned during the past three administrations, divided government has become a way of life in Washington, providing ample excuse for inaction.
Both parties are ignoring the automatic increases in government spending in Social Security, Medicare, and interest on the national debt. The baby boom generation is leaving the work force, becoming takers of benefits, rather than makers of income, profits, and wealth. The simple result: Spending grows faster than revenue for decades to come, and the problem will get much worse, as quickly as interest rates rise from their record lows.
As the Committee for a Responsible Federal Budget moaned in its analysis of the candidates: “Neither candidate would slow the unsustainable growth in the debt. Even stabilizing the debt at today’s post-World War II era record-high levels would require significant tax and/or spending adjustments and would likely require a particular focus on entitlement reform over the long run.”
This has become our fiscal system: “Garbage in, garbage out.”
