During his 2016 presidential campaign, Donald Trump called himself the “king of debt.” He lived up to that name while running the economy during his first term.
According to a new study by the Committee for a Responsible Federal Budget, that’s what happened. The study showed that during President Trump’s four years in office, he approved $8.4 trillion in new 10-year loans, while President Joe Biden only approved $4.3 trillion.
Taking out the COVID stimulus money, Trump approved $4.8 trillion in new debt, while Biden only approved $2.2 trillion.
Group for a Responsible Federal Budget
The report said, “While past performance doesn’t always show what will happen in the future, it is helpful to look at the fiscal performance from each President’s time in office for clues as to how they plan to deal with these problems or how high up on their agendas fiscal responsibility will be.”
Karen Leavitt, the national press secretary for the Trump campaign, told MarketWatch that during Biden’s first term, “Joe Biden’s out of control spending created the worst inflation crisis in generations.”
“Our country can’t handle four more years of Bidenomics,” she said. “When President Trump gets back to the White House, he will bring back MAGAnomics and make the economy better for everyone in the United States.”
MarketWatch talked to James Singer, a spokesman for the Biden campaign. He said that Trump “left our economy in tatters” and that tax cuts for the wealthy increased the federal debt while he was in office.
It will cost families $8,300 more and add to the debt if he gets a second term, Singer said. “This is all so he can give billionaires and corporations more handouts.” “This is Trump’s record and plan in a nutshell: careless bluster that hurts our economy, makes the rich richer, and puts working families on the hook.”
The economy will be very different in January 2025 for whoever wins the election in November compared to when Trump took office in 2017 or when Biden took office in 2021.
In both instances, inflation was low and stable, and the interest rate on a 10-year U.S. Treasury bond BX:TMUBMUSD10Y stayed well below what it has been in the past. That kept the government’s debt service costs low and made it cheaper for the government to borrow money for spending or tax cuts.
Instead, the person who becomes president in January will take over a country with huge budget deficits and a painful bout of inflation that has made people very nervous even though it is ending.
Biden has promised to only raise taxes on corporations and people who make more than $400,000 a year in order to reduce the deficit. However, some experts aren’t sure if that will be enough to solve long-term debt problems.
The CRFB thinks that the president’s budget, which came out earlier this year, would raise taxes on those groups by $5.2 trillion over 10 years and spend an extra $3.3 trillion on things like bigger tax credits for children, more money for pre-K and childcare, and a national program for paid family and medical leave.
Trump has promised to spend more than $5 trillion to make his tax cuts from 2017 permanent. His plan to deport tens of millions of undocumented immigrants could also cost the government up to $1 trillion in lost tax revenue and cause major industries to lack workers.
Trump’s plan to put a 10% tax on all goods bought from other countries would help pay for some of these things. The CRFB thought that the policy would bring in around $2 trillion over ten years.
Many people are starting to wonder if markets can handle all this new federal borrowing, according to the Financial Times. Ajay Rajadhyaksha, global chair of research at Barclays, told the paper that the U.S. government is “spending money as a country like a drunken sailor on shore for the weekend.”
Due to large federal deficits, the U.S. will have to issue $150 billion in new debt by the end of the fiscal year in September. This will make the total amount of short-term debt held by investors reach all-time highs.
“It’s likely that Treasury bills will make up a bigger part of total debt,” Torsten Slok, chief economist at Apollo, told the FT. “This makes me wonder who will buy them.” “This could definitely make funding markets tight.”
