For Harris and Trump, the out-of-control US debt is the elephant in the room US election 2024

Once upon a time, the United States’ skyrocketing national debt was a major talking point in presidential elections.

The final debate between Donald Trump and Hillary Clinton in 2016 included a dedicated 12-minute segment on the topic.

Barack Obama and Mitt Romney clashed on the issue in all three debates in 2012.

Fast forward to 2024 and it appears that national debt is no longer important.

The word “debt” wasn’t mentioned once during the first and only debate between Trump and Kamala Harris earlier this month.

The Republican Party, traditionally most eager to assume fiscal responsibility, did not include a single reference to the debt or deficit in its 16-page platform document released in July.

It’s not that debt is any less relevant today than it was in recent elections – quite the opposite.

In 2012, the national debt, excluding money the government owes itself, was $11.4 trillion, about 69.5 percent of gross domestic product (GDP).

Today it amounts to about $28 trillion, or about 99 percent of GDP.

The Congressional Budget Office (CBO) predicts that figure will exceed $51 trillion over the next decade, pushing the debt-to-GDP ratio to 122 percent – higher than after World War II.

Neither Trump nor Harris have paid much attention to this ticking time bomb, let alone made serious proposals to defuse it.

In fact, both candidates’ policies will make the situation worse.

While grandiose promises from politicians are nothing new, Trump and Harris have made so many costly commitments – from Trump’s promise to extend his 2017 tax cuts and exempt overtime from taxes to Harris’ plan for $25,000 in aid for first-time home buyers – and independent budget forecasters have struggled to keep up.

The nonpartisan Tax Policy Center estimates Harris’ agenda would increase the deficit by up to $2.6 trillion over the next decade, while Trump’s proposals would increase the deficit by $2 trillion to $3.1 trillion.

The Penn Wharton Budget Model, which excludes some of the candidates’ recent pledges, estimates the deficit would rise by $4.1 trillion under Trump and $2 trillion under Harris.

“None of the candidates want to deal with it,” Gary Hufbauer, non-resident senior fellow at the Peterson Institute of International Economics, told Al Jazeera.

“Both came to the conclusion that discussions about debt reduction were a hopeless endeavor,” Hufbauer added.

There is debate among economists about how much debt the U.S. economy can take on before it becomes a serious problem.

Unlike private households, governments have an indefinite planning horizon, which allows them to constantly roll over their debt.

When it comes time for governments to pay back lenders, they can simply take on new debt to meet their obligations.

Compared to other countries, the United States has a particular advantage in debt management due to the dollar’s status as the world’s primary reserve currency.

Because the dollar is held in large quantities by central banks and financial institutions around the world, the US government can borrow at lower interest rates. It can also raise debt in its own currency, avoiding exchange rate fluctuations that would increase repayment costs.

However, there is little agreement that there is a point at which debt can no longer increase without serious economic consequences.

Economists at the Penn Wharton Budget Model argued in an analysis published last year that financial markets would not sustain a national debt of more than 200 percent of GDP.

Jagadeesh Gokhale and Kent Smetters predicted that the U.S. government would have about 20 years to take corrective action before it reaches a point where no tax increases or spending cuts can prevent a default – a scenario that would send shockwaves throughout the country would trigger the global economy.

“This time frame represents the ‘best-case’ scenario for the United States under market conditions in which participants believe that corrective fiscal measures will occur ahead of schedule,” Gokhale and Smetters wrote in their analysis published last October.

“If they instead started believing otherwise, the debt dynamics would make the window for corrective action even shorter.”

Even if an outcome as catastrophic as national bankruptcy does not occur, the CBO predicts that all federal government revenues will go toward Social Security and paying interest on debt by the mid-2030s.

As every cent of taxes is gobbled up by mandatory government spending, future governments will be constrained in their ability to invest in growth-enhancing innovations or respond to emergencies such as recessions or the next pandemic.

Unfortunately, there is no painless solution to the debt problem that does not involve a combination of spending cuts and higher taxes – and the longer the measures are delayed, the more bitter the solution will be.

But in the age of populism, politicians have little incentive to talk about difficult decisions and voters have little incentive to listen.