by Michael Pento, Market Oracle:
The Congressional Budget Office (CBO) estimates the total deficit for fiscal 2016 will be $590 billion. This is $152 billion (34%) greater than the shortfall posted in fiscal year 2015. And by 2026 the deficit would be considerably larger as a share of the nation’s output (GDP) than its average over the past 50 years.
In addition to this, debt held by the public would rise significantly from its already high level, reaching 86% of GDP by 2026.
These accumulating budget deficits add to the Gross Federal debt that is now over $19.4 trillion dollars (105% of GDP). Most importantly, the debt and deficit estimates from the CBO assumes a growth rate in nominal and real GDP that is markedly higher than any other enjoyed in recent history; and also do not include any recessions over the next decade.
But the nation’s growing debt and deficits don’t appear to be weighing on anyone’s mind. After all, Americans are burdened on a daily basis by more pressing issues such as an Olympic swimmer’s drunken exploits and the ongoing search for Pokémon. Unfortunately, while the hypnotism of America intensifies, our debt burden grows unabated.
But with the election year upon us, one would have hoped this topic was at least superficially broached. That the two candidates would have at the very least made a glib proposal as to how they would avert our impending debt crisis.
Instead, both Clinton and Trump appear hell-bent on outspending each other at every campaign stop.
Hillary says if you are with “her” you’ll get free college tuition! Her $350 billion proposal covers millions of voters set to pay for college, as well as interest rate relief for those saddled with student loans. Clinton has gotten applause when she suggests she will stick the rich with the bill. But this no growth economy isn’t churning out enough Beyoncé’s, to pick up the cost of college for the other ninety-nine-point-nine-nine percent. And a transfer of the cost of college education from the individual to the state will explode future federal deficits.
Ivanka Trump described her father as “a tough-talking deal-maker who also worries about family leave, equal pay for women and the cost of child care.” But this softer side of Trump that Ivanka reveals is certain to make America broke again. Trump is promising working moms free child care. It’s unclear how much this will cost since the proposal keeps changing but unless he can get Mexico to pay for it, it will add a lot to the deficit. In fact, the self-proclaimed lover and king of debt even goes so far to claim, “I would borrow, knowing that if the economy crashed, you could make a deal.”
But the proposed spending doesn’t just stop at child care and college. Both candidates promise infrastructure programs to rebuild America’s roads, bridges, and airports.
Clinton’s plan, which is estimated to cost $275 billion over five years, calls for setting up a national infrastructure bank to help fund large-scale projects. For the record, an infrastructure bank is a euphemism for off balance sheet government borrowing. And if Hillary’s spending plan is big, Trump’s, as you can imagine, is “Yuge” – his program is set to be double that of Clintons…not including the wall.
Both candidates will significantly add to the amount of red ink. The Committee for a Responsible Federal Budget estimates that Donald Trump’s plan would add $2.55 trillion to the deficit over the next decade. And a study by the American Action Forum says Clinton’s plan will increase the deficit by $2.2 trillion.
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