As the U.S. grapples with its economic challenges, the latest figures reveal that the gross domestic product (GDP) rose by just 1.2 percent in the second quarter of 2016. This meager growth rate indicates a troubling stagnation rather than the dynamic expansion needed to tackle the nation’s mounting debt. As the economy stalls, deficits are poised to rise even further.
The federal budget deficit for the fiscal year 2015 stood at approximately $439 billion. Projections for fiscal year 2016 estimate this figure will balloon to $616 billion, marking an alarming increase of about $177 billion, or roughly 40 percent.
With the federal debt exceeding 100 percent of GDP, it is evident that a 1.2 percent growth rate will not suffice to alleviate the debt burden. Instead, this low growth, coupled with a projected $616 billion deficit, will only exacerbate the situation, exacerbating the debt as a percentage of GDP.
Neither Hillary Clinton nor Donald Trump appears to be addressing the critical issue of U.S. debt directly. Interestingly, both candidates’ economic platforms rely heavily on substantial spending initiatives, which will inevitably be financed through increased borrowing. But how much additional debt can the next president realistically incur?
George W. Bush saw federal debt double from $5 trillion to $10 trillion, while Barack Obama is on course to do the same, pushing the total from $10 trillion to $20 trillion. It seems unlikely that the next president will have the capacity to double this figure once more, escalating it to $40 trillion.
Irrespective of their awareness or acceptance, whoever wins the election will inevitably confront the debt crisis. This responsibility is a weighty legacy left by past administrations and Congresses.
Confronting the Debt Crisis
The extent of the debt crisis is even more severe than it appears. According to Professor Laurence Kotlikoff, the true U.S. fiscal gap is around $200 trillion, starkly contrasting from the commonly cited federal debt of $19.5 trillion. This gap arises from Kotlikoff’s analysis of projected obligations versus the present value of anticipated future tax revenues and receipts.
To reconcile the interests of current benefits recipients with those who anticipate future benefits, Kotlikoff warns that the government would need to raise every single federal tax by a staggering 53 percent. Alternatively, federal spending would have to be slashed by 34 percent. Yet, we can’t recall either candidate suggesting such drastic tax increases as part of their campaign agendas.
At present, there is a significant discrepancy between what the public expects to receive through Social Security and Medicare, and the actual funding available to meet these obligations. Short-sighted attempts to stimulate the economy through deficit-financed programs only compound the debt crisis. Fixing this will fall squarely into the lap of the next president.
It’s not merely a matter of convenience or acceptability; it comes down to hard math that cannot be ignored. Neither Clinton nor Trump seems equipped to handle this challenge adequately.
This isn’t about Clinton’s controversial past or Trump’s unconventional hairstyle. It’s about acknowledging that both candidates fall short when it comes to confronting the critical issues at hand.
However, there is another option…
Laurence Kotlikoff for President
Laurence Kotlikoff is currently running as a write-in candidate for president. While he may not have the traditional experience typically associated with the role, his qualifications speak to the heart of the economic issues plaguing the nation.
In contrast to Clinton, whose tenure as Secretary of State raises serious questions about her judgment and effectiveness, and Trump, who lacks the proven credentials, Kotlikoff has dedicated extensive time to studying the fiscal gap and its implications. He stands as a candidate who truly understands the significant challenges facing the American economy.
Can Kotlikoff succeed without backing from a major party? An establishment-oriented viewpoint may say no, but that’s not a reason to discount his candidacy.
If you feel uncertain about Clinton and Trump and wish to express your dissent against the two-party system, voting for Kotlikoff could be a viable option.
Kotlikoff is one of the few academic economists willing to candidly address the inconvenient truths impacting Americans today. You can explore his platform—which encompasses not just economic issues—here: Kotlikoff 2016.
Sincerely,
MN Gordon
for Economic Prism
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