Biden, Trump Fiscal Policies Added Trillions to National Debt: Analysis

President Joe Biden delivers remarks at the White House on May 31, 2024. Chip Somodevilla/Getty Images

President Joe Biden and former President Donald Trump added trillions of dollars to the 10-year debt on net, according to a new analysis by the Committee for a Responsible Federal Budget (CRFB) released on June 24.

The nonprofit public policy organization published the findings of a new study comparing the fiscal policies of the two administrations, using data from the Congressional Budget Office (CBO) and the Office of Management and Budget (OMB). The organization assessed the presidents’ key actions and the 10-year impact with interest.

The Trump administration approved $8.4 trillion of new 10-year borrowing, or $4.8 trillion, excluding the CARES Act and other pandemic-era stimulus and relief packages.

Former President Trump’s pre-pandemic borrowing was fueled by the Tax Cuts and Jobs Act ($1.9 trillion), the Bipartisan Budget Acts of 2018 and 2019 ($2.1 trillion), and Affordable Care Act Tax Delays and Repeals ($539 billion), according to the report.

In his first three years and five months in office, President Biden approved $4.3 trillion of new borrowing, or $2.2 trillion excluding the American Rescue Plan.

Ignoring COVID programs, President Biden’s borrowing was driven by appropriations for fiscal year 2022 and 2023 ($1.4 trillion), the Honoring Our PACT Act ($520 billion), and the Bipartisan Infrastructure Law ($439 billion).

“The next presidential term will present significant fiscal challenges,” the report stated.

“Adding trillions more to the national debt will only worsen these challenges, just as both Presidents Trump and Biden did during their terms, along with lawmakers in Congress.”

www.crfb.org

Executive Actions and the National Debt

Researchers found that the incumbent’s executive actions added $1.2 trillion to the 10-year debt, with roughly half dedicated to student debt forgiveness ($620 billion). Other executive actions contributed $548 billion to the debt.

By comparison, former President Donald Trump’s executive actions contributed less than $20 billion to the 10-year debt on net.

According to the report, the presumptive Republican presidential nominee’s health care-related executive actions added $456 billion to the debt on net. However, the former president offset the increase with a $443 billion reduction from new and increased tariffs.

Under President Biden, 71 percent of new debt came from unilateral decisions, while 29 percent was based on bipartisan laws. During former President Trump’s term, 77 percent of new debt originated from bipartisan legislation, and 23 percent was attributed to executive decisions.

“The national debt is on course to reach a record share of the economy under the next presidential administration,” the report stated.

New CBO Outlook

The nonpartisan budget watchdog, CBO, recently updated its 2024–2034 economic and budget outlook.

The federal deficit is projected to be $1.9 trillion for fiscal year 2024, according to the CBO. This is up from the February estimate of $1.5 trillion. The higher adjustment was fueled by student-loan forgiveness, emergency aid for Ukraine, Israel, and Indo-Pacific nations, and a boost for Medicaid.

Looking ahead, the U.S. government is anticipated to run a $2.8 trillion budget shortfall by 2034. Cumulatively, Washington is expected to register $22 trillion in deficits over the next decade.

The national debt is anticipated to top $50 trillion in the next 10 years, assuming the nation does not slip into a recession or engage in a major military conflict.

Interest costs are predicted to be a sizable part of the country’s ballooning debt and deficits.

By 2034, annual interest charges will exceed $1.7 trillion. Cumulatively, they will total around $13 trillion.

“In CBO’s projections, rising spending for Social Security and Medicare boosts mandatory outlays, discretionary spending as a share of GDP falls to historic lows, and higher interest rates and mounting debt cause net outlays for interest to increase,” the CBO outlook report stated.

“Beginning in 2025, interest costs are greater in relation to GDP than at any point since at least 1940 (the first year the Office of Management and Budget reported such data) and exceed outlays for defense and outlays for nondefense programs and activities.”

With federal outlays projected to be 24.1 percent of GDP over the next decade, spending will be firmly above the 50-year historic average of 21 percent of GDP.

If the CBO’s predictions are accurate, it would be “higher than any time in history outside of a war, recession, or other crisis,” the CRFB says.

Trump-Era Tax Cuts in Focus

The Trump-era tax cuts are set to expire by the end of next year, sparking intense debate during the election cycle.

Extending the tax policy would add as much as $3.3 trillion to deficits over the next decade, the CBO estimates.

An analysis by the Peter G. Peterson Foundation suggests an extension would cost $4.6 trillion over 10 years because of the net interest costs.

“The extension would significantly increase federal deficits that are already projected to grow over the next 10 years,” the fiscal policy think tank stated. “If enacted, the total cost of a full extension would push deficits past $2.0 trillion in 2027 and $3.0 trillion in 2032, worsening the imbalance between federal spending and revenues.”

Allowing the tax provision to persist would ensure the debt grows higher, “resulting in even lower revenue,” the CRFB explained in a separate report released on June 21.

President Biden has vowed to end the Trump-era tax breaks and promised not to raise taxes for anyone making less than $400,000.

In May, the GOP challenger pledged across-the-board tax cuts if elected to a second term.

“I’ll give you a Trump middle class, upper class, lower class, business class big tax cut,” former President Trump said at a New Jersey rally.