Isn’t it odd (or sad?) that none of the presidential candidates are campaigning on – or even talking about – reducing the budget deficit?
After our last financial crisis, the deficit rose to 12 percent of GDP. That includes TARP, economic stimulus and other spending that has since become “the norm.”
Back in 1991, when the deficit was around $150 billion, the deficit to GDP ratio was 6 percent, and people took notice.
Bill Clinton campaigned on a deficit reduction platform and when he got into office, he froze discretionary spending and raised taxes. The top rate back then was 39.6 percent.
But people were OK with it because reducing the deficit was a priority.
And give former President Clinton credit, the result was a balanced budget. Of course, then we had a surplus everyone fought about and subsequently squandered, but that’s another story. Today, the deficit to GDP ratio is 3 percent, due in large part because tax collection improved. But signs indicate the ratio will continue to climb, as reflected by Congressional Budget Office projections.
Additionally, the debt to GDP ratio stands currently at 102 percent.
Typically anything above 100 is alarming. But we should be able to manage without interest rates skyrocketing because we have the reserve currency (for now).
None of this matters? Why are none of the candidates talking about this?
Only they know for sure. It must not be a priority.