The Trump administration has now added six trillion dollars to US federal debt. This is despite Trump’s 2016 assurances that he would eliminate the debt completely: “I think I could do it fairly quickly ... I would say over a period of eight years.”
According to US Treasury, the debt clicked over $26 trillion this month, six trillion dollars higher than at Trump’s inauguration.
This sits atop a mountain of evidence confirming Trump’s economic team is delivering the worst outcomes since the Great Depression. The US economy is now the weakest of all 36 advanced OECD nations.
Record debt added
Trump added six trillion dollars in less than three years and five months. That comes to $1,774 billion a year. That is more than double the rate of Obama’s second term, after the great recession. It is nearly four times that of George W Bush’s first term and more than six times Bill Clinton’s first term debt rate. See chart at the top.
Global comparisons
There has been no need for any fresh borrowings since 2015. Most well-managed economies have steadily reduced debt over that time. These include Germany, Ireland, Denmark, Israel, New Zealand, the Netherlands, Taiwan, Poland, the Ukraine, Austria, Belgium, Portugal, the Czech Republic and Sweden.
Revenue lost forever
The debt is blowing out because government revenue nowhere near matches spending. For the first eight months of this financial year revenue was $2,019 billion, compared with $2,302 billion for the same period last year. That’s tracking at an unsustainable 51.8 per cent of outlays – just over half.
The reason for the collapse in revenue is crystal clear. Trump rushed through huge tax cuts in 2017 – against expert advice. He was warned this would happen. It is happening.
Spending out of control
Simultaneously, wasteful spending has exploded. This includes hand-outs to corporations, payments to Trump companies for his frequent golfing holidays, Trump’s vanity “space force” and constructing a very short but very expensive border fence for photo op purposes.
The current budget is on track for the worst deficit in US history, outside world wars, and the deepest in the developed world today.
The recurring cost
Interest to be paid on the debt this year was budgeted at $576.5 billion. Now the coronavirus has whacked the economy, the actual cost will be much higher.
That is $4,369 per US taxpayer. This must be paid every year until the debt is repaid, which may take decades. If there was ever a time for debt repayment, the last four years have been it.
All the wrong calls
Every significant economic variable has deteriorated under Trump. There is not one area of success. We shall update them all here shortly.
These outcomes are not due to the coronavirus. The decline became evident soon after the first Trump budget. It was exacerbated by the foolish tax cuts, the wasteful spending and the disastrous trade wars. And now all the wrong calls on combating the pandemic.
This spectacular economic collapse has been masked by an extraordinarily successful campaign of mendacious tweets claiming the economy before the pandemic was “best ever” and “world’s greatest”. This is one mask Trump uses quite effectively.