Will Democrats rescue the national debt?

Washington Post

5 days ago

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House Republicans advanced a tax bill last week that an independent assessment says would increase deficits by upward of $3 trillion over the next decade. A shaky bond market seems to be signaling that investors would like lawmakers to take long-term debt concerns more seriously. But this behavior from Congress isn't new: The latest bill extends budget-busting tax cuts from Trump's first term, which were followed by a $1.9 trillion pandemic stimulus package under President Joe Biden. I spoke to our columnists Jim Geraghty and Catherine Rampell about the growing national debt and whether the politics around it might change.
— Benjy Sarlin, assignment editor
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Benjy Sarlin How big a problem is the deficit in your eyes and how urgent a priority is reducing it?
Jim Geraghty The deficit is a very big problem, and a country with responsible leadership would prioritize reducing it. Alas, the electorate shows just about zero interest in higher taxes, lower spending, entitlement reform or any other serious steps to address it, and politicians have responded to those incentives by largely ignoring the increasing debt.
Catherine Rampell In the long run, the deficit is a huge problem. Our debts will have to be paid back at some point, in the form of higher taxes and/or lower spending. We've been able to skate these consequences thus far because the rest of the world is still willing to lend us money in huge sums. But at some point the chickens will come home to roost. The challenge is we don't know when that will happen, and it could be a long ways from now — which is why the public and politicians have been shrugging off warnings from the usual deficit worrywarts.
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Jim Republicans strongly object to higher spending when Democrats control the appropriations process. When they're running the show, not so much, as the 'Big Beautiful Bill' demonstrates.
Catherine I sometimes think back to Jude Wanniski's two Santa Clauses analogy from the [1970s]. Republicans were the tax-cut Santa Claus (give out goodies to the public in the form of lower taxes). Democrats were the spending Santa Claus (give out goodies in the form of more generous government programs). Today, both parties are both Santa Clauses.
Jim By the way, did you notice that Build Back Better and Big Beautiful Bill are both 'BBB'? It is fitting, because that's what America's credit rating is going to be, at this rate.
Benjy Jim, you mentioned the electorate. Is it naive to think Democrats might run on cutting deficits in 2026 or 2028 if these issues persist? And, if so, what might a partisan Democratic plan to do that look like?
Jim I'd love it if the Democrats became the debt-and-deficit focused party in 2028. I find that extremely unlikely, other than the usual pro forma talk that America's deficit and debt problems can be solved by raising taxes on the rich. Democrats' enthusiasm for raising taxes on 'the rich' has waned, or at least stalled, now that in many corners of America's wealthy, the Democrats are the party of the rich. Kamala Harris won 52 percent to 46 percent among those making $200,000 or more, according to the 2024 exit poll.
Jim First, Democrats need candidates who are willing to spell out how deficit spending has resulted in inflation and spooked the bond markets. There's always going to be some other candidate who's willing to blame a more convenient villain — i.e., 'greedflation,' big corporations and 'Washington fat cats.'
Catherine I think it's very unlikely Dems run on deficit reduction. Voters don't care about it. If anything they will hate (nearly) all of the measures required to actually reduce deficits. The last major party candidate I can remember putting forth a plausible budget plan that didn't massively increase deficits was Hillary Clinton in 2016. The net fiscal impact of her plans was pretty close to zero. And didn't seem to do her much good at the time, either.
Jim If anything, the electorate punishes candidates who dare tell them they can't afford everything they want.
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Benjy This is the second presidency in a row where deficits seem to be creating some visible real-world headaches, not just scolding from budget wonks. How bad would that have to get before we saw a clear pivot toward some kind of emergency response from either or both parties?
Catherine I think both parties have learned approximately zero lessons from major fiscal stimulus (in the form of both tax cuts and higher spending) from the past few years. The past few years obviously proved there are trade-offs we can't ignore — we can't just spend or tax-cut indefinitely without major unintended consequences. But lots of party operatives disagree with me.
Jim Part of the problem for deficit hawks is that higher interest payments on the debt aren't very visible. It's just numbers on a page. If those lost billions upon billions looked like Godzilla, Americans would treat it like a crisis.
Catherine Or, if those interest payments started crowding out our ability to pay for other government services Americans depend on (like Medicaid, Medicare, etc.). But we're not there yet because the rest of the world keeps lending to us.
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Benjy Let's get to Washington's favorite idea since before I was born: Bipartisan deficit talks. There were high-profile efforts in the Obama era to find a spending and revenue deal, but nothing since then. Is there any way both parties (perhaps post-Trump) could decide to take a shared political hit by making some deal on this together? Or is that just my inner Aaron Sorkin talking?
Jim 'And then President Bartlet gave a stirring speech that brought Democrats and Republicans together …' I don't think that will happen until those long-discussed dire consequences kick in — and by then the only options remaining will be bad ones.
Catherine There are some models for this kind of thing that have sort of worked on a smaller scale (like independent commissions to close military bases). But it's really hard to see it working now. The scale of the changes needed here — and the political pain that goes with them — are just orders of magnitude larger. Unfortunately, I think we will need to face an actual crisis — like a much more painful bond market revolt — before the parties try to fix anything, whether unilaterally or together.
Jim Trump-era politics made it harder for bipartisan cooperation on relatively easy issues, and the debt was an issue that almost everyone preferred to ignore long before Trump came down that escalator.
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Benjy Since it seems up to Washington columnists to carry the deficit scold torch then, what would be the number one proposal you'd each bring to the table if they asked you how to find some real savings?
Catherine The easiest thing would be to just do nothing on taxes right now — and let Trump's 2017 tax cuts expire as scheduled. For everyone, to be clear. (Biden and Dems wanted to extend the cuts to all but the very wealthiest.)
Jim Means-test Social Security. (Jim dodges thrown fruits and vegetables.) A whole lot of retirees are wealthy and don't need the Treasury Department sending them checks. Of course, people believe their Social Security payments have been in a (Al Gore voice) 'lockbox' all their working years. Nah, the government spent that money as quickly as it came in.