Biden's management of US deficit could shape his campaign

The United States federal deficit has been on an upward trajectory during President Biden's tenure, raising questions about its implications for the broader economy and the administration's economic policies, often referred to as "Bidenomics."

Yahoo Finance Senior Columnist Rick Newman dives into the details, providing clarity into the factors contributing to the rising national debt under the Biden administration and how it could be a big topic in this year's presidential race against the presumed nominees: Biden and former President Trump.

For more expert insight and the latest market action, click here to watch this full episode of Market Domination Overtime.

This post was written by Angel Smith

Video Transcript

The first presidential debate is now underway under a week away, and the economy will no doubt be a topic of discussion.

Joining us now is Yahoo Finance's own Rick Newman.

Rick, the latest edition of By Dynamics.

Where are we going with this one?

Well, I look at the, uh, latest debt outlook.

Uh, that, uh, the congressional budget put out this week.

Uh, this hardly ever makes headlines anymore.

But look, the the budget outlook only gets worse.

It never gets better.

So back in February, when they last updated this data, they thought the deficit for, uh the year we're in 2024 would be one F, $1.5 trillion.

Uh, guess what?

It went up.

Now they think the deficit will be $1.9 trillion.

And you've got Biden and Trump kind of flinging mud at each other on this issue.

Uh, Biden.

When that news came out, Biden said, Well, Trump just wants you to make everything worse.

He wants to extend these tax cuts for billionaires and millionaires that would add another $4 trillion to the national debt.

Biden said, I have a plan.

And he pointed to his plan.

But the fact is, um, Biden had the same plan in 2020.

And in 2021 and 22 when Democrats controlled Congress and those tax increases he wanted to put in place, he couldn't get that done.

And by the way, uh, Biden also by by slashing, uh, cancelling student debt by $150 billion this year, all of that money he just got tacked on to the national debt.

So we've got, uh, we've got politician.

I mean, Washington is just filled with politicians who give this issue lip service.

But there is nobody who wants to solve this problem.

The reason they don't want to solve the problem is just going to be an unhappy solution.

And voters are going to punish them when their taxes go up or their benefits get cut.

So everybody hates this problem, but there's nobody who really wants to solve it.

And Rick, we were just talking to Nancy tener about you know that it there are also sort of inflationary implications of this as well.

So you would think that that would be a little bit of a motivator.

Well, the inflation implications of of debt and debt financing are complicated.

Uh, and voter, you know, voters basically look at the price of gas and they say, I'm happy or I'm unhappy with the guy who's in power.

Um, and it's just easier, you know, II.

I mean, if you go back 10 or 15 years or even 20 there were people who many, many people, serious economists, finance experts and politicians who said if we were putting churning out the amount of debt that the Treasury is printing right now, markets would rebel and we would never be able to get away with it as a country.

Well, it has turned out we are getting away with it.

The market just keeps absorbing way more US debt in the form of Treasury securities than I think anybody ever thought was possible 10 or 20 years ago.

So the market is enabling what are basically terrible fiscal habits.

Some president is gonna have to deal with this.

The the solutions are not that complicated.

It's gonna be a combination of tax increases and benefit cuts.

Um, but nobody wants to, uh suggest those things or try to put them in place before it's absolutely necessary because voters don't want to hear it.

So we're all to blame for this mess?

Well, maybe a president in 2050 or 2075.

Or think about it.

The market is going to force, uh, is gonna force a solution.

We just don't Don't know when it's gonna happen.

Until the market does force politicians to do something, they will not do anything at all.

Yeah, I think I'm calling 2100 at this point.

Thanks a lot.

Appreciate it, Julie.