America’s fiscal outlook is disastrous, but forgotten

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It was not so long ago that the hottest topic in American politics was the ballooning national debt. In 1992 Ross Perot had the best showing for a third-party candidate in a presidential election since 1912 on a platform of fiscal probity. Two years later the Republicans seized control of Congress for the first time in 40 years, with the first item in their “Contract with America” being a pledge to balance the budget. Bill Clinton easily won re-election two years after that, in part by negotiating spending cuts with Republicans that led to America’s first surpluses in a generation.

At the start of this fiscal hullabaloo, in 1992, America’s net debt amounted to 46% of GDP. Today it has reached 96% of GDP. For the past five years, under first Donald Trump and then Joe Biden, the federal deficit has averaged 9% of GDP a year. The International Monetary Fund says that America’s borrowing is so vast it is endangering global financial stability. S&P and Fitch, two credit-rating agencies, have already downgraded America’s debt; a third, Moody’s, is threatening to.

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