The Next President’s Debt Burden

According to the Department of Commerce, U.S. gross domestic product increased at an annual rate of 1.2 percent in the second quarter of 2016.  This, unfortunately, isn’t indicative of the sort of robust economic activity that will grow the economy out of debt.  In fact, as growth is stagnating, deficits are increasing.


GTY_donald_trump_hillary_clinton_sk_150619_16x9_992Potential future debt administrators Donald Trump and Hillary Clinton (this may be the real Hillary Clinton; unfortunately no-one knows where she is at the moment, as she has  evidently been replaced by a  malfunctioning android).

Photo credit: Getty Images


The U.S. fiscal year 2015 budget deficit was about $439 billion.  For fiscal year 2016, the federal government is projected to run a deficit of $616 billion.  The upsurge, of roughly $177 billion, amounts to about a 40 percent deficit increase from 2015 to 2016.

Presently, the federal debt is well over 100 percent of GDP.  Obviously, 1.2 percent GDP growth is wholly inadequate to shrink the debt.  To the contrary, 1.2 percent GDP growth in the face of a projected $616 billion deficit will further increase the debt as a percentage of GDP.

As far as we can tell, neither Hillary Clinton nor Donald Trump is talking about the U.S. debt problem.  What’s more, they’re economic platforms both include massive spending programs.  The difference, of course, will be made up with debt.  But how much debt can the next president really add?

George W. Bush doubled the federal debt from $5 trillion to $10 trillion.  Barack Obama’s on target to double the federal debt from $10 trillion to $20 trillion.  It is unlikely the next president will be able to double the debt from $20 trillion to $40 trillion.


1-Federal debtTotal federal debt, excl. unfunded liabilities – growing like weeds – click to enlarge.


Whether Clinton or Trump realizes it or not, whoever wins the election will be forced to deal with the debt problem.  They may not like it.  They may not agree with it.  But this is the burden past presidents and congresses have left the next president.


Reckoning the Debt Problem

Regrettably, the debt problem is far worse than advertised.  According to Professor Laurence Kotlikoff, the U.S. fiscal gap is around $200 trillion.  This is dramatically different than the $19.5 trillion federal debt that is commonly cited.

The vast disparity is the result of Kotlikoff calculating the difference between projected financial obligations and the present value of all projected future tax and other receipts.

To balance the interests of those now receiving benefits and those who hope to receive benefits in the future, Kotlikoff’s calculated that the government would need to raise every single federal tax by 53 percent.

Alternatively, the government could cut all federal expenditures by 34 percent.  We can’t recall Clinton or Trump mentioning an immediate and permanent 53 percent increase in federal taxes as part of their campaign.  Can you?

Right now there’s a gaping hole between what people are expecting to receive – in the form of Social Security of Medicare – and the funding to cover it.  Short-sighted solutions to boost the economy through stimulus programs, financed via deficits, ultimately make the debt problem worse.  One way or another, the next president will have to deal with this.


2-your unfundednessThe situation as of 2012, with various estimates of the size of unfunded liabilities. Since Mr. Kotlikoff’s estimate is by far the worst, it is most likely the correct one. This assessment is based on the history of government debt and welfare state promises to date – click to enlarge.


It isn’t a matter of what’s expedient.  Nor is it a matter of what’s acceptable.  Plain and simple, it is a matter of arithmetic that has to be reckoned.  Neither Clinton nor Trump is up to the task.

To be clear, this has nothing to do with Clinton’s cockadoodle awful face.  It also has nothing to do with Trump’s incomprehensible haircut.  Instead, it has everything to do with the fact that these two candidates are Grade A dingleberries. However, there is an alternative…


Laurence Kotlikoff for President

If you didn’t know, Kotlikoff’s running for president as a reluctant write-in candidate.  Does he have the experience to be president?  Not really. But neither does Trump.  Moreover, while Clinton appears to have a presidential resume her job performance while Secretary of State is downright disgusting.

She should be in prison for committing federal crimes.  Plus, the way she tickled the pooch on Benghazi with ice-covered ambivalence should be reason enough why she’s unfit to be president.

Does Kotlikoff have a chance to win without a major party behind him?  An establishment minded person would say he doesn’t stand a snowballs chance in hell.  But that doesn’t mean you shouldn’t vote for him.


KotlikoffLaurence Kotlikoff, who actually knows how to operate an abacus, a talent presidents per experience usually lack.

Photo via


For if you have significant reservations about Clinton and Trump, and don’t want to soil your vote by poking out the chad next to either of their names, there’s a simple solution.  Take a personal stand against the derisory two party political system and vote for Kotlikoff.

Kotlikoff has researched, studied, and contemplated the fiscal gap more than just about anyone.  He’s forgotten more about it than Clinton and Trump will ever know combined.  He is also one of the few academic economists to speak truthfully about the unfavorable facts facing Americans.

You can learn about his platform, including issues beyond the economy, here: Kotlikoff 2016.


Charts by St. Louis Fed, George Mason University


Chart and image captions by PT


MN Gordon is President and Founder of Direct Expressions LLC, an independent publishing company. He is the Editorial Director and Publisher of the Economic Prism – an E-Newsletter that tries to bring clarity to the muddy waters of economic policy and discusses interesting investment opportunities.




Emigrate While You Can... Learn More




Dear Readers!

You may have noticed that our so-called “semiannual” funding drive, which started sometime in the summer if memory serves, has seamlessly segued into the winter. In fact, the year is almost over! We assure you this is not merely evidence of our chutzpa; rather, it is indicative of the fact that ad income still needs to be supplemented in order to support upkeep of the site. Naturally, the traditional benefits that can be spontaneously triggered by donations to this site remain operative regardless of the season - ranging from a boost to general well-being/happiness (inter alia featuring improved sleep & appetite), children including you in their songs, up to the likely allotment of privileges in the afterlife, etc., etc., but the Christmas season is probably an especially propitious time to cross our palms with silver. A special thank you to all readers who have already chipped in, your generosity is greatly appreciated. Regardless of that, we are honored by everybody's readership and hope we have managed to add a little value to your life.


Bitcoin address: 12vB2LeWQNjWh59tyfWw23ySqJ9kTfJifA


Your comment:

You must be logged in to post a comment.

Most read in the last 20 days:

  • India’s Experiments with COVID-19
      Shooting from the Hip [ed. note: the tweets linked below mainly show videos from various lockdown phases]   Reminiscent of his demonetization effort in 2016, on 24th March 2020, Indian Prime Minister Narendra Modi, appeared on TV and declared an immediate nationwide curfew. No one was to be allowed to leave wherever he or she happened to be. All flights, trains (after 167 years of continual operation) and road transportation came to a complete, shrieking...

Support Acting Man

Austrian Theory and Investment


The Review Insider


Dog Blow

THE GOLD CARTEL: Government Intervention on Gold, the Mega Bubble in Paper and What This Means for Your Future

Realtime Charts


Gold in USD:

[Most Recent Quotes from]



Gold in EUR:

[Most Recent Quotes from]



Silver in USD:

[Most Recent Quotes from]



Platinum in USD:

[Most Recent Quotes from]



USD - Index:

[Most Recent USD from]


Mish Talk

    Buy Silver Now!
    Buy Gold Now!