Budget deficit is at 3.2% of GDP
The budget deficit in the United States (SQQQ) (SDS) stands at $587 billion for 2016, a rise of 35.0% from last year, according to the U.S. Department of the Treasury. It stands at 3.2% of GDP for 2016, the biggest deficit in three years. In 2015, the deficit was 2.5% of GDP. In 2014, it was 2.8% of GDP.
According to the Committee for a Responsible Federal Budget (or CRFB), over the short term, Republican nominee Donald Trump’s plan for tax cuts seems positive for growth in the US economy (SPY) (IWM) (QQQ). Over the longer term, however, the CRFB believes his plan could weigh down economic growth and lead to a rise in the national debt and deepen the fiscal deficit.
On the other hand, the CRFB believes Democratic nominee Hillary Clinton’s near term plan to raise taxes could support the US economy’s fiscal budget. Her plan related to spending, however, could be a drag on the fiscal budget over a longer term, according to the CRFB.
A big drag on fiscal spending, when it comes to either candidate’s victory on November 8, is entitlements.
Entitlements, the biggest driver of US debt
One of the biggest drivers raising public debt in the United States is entitlements. Entitlements, which include Social Security and Medicare, make up about 60.0% of federal spending.
Here’s what the CRFB believes:
• Medicare will run out of money by the 2020s.
• Social Security will run out of money by the 2030s.
To deal with the issue of funds for entitlements, Trump plans to repeal the Affordable Care Act, commonly known as Obamacare. Clinton plans to tax the wealthy. “I will not cut benefits,” she promised.