National debt nears $28T as Biden prepares new spending initiatives

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Former Trump 2020 campaign senior adviser and former White House senior adviser for strategic communication Mercedes Schlapp discusses Joe Biden’s plan to reverse Trump administration policies, specifically his approach to immigration.

A national debt that surged as the Trump administration contended with the financial consequences of the coronavirus pandemic is expected to rise even higher as President-elect Joe Biden attempts to enact policies he touted on the campaign trail.

The national debt is approaching $28 trillion ahead of Biden’s inauguration on Wednesday after surging more than $7 trillion during Trump’s four years in office. The likely passage of additional coronavirus relief measures in the early days of Biden’s administration could add trillions more in debt, even before factoring in other policy changes.

Biden’s Treasury Secretary Nominee, former Fed Chairman Janet Yellen, said the “long-term fiscal trajectory is a cause for concern” during her Senate confirmation hearing on Tuesday. At the same time, she argued that financial aid measures were necessary to bolster an economy ravaged by the pandemic.

“To avoid doing what we need to do now to address the pandemic and the economic damage that it’s causing would likely leave us in a worse place economically and with respect to our debt situation than doing what’s necessary,” Yellen said at the hearing.

Biden identified several policy goals, such as an expansion of the Affordable Care Act, that would carry a hefty price if they are enacted. The president-elect faces pressure from the Democratic Party’s progressive wing, which favors aggressive spending to combat issues such as climate change, and likely opposition from Republicans seeking to rein in government spending.

In the days ahead of his inauguration, Biden unveiled a $1.9 trillion coronavirus relief proposal that included $1,400 direct payments to Americans and financial aid for state and local governments. Congress already passed nearly $3 trillion in aid under the Trump administration.

Republicans have argued against large stimulus packages that would add more to the national debt, while some Democrats have argued that Biden’s initiative doesn’t go far enough to address the current financial crisis.

Biden has indicated that he will look to increase taxes on corporations and the wealthiest Americans in order to pay for his proposed policies. The incoming president repeatedly denied Trump’s claims on the campaign trail that his administration would raise taxes on the middle class.

Proponents of a short-term increase in government spending, including Biden, point to low interest rates and argue that an improving economy will help to pay down the debt in the long term.

“Economic research confirms that with conditions like the crisis today, especially with such low interest rates, taking immediate action—even with deficit financing—is going to help the economy,” Biden said earlier this month.

Ahead of the election, Biden outlined an expansion of the Affordable Care Act that he said would result in lower health care premiums, deductibles, and drug prices for Americans. He supports a “public option,” where Americans can keep their private insurance or join a government plan.

In October, Biden acknowledged his plan would “cost some money,” requiring $750 billion in spending over a 10-year period.

Biden also pledged to make a $2 trillion investment in his first term toward sustainable infrastructure and clean energy, as well as additional spending on education. The incoming president’s first budget request is expected by as soon as this March.

Analysts warned about the surge in the national debt even before the coronavirus pandemic – and long before Biden was set to take office.

“Not since World War II has the country seen deficits during times of low unemployment that are as large as those that we project — nor, in the past century, has it experienced large deficits for as long as we project,” Phillip Swagel, director of the nonpartisan Congressional Budget Office, said in January 2020.