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Obama or Romney: Whose debt reduction plan does history favor?

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• Although America's economic path has been rough over the past four years, the United States isn't doing badly compared with other instances when recession has been accompanied by troubles in the financial system. Charts comparing various "financial recessions" at home and abroad suggest the recent US course is typical. This still leaves room for interpretation when it comes to Obama's track record. Some can say that he missed opportunities to kindle a faster recovery, others that the economy has done better on his watch than he's been given credit for. In fact, both points may be true.

• When it comes to the way forward, Obama and Romney have similarities as well as differences. Although Romney calls for a cap on government spending at 20 percent of gross domestic product and Obama does not, both candidates have voiced support for reducing federal deficits. That hints at another similarity: Neither is calling for the kind of stimulative fiscal policy next year that many economists recommend.

• Forecasters generally expect things to get better over the next four years – and for federal deficits to fall – no matter who is elected. The job market is improving, and US households have made substantial progress in "deleveraging" after heavy borrowing during the housing boom, both of which should buoy the economy's consumer sector. A big caveat: Europe's debt crisis and America's "fiscal cliff" (expiring tax cuts and new curbs on spending) cloud the outlook.

• Economists differ on whether America's high-level national debt is already crimping economic growth. But there's broad consensus that the long-term problem is real and that charting a fiscal course correction soon will make the problem easier to solve.

History lesson No. 1: Whatever else you do, grow!

Paying down debt is a lot easier if you have income. Faster growth creates not just jobs but also the right climate for easing fiscal challenges. Countries don't even need to achieve an outright reduction of debt. Often the key is just to have debt grow slower than GDP.

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