The US Election Countdown newsletter offers readers a deep dive into the intersection of money and politics as the race for the White House heats up. One of the key issues facing the US is its rapidly increasing national debt, which is projected to reach over $35 trillion in the near future. Billionaire Thomas Peterffy even goes so far as to predict that the US will inevitably default on its debt at some point in the future. This alarming prospect could have major global implications, given the US’s status as the world’s biggest economy and its use of the dollar as a reference currency.
Despite concerns about the sustainability of America’s debt burden, some economists argue that simple measures such as raising taxes or cutting expenditures could help alleviate the budget deficit. However, the current political climate, with both Joe Biden and Donald Trump making promises of increased spending and tax cuts, makes the prospect of bipartisan cooperation to address the debt crisis seem increasingly unlikely. This lack of fiscal discipline has left America’s national finances looking more like a leveraged buyout, with significant interest payments and high interest rates reminiscent of a private equity deal.
Another concerning parallel can be drawn with the commercial real estate sector, which is also highly leveraged and facing pressures from rising interest rates and decreased demand for office space. Property brokers fear that a significant portion of the $2 trillion in commercial property loans needing refinancing by 2026 may fail to secure funding, potentially leading to a banking crisis similar to the one that hit regional banks last year. This grim outlook is compounded by the expectation that Trump, if re-elected, will continue his high-spending, low-tax policies, further exacerbating the budgetary deficit.
The late real estate mogul Seymour Durst, known for his cautious fiscal approach, would likely be alarmed by the current state of US debt. Durst was responsible for establishing the US debt clock in 1989, when national borrowing was significantly lower than it is today. His legacy serves as a stark reminder of the dangers of runaway debt and the importance of responsible fiscal management. As the US heads towards an election amid a mounting debt crisis, the future of the country’s finances remains uncertain, with potentially dire consequences for the global economy.
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