US Scholars Warn "Debt Explosion Regardless of Biden or Trump Presidency"

Kenneth Rogoff, Harvard Professor, Points Out
Debt Increase Pledges by Both Candidates... Greater Risk
Trump's 10% Universal Tariff Causes Economic Turmoil

Concerns have been raised that regardless of whether President Joe Biden or former President Donald Trump wins the U.S. presidential election, debt could increase explosively, leading to a serious situation.

On the 13th (local time), Kenneth Rogoff, a professor of economics at Harvard University, said on Bloomberg TV's Wall Street Week, "Both Biden and Trump do not understand that the era of ultra-low interest rates will not return, and the political sphere shows a very relaxed attitude toward debt."

The U.S. Congressional Budget Office (CBO) currently projects that the federal government debt will soar from 99% of the U.S. Gross Domestic Product (GDP) to 116% by 2034.

Rogoff, a distinguished scholar and former chief economist at the International Monetary Fund (IMF), pointed out that both President Biden and former President Trump seem to be pursuing pledges that increase debt. Despite President Biden proposing wealth taxes and other measures to cover the costs of spending priorities in his State of the Union address on the 7th, Rogoff said, "President Biden's State of the Union address proposed exploding the debt."

He also mentioned the increase in fiscal deficits during former President Trump's administration, stating, "I don't know what former President Trump will do, but I guess he will do what he did during his previous term."

Professor Rogoff warned of difficulties arising from the rapid increase in debt. He believes that the growing borrowing burden will increase inflation and interest rate volatility and intensify political pressure on the Federal Reserve (Fed). He also noted that the current CBO forecast leaves room for unexpected debt surges, saying, "We are taking increasingly greater risks."

Following the global financial crisis, the impact of fiscal deficits was limited due to continued ultra-low interest rates. However, Rogoff explained that the situation changed as interest rates rose sharply after COVID-19.

Furthermore, Rogoff evaluated the policies of both candidates as "the most protectionist presidents in a long time." Former President Trump imposed high tariffs on China during his term. President Biden has maintained tariffs on China, and his clean energy support policies favor American-made products, which Rogoff described as protectionist policies.

Regarding former President Trump's pledge to impose an additional universal tariff of 10% on all imports, Rogoff believes that the sudden imposition of tariffs would cause economic disruption. He said, "(Universal tariffs) will affect recession and inflation," adding, "If a 10% tariff is introduced, inflation and interest rates will rise."

This content was produced with the assistance of AI translation services.