The Lombard Review
Politics

Biden steps aside: what it means for the deficit

Deficit scenarios after withdrawal

The U.S. Treasury Building, Washington
The U.S. Treasury Building, WashingtonPhoto: MeanieHyaena / Wikimedia Commons, CC BY 4.0
1 min read Data: Biden withdrew 21 Jul

Joe Biden’s historic decision on 21 July to withdraw his candidacy for the presidency and endorse Kamala Harris has injected profound uncertainty into American fiscal projections. While the immediate political realignment altered election dynamics, fiscal analysts are evaluating what the changed ticket means for the multi-trillion-dollar federal debt trajectory.

The U.S. Capitol at night
The U.S. Capitol at nightPhoto: Diliff / Wikimedia Commons, Public domain

The Unyielding Fiscal Baseline

Whether the White House is occupied by a Democratic or Republican administration in 2025, neither political party offers a credible programme for structural deficit consolidation. A Harris administration would seek to extend tax cuts for lower earners while expanding social subsidies; a Trump administration would push for permanent corporate tax relief and deregulation. Both paths guarantee multi-trillion-dollar annual deficits that will feed sovereign debt supply.

The Marriner S. Eccles Building, headquarters of the Federal Reserve Board, Washington
The Marriner S. Eccles Building, headquarters of the Federal Reserve Board, WashingtonPhoto: Federalreserve / Wikimedia Commons, Public domain

The reshuffling of the American presidential race does not change the nation’s underlying fiscal trajectory: the sovereign borrowing machine will continue compounding regardless of which party wins.