Moderator Chris Wallace addresses the audience at the final presidential debate between Donald Trump and Hillary Clinton in Las Vegas, Nev. on Oct. 19. (EPA/Gary He)

The national debt has only increased in the four years since former Republican presidential nominee Mitt Romney compared it to "a prairie fire" and predicted that the United States would soon confront a fiscal crisis like those that have afflicted Greece and other European countries.

That crisis has not materialized, at least not yet, and neither Donald Trump nor Hillary Clinton has made debt reduction a focus of this presidential campaign. That's not hurting them directly with voters -- who tell pollsters they don't worry about debt nearly as much as they used to.

But economic forecasters say neglecting debt-reduction will limit the next president's ability to address two of voters' top issues: growing the economy and creating jobs. In the view of these forecasters, one way to grow the economy is by raising taxes to reduce the debt.

These forecasters are relying on new computer models that use sophisticated mathematical techniques, collectively known as "dynamic scoring," to simulate the effect of a new policy on the broader economy. According to new dynamic projections from the Tax Policy Center, Clinton's plan to increase taxes would help the economy over the long term if the revenue was used to reduce the deficitwhile Trump's plan to reduce taxes would prove counterproductive.

The projections are based on a model developed by economists at the University of Pennsylvania that assumes that reduced borrowing by the government will result in cheaper rates of interest for everyone, thereby boosting the economy -- an assumption some economists in both parties would dispute.

Accumulating debt

On that assumption, Clinton's proposals for increased taxes would expand the economy by about 0.5 percent over 20 years, relative to current projections, the model forecasts -- if she used the money to reduce the deficit.

Clinton, however, has proposed spending the money on new programs, not reducing the deficit. With this approach, discretionary outlays -- the section of the budget excluding entitlements such as Social Security and Medicare -- would increase by about 5 percent, and the economy would be about 0.5 percent smaller after 20 years, according to the forecast.

The difference in the size of the economy amounts to "a smidgen" in the long term, said Kent Smetters, an economist at Pennsylvania. "These aren't necessarily radical changes," he said.

Clinton's additional taxes on corporations and the wealthy would discourage investment, limiting the funds available to businesses seeking to expand. Meanwhile, the national debt would continue to accumulate at the same pace as before, so Clinton's agenda would not reduce interest rates.

Trump's tax relief would give the economy a boost in the short term, but only at the cost of lowering its trajectory for years to come, according to the model.

He has proposed reducing discretionary outlays, excluding the Pentagon's budget, by 1 percent each year -- a schedule known as the "penny plan." This plan would reduce discretionary spending overall by roughly 5 percent over a 10-year period.

Trump has claimed that the penny plan, together with increased economic activity from energy, regulatory and trade policy reform, would cancel out any increase in the deficit from the tax relief. According to the forecast, however, the tax cuts would still force the government to borrow more to continue operating, even with the 5 percent reduction in expenditures.


Rapidly mounting debt would increase interest rates, eliminating the economic benefits from a reduction in taxes. After 20 years, the economy would be 3 percent smaller, compared to current projections.

'Some kind of truth'

Some economists disagree with the assumption that growing debt will hold back the economy, including Dean Baker, a founder of the liberal Center for Economic and Policy Research.

He argues that the U.S. economy still has plenty of unused capital that will keep interest rates in check, even if the government borrows more.

"The idea is that, by us borrowing more money, we’re pulling money away from the private sector that could have gone to productive investment," Baker said. "The government could borrow more money and employ more people, and it could actually lead to higher growth."

Trump's economic advisers have been scathing in their response to the model. They have accused the Tax Policy Center of working to boost Clinton and mused about whether the organization leaned on Smetters to manipulate his results to make the Trump plan look worse.

They dismiss the interest-rate argument about debt and investment, noting that rates have fallen under the Obama administration even as the debt has grown by trillions of dollars.

Most importantly, they have accused Smetters and other economic modelers of deliberately excluding several planks of Trump's economic plan that the campaign's own modeling suggests would supercharge economic growth -- most notably, a more aggressive stance with America's international trade partners, which the campaign believes would reduce America's trade deficit.

In an interview last week, Peter Navarro, a University of California-Irvine economist who is a Trump senior adviser, slammed Smetters for his analytical assumptions and for not modeling the full Trump plan: “He’s going out there like he’s speaking some kind of truth to the financial markets,” Navarro said.

Smetters and his collaborators say they share these critics' skepticism about the salience of the national debt. The model, they note, follows the nonpartisan Congressional Budget Office in projecting that interest rates will remain close to zero for many years, limiting the influence of the debt on the economy.

All the same, the increase in borrowing that would likely accompany Trump's policies would be great enough to have an effect, said Len Burman, the Tax Policy Center's director.

"Even if you think that market interest rates are going to stay low for a long time, there are risks associated with massive increases in government debt," he said. "That could be disastrous."