- The US needs to ease business regulation to escape rising deficit trend, Larry Fink said.
- He told CNBC that Washington's "massive, massive spends" are unaffordable.
- To lower the debt burden, the private sector must be unrestrained and lead growth, he noted.
The US can't hope to escape its rising debt problem if the private sector is overburdened by regulatory red tape, Larry Fink said on CNBC.
The BlackRock CEO argued that the US economy must keep growing, or face the repercussions of runaway overspending. To do that, it's essential that the country frees its business environment of too-strict oversight, he said.
"These deficits are going to become a big burden," Fink said on Monday. "And we're going to be really putting on the backs of our children, our grandchildren, a real burden of these massive, massive spends that we can't afford."
Since the pandemic, ballooning federal spending has drawn the criticism of market commentators, including those in the Treasury Department. The Congressional Budget Office estimates the deficit to hit $1.9 trillion by the end of this fiscal year, amounting to a 6% debt-to-GDP ratio.
That's well over the 50-year average deficit of 3.7%, the office reported in June.
With US debt projected to keep eating up a greater share of GDP through the coming decades, analysts have been sounding the alarm of a fiscal crisis. Higher debt will spur market instability, stoke inflation, and erode the quality of life Americans currently enjoy, economists warn.
But while most solutions have centered on hiking taxes or cutting social expenditures, Fink argues that help could come from the US corporate sector, if the government allows it.
"Growth is not going to come from tax cuts. That's too short term. Growth is not going to come from tax increases," he said, instead pointing out that the US faces growth opportunities in movements such as digitization and decarbonization: "We can do so much as a country right now. But we're inhibited by our controls."
In the face of this, Fink did not promote either presidential candidate as the better option to tackle the issue. Rather, both Donald Trump and Joe Biden will need to loosen regulation and give businesses greater reign.
With the election less than four months away, neither candidate has so far offered a solution to the rising deficit, and observers see both candidates adding to it over the next four years.
The largest fiscal difference between Trump and Biden concerns the 2017 corporate tax cuts, which Trump introduced during his first term. He's expected to extend the cuts if he enters the White House in 2025, while Biden would likely let them expire.