Trump’s trillion-dollar-plus deficits put America on path to fiscal ruin
“Though no one in Washington will admit it, our nation’s finances are in deep trouble. Spending is up, revenue is down, and this will only get worse.”
It became very clear this month that neither the Trump White House nor its allies on Capitol Hill want you to know that the federal budget is already in very bad shape … and getting worse.
It happened when the Treasury, the official keeper of Washington’s financial results, issued its monthly statement for the first 10 months of fiscal 2018 about federal revenue, spending and, therefore, the budget deficit.
Treasury showed what no president ever wants to admit: The deficit is spiking. The federal government’s red ink this year is already 21 percent above what it was in 2017, and there are few prospects that the bottom line will improve anytime soon.
Except with infrequent and unsubstantiated platitudes about how the situation is going to get better, the Trump White House and Republicans in Congress have been doing everything possible not to talk about the budget this year. To avoid tough questions and politically embarrassing votes, the House and Senate have even refused to consider a budget even though they are required by law to adopt one.
But this year isn’t the real issue.
Trump’s deficits are permanent
Unlike the trillion dollar budget deficits that occurred during the Obama administration that were temporary and largely the result of the Great Recession, the Trump deficits that will soon reach and exceed $1 trillion are permanent and will only get worse in the years ahead.
The Trump deficits are the result of changes in federal spending and revenue that will continue to be in place until some president and Congress decide to reverse them, that is, to increase taxes and make cuts to popular programs.
Not only has there been little appetite to do that, many in Congress and the Trump administration seem to be hellbent on ignoring the deficit and national debt and increasing spending and reducing revenue even further.
When the House returns to Washington in September, it is set to consider another tax cut that could reduce revenue by an additional trillion dollar. None of this includes the natural and man-made disasters — everything from earthquakes, forest fires and hurricanes to military, terrorist and foreign policy situations — that occur each year and cost more than planned.
Nor does it include interest on the national debt. The combination of big increases in federal borrowing from the very large deficits and the need for Washington to roll over its sizable short-term debt at higher interest rates will make this the fastest growing spending of all.
And all of this is happening when the economy is doing well. The relatively mild economic downturn that many are now saying will occur over the next few years will lower revenue and increase the deficit even further.
That makes the Trump administration’s extreme reluctance to comment on the deficit report from its own Treasury understandable: The news, which is already bad on its watch as a result of its policies, is only going to get worse.
Our national finances will only get worse
The White House was actually refusing to comment on three key issues:
►It obviously doesn’t want to talk about how big the annual deficit could get in the years ahead. The Congressional Budget Office is already projecting it will exceed $1.5 trillion by 2028, and that assumes no changes from existing taxes and spending laws and no recession.
►It also doesn’t want to talk about how it will pay for more tax cuts, a Space Force, the wall, infrastructure or anything else … including reducing the deficit.
►The Trump administration doesn’t want to explain how it’s going to manage the U.S. economy out of a recession if one happens on its watch. The traditional federal response of tax cuts and spending increases might not be as politically palatable as it has been in the past given that it could drive the annual deficit to close to $2 trillion.
The budget policymakers on Capitol Hill and in the Trump White House obviously aren’t focusing on much beyond 2018 and 2020. But they should at least be willing to admit there’s a problem that will continue long after the votes have been counted in those elections.