Economy & Business

The Trump Deficit

(Marcos Brindicci/Reuters)

It does not take great leadership — or great skill at deal-making — to do things that already are popular. There is nothing easier than giving people what they want when it does not cost you anything. That is one of the basic problems of American politics.

The news that the budget deficit has returned to a point just a hair shy of the trillion-dollar mark is dispiriting. The Trump administration is rightly proud of its economic record of modest but steady growth accompanied by strong employment and very good growth in wages. But if we cannot get government spending under control during the good times, what hope do we have for the more challenging times? And there will be more challenging times.

Congressional Republicans did make some real progress on spending controls during the Obama years, but it is very difficult to resist revenue-hungry special interests — especially when those interest groups represent big blocs of voters.

And budget reform without presidential leadership is more difficult still. The major drivers of federal spending are Social Security, Medicare, Medicaid (along with other health-care subsidies), and national security. President Trump has ruled out pursuing Social Security and Medicare reform out-of-hand. These are very popular entitlements, and particularly popular among some sensitive Republican constituencies. Likewise, military spending is very popular among Republicans, and some conservatives argue, not without reason, that we are not spending enough on the armed services.

We are all for negotiating an extra nickel off every case of pencils the federal bureaucracies order, but the U.S. government is not going to be able to put its fiscal situation on solid footing without addressing the major drivers of spending — meaning entitlement reform. Even if Republicans were willing to countenance the radical tax increases put forward by some leading Democrats, these almost certainly would prove insufficient to cover spending if it continues on its current trajectory. We would need to roughly double federal taxes to make that happen.

Some cynics say that there isn’t any political juice in all this green-eyeshades business, that nobody really cares about the deficit. That is not true, but even if it were true, nobody cared about subprime mortgages, either — until they had to. Washington’s spendthrift ways are setting the U.S. government up for an eventual fiscal crisis, at which point the options for reform will be fewer — and much more painful — than the ones currently before us.

In 2007, the federal deficit was 1.1 percent of GDP. In fiscal year 2019, it was more than four times that. In GDP terms, the deficit has grown larger every year of the Trump administration — and given Republican control of Congress for the first two years of that administration, this is not something that can be blamed exclusively on the Democrats.

While presidential leadership does matter, this ultimately is a congressional issue — it is Congress that authorizes spending and Congress that writes the tax code. And Congress is going to have to act on these and other related issue at some point. The Kyiv circus will pack away its tents, someday — and what will Congress be able to say it has done for the good of the country?

It is time for Washington to sober up and buckle down. Do it before the next $1 trillion in new debt has gone out the door.


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