Issues & Insights

A Budget Disaster of Epic Proportions

I&I Editorial

Three days after President Trump told his aides to look for deep cuts in federal spending for 2020, he agreed to a budget deal that blows a $320 billion hole in the spending caps and allows a two-year suspension of the debt ceiling. 

Trump tweeted that “this was a real compromise in order to give another big victory to our Great Military and Vets!”

In fact, it is exactly how Washington has worked for decades. This is a place where politicians splurge today, and promise to repent tomorrow. And where “compromising” means adding your differences together, rather than splitting them.

Thus, as a result of this “compromise,” Democrats are boasting that not only did they get a huge boost in domestic spending, they are “pleased that our increase in non-defense budget authority exceeds the defense number by $10 billion over the next two years,” according to the statement issued by House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer.

For good measure, the dynamic Democratic duo added that, with this deal, “Democrats secured an increase of more than $100 billion in funding for domestic priorities since President Trump took office.”

With the national debt now exceeding $22 trillion, and this year’s deficit slated to top $1 trillion, this isn’t politics as usual. This is recklessness.

The 2011 budget caps, remember, were part of the Republicans’ deal with President Obama, which they secured in exchange for letting some of President Bush’s tax cuts expire. To give the caps teeth, the deal included a sequester provision that imposed automatic, across-the-board spending cuts if Congress couldn’t figure out how to live within its means.

For a time, those spending caps actually worked.

Overall, federal outlays declined for three years straight after that agreement, when you adjust for inflation. As a share of GDP, spending shrank from 23.4% down to 20.2%. Lo and behold, the world didn’t come to an end.

Since then, however, Congress lost interest in spending restraint, and the floodgates reopened. Despite the technical existence of spending caps, outlays have shot up 19% in real terms since 2014. Spending is up nearly 9% in just the past two years alone. As a share of GDP, federal expenditures have crept back up to 21.3%.

To understand what this means for the deficit, consider that if Congress had simply held spending growth to the rate of inflation after 2014, the deficit this year would be $400 billion, instead of more than $1 trillion.

Sen. Rand Paul had it right when he called the deal a “huge mistake.”

The current “compromise” profligacy comes at a time when the country is already far along an unsustainable path.

The Congressional Budget Office now estimates that, unless Congress and the White House come to grips with spending, projected deficits over the next three decades will “drive federal debt held by the public to unprecedented levels — from 78% of gross domestic product in 2019 to 144% by 2049.” Interest payments alone will start to swamp the budget, making it all the harder to ever get to a balanced budget.

It’s important to note that this problem is not being driven by Trump’s tax cuts. Even with those cuts in place, federal revenues are near the postwar average, and they are slated to continue to claim a larger share of GDP each year for the next several decades.

The problem is entirely on the spending side. The CBO’s forecast has spending closing in on 30% of GDP by 2049 — and that’s assuming there aren’t any major new entitlement programs.

Yet, even as dramatic as these numbers are, the fact is that getting spending, deficits, and debt under control does not require massive cuts in spending. All that is needed is a modicum of long-term spending restraint.

Unfortunately, that’s the only thing in short supply in Washington these days.

— Written by John Merline

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The Issues and Insights Editorial Board has decades of experience in journalism, commentary and public policy.


  • Can we please now confirm that the GOP isn’t (and probably never was) the party of smaller government and limited spending?

    Sure when Obama was in the White House, the GOP was proud to wave the Gadsen flags at rallies supporting and lauding the Tea Party, which originally the goals had nothing to do with immigration or “America First”, but was solely its genesis was bailouts and high government spending. And yes, this included wasteful spending on bloated defense policies too.

    They rode this sentiment to victories in ’10 and ’12 across the country, pulling in millions in campaign donations.

    Of course though they never have had any real intention to reign in spending. Cutting taxes is great; coupled with spending cuts. But with the Trump takeover of the GOP, for people who actually believe in smaller government and cutting the deficit, it is a lonely landscape.

  • They’ve been promising to repent later for decades. It’s clear that the Federal government cannot control itself and needs to be checked before they collapse the economy completely.

    At this point the States should intervene by calling a Constitutional Convention under Article 5 of the constitution, and passing a Balanced Budget Amendment without Washington’s involvement.

    • An Article 5 convention is the Pandora’s box that will not and cannot be limited to the horribly worded BBA.

  • The AMTRAK Collectivist Express continues to be manned by those who think we can spend ourselves rich or that our national currency counterfeiters at the Federal Reserve will “print our way out of debt” while going further in debt!
    The combined propaganda arms of government funded schools and colleges, the Insider controlled media narratives and those elected representatives that know full well they are buying votes on the backs of your grandchildren’s labors are never going to fessup to their fiscal crimes. It’s not in their best interest to admit it is they that have and are continuing to cause inflation that has already a 97% fall in the value of the dollar since the Federal Reserve co-opted Congress’s mandated Constitutional role.
    Keynesian policies continue push the country toward financial disaster.
    When government controls what is taught to our youth, is it any wonder that nearly all those who graduate are totally without any connection to real math or can calculate an APR percentage rate.

    Who said: “I place economy among the first and most important virtues, and public debt as the greatest of dangers to be feared. To preserve our independence, we must not let our rulers load us with perpetual debt. If we run into such debts, we must be taxed in our meat and drink, in our necessities and in our comforts, in our labor and in our amusements. If we can prevent the government from wasting the labor of the people, under the pretense of caring for them, they will be happy.”

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