Budget

The Coming Federal Fiscal Binge

Ready for another round of tax cuts combined with spending increases?

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Trump
Andrew Harrer/dpa/picture-alliance/Newscom

William Safire said that as a speechwriter for Richard Nixon, he would sometimes urge the president, "Take the easy way!" Nixon could then give a speech saying he had rejected advice from his aides to take the easy way, preferring to do what was right.

Politicians may pretend to make hard choices, but they rarely do. Those in office now won't be inspired to heroic deeds by the failure to repeal Obamacare. Just the opposite.

The lesson of this episode is that it's hard to reach agreement on taking things away from the voters. The corollary is that it's easy to reach agreement on giving things to the voters. The obvious next step is a fiscal binge that serves the selfish interests of everyone except posterity.

Here's how it may play out: Congressional Republicans pass tax cuts. Democrats join them on a big infrastructure bill. President Donald Trump's proposed spending cuts come to little or nothing. The deficit balloons, and not many people in Washington care.

Robert Bixby, executive director of The Concord Coalition, a nonpartisan budget watchdog, tells me, "There's a political logic to it: 'You get what you want. We get what we want. And the future will pay for it.'" Marc Goldwein, senior policy director of the Committee for a Responsible Federal Budget, agrees: "The risk of irresponsibility is high."

Having lost on overhauling health care, Trump indicated he is ready to move on to tax reform. This choice evoked chortles from skeptics, who say a major revision of the Internal Revenue Code will be an even harder challenge.

But why assume Republicans will balk at anything short of a comprehensive overhaul? If they can't get that—and there is no reason to think they can—they will almost certainly settle for tax cuts, even if it means bigger budget deficits. That's been their default option for decades.

Trump couldn't care less about the deficit. So GOP members will meet no particular resistance from him if they want to cut rates, scrap the estate tax or the alternative minimum tax, or increase the standard deduction.

House Speaker Paul Ryan has in mind a border adjustment tax, which would bring in enough revenue to make up all or most of what the other changes would lose. But neither Trump nor congressional Republicans are likely to approve a measure that would raise consumer prices and be hard to explain. The path of least resistance involves dropping the proposal and not bothering to pay for the tax cuts.

Paying for them holds little allure because it would mean either killing tax breaks cherished by millions of people or curtailing outlays. Trump has proposed some $54 billion in spending reductions, taken from agencies ranging from the Environmental Protection Agency to the National Endowment for the Arts, but those couldn't be used to offset tax cuts. The money saved is supposed to go for Trump's military buildup.

But rest assured, it won't be saved in the first place. "Some of Trump's closest allies said his budget has virtually no chance in Congress," reported The Washington Post. "Even those fiscal conservatives who do want to cut spending don't necessarily think slashing major domestic programs is the answer."

The only other place where spending could be cut much is in the biggest entitlements—Social Security, Medicare and Medicaid. But Trump the candidate promised not to go after Social Security and Medicare. Leaving Obamacare alone means Medicaid escaped the ax.

The president should have more luck boosting outlays. He envisions a $1 trillion program aimed at "revitalizing our country's ruined roads, crumbling bridges and outdated airports," Press Secretary Sean Spicer explained. Trump told The New York Times he intends to "prime the pump to some extent. In other words: Spend money to make a lot more money in the future."

It's a classic Keynesian formula with a long Democratic pedigree. Getting bipartisan support should not be a heavy lift. The website Axios reports that House Democratic leader Nancy Pelosi "wants Trump to move quickly on a 'big jobs bill' that includes some corporate and middle income tax cuts coupled with government spending to stimulate growth."

The problem with all this is that it would squander money we don't have, further enlarging our national debt and loading more burdens onto our children and grandchildren. That's not the responsible way, but it is the easy way. And politicians will be eager to take it.

© Copyright 2017 by Creators Syndicate Inc.

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  1. Stealing less from some people is the right thing to do whether or not it is “paid for” by stealing more from other people or not. Call me when Trump reaches his first trillion dollar deficit. Otherwise you’re a hypocrite who cares about parties, not the deficit.

    1. I don’t think changing the people you steal from, while still stealing the same amount (if you cut taxes without cutting spending, all you’re doing is stealing from future generations instead of people today) is really a morally laudable act.

      1. It’s always better to “steal from future generations”, because (1) the world may end, so those generations will never come, and (2) the debt may never be paid, so those generations will never be stolen from, because it’s better to steal from the people who bought those bonds voluntarily.

        1. That just seems like justification to run up debt indefinitely. And even debt that never gets paid back will still affect those future generations. A national default by the US government isn’t only going to affect bondholders (not to mention all the interest payments that will be made in the meantime at taxpayer expense).

        2. Exactly. Borrow and spend

      2. Stealing from future generations to pay for our own fuckups is better because we’re selfish assholes.

  2. It’s like a game of musical chairs can never end. I suppose at some point the people may panic as they notice the chairs aren’t there. How many chairs have to remain to prevent panic?

  3. TAX CUTS ARE NOT SPENDING, JESUS CHRIST PEOPLE. If that “logic” worked, i’d be super rich from all the money i’m not spending on yachts.

    1. But if you stop taking money from people, HOW WILL YOU PAY FOR IT? Huh, smart guy?

      1. What if it’s just never paid for?

    2. Look at your money – is that your name and picture on the money? You didn’t build that. All the money belongs to the government and whatever they don’t take is a debt you owe to them that your descendants will be paying off. Plus interest.

    3. This is obviously true, but if cut taxes and don’t have a spending plan that puts the budget in balance, all you’re doing is kicking the can down the road. Sure, you’re making people pay less of their money today, but you are making people of the future pay more in exchange.

    4. If you reduce income without reducing expenses, guess what happens. Tax cuts may “pay for themselves”, but that’s is no guarantee and is really more a rationale for politicians.

  4. Try telling people that Reagan’s tax cuts increased the deficit and invariably his supporters will immediately point out that Reagan’s tax cuts actually increased tax revenues and it was Congress’ spending increases that blew up the deficit. Then point out to them they’re defending Reagan by pointing to the fact that he increased government revenues even after he claimed the only way to downsize government was to starve the beast. (And maybe that since both the tax cuts and spending increases were acts of Congress, it’s a little hypocritical to blame them for the one and credit Reagan for the other.)

    1. Reagan wanted tax cuts, Congress wanted spending increases. They cut a deal. Well, two deals, really. One in 1981 to goose the economy, and then cuts along with sorely needed tax reform in 1986. He and Congress should share credit for tax reform, though it was Reagan’s popularity that gave it the necessary momentum.

    2. Yes, tell them that after you tell them that Reagan signed into law the original illegal alien AMNESTY.

  5. NOW THAT OBAMA’S OUT OF OFFICE SUDDENLY REASON IS CONCERNED ABOUT THE FEDERAL BUDGET ALL OF THE SUDDEN.

    Now that that’s out of my system, let me tell you what I think: You don’t pay for tax cuts.

    1. Since YOU did not care about deficits or the debt, it is natural that you don’t pay for tax cuts. You don’t cut spending either.

  6. The truth is, until other people decide to stop lending the USA money to spend on any and everything, this cycle never ends.When it ends, the USA goes bankrupt and the world economy collapses. So, it’s a ponzi scheme until then.

    1. How can the world economy collapse? It’s just a matter of paper’s becoming worthless. All the actual goods & services are still there. It’s just that people who thought they were going to be paid by somebody later won’t be. The people who would’ve paid them will be better off.

      1. Actually, all that the inflation due to overissuance of fiat money does is screw over those stupid enough to invest in the currency (i.e., bonds, etc.); the investors in real assets simply have the value rise with inflation.

  7. Drumpf couldn’t care less about the deficit.

    Neither could Republicans. At least the Democrats raise taxes or threaten to do so for tackling deficits. The Republicans? Just borrow.

    Watch all the grandstanding assholes of the GOP having NO problems at all in raising the debt ceiling. ALL of ythem. Even Mark Meadows conceded that *this* budget did not have to be deficit neutral

    1. “At least the Democrats raise taxes or threaten to do so for tackling deficits.”

      $10 trillion worth of threats from 2009-2016

    2. Thank you for pointing out the biggest lie of the Republican political class – that it is the party of fiscal responsibility.

  8. Eh, it seems that every other country gets to devalue its currency so as to prop up demand for its products, so why shouldn’t the US of A do it to get its own people to buy American? As for myself, I’m totally invested in the foreign stock market, so I say, “bring it on”!

  9. The government is attempting to gain the power of waste, extortion, mishandle, and bungle in the authoritative divisions and offices. Very nearly two years back, the Oversight Committee heard a declaration from the Chairman of the Recovery and Transparency Board, Earl Devaney, who referred to figures from the Association of Fraud Examiners that recommend that U.S. citizens lose as much as 7 percent of their administration’s spending to extortion and waste. In the event that that figure is valid, at that point the national government lost $228 billion a year ago alone. However, the full degree of citizen misfortunes can’t be measured, to a limited extent on the grounds that the Government Accountability Office (“GAO”) is as yet unfit to dependable track the monetary state of numerous elected organizations or precisely solidify the national government’s budgetary articulations. Indeed, The Sunlight Foundation as of late found that USASpending.gov ? the site expected to report all government contract and concede spending ? is “totally futile” in light of the fact that the access data is exact for 35 percent of elected projects. This is inadmissible. http://www.dissertationavenue.co.uk/

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