Debt and Deficits

Trump's New Budget Plan Is a Fiscal Disaster

The administration's spending blueprint continues the fiscal decline that began during the Bush era.

|

ONATHAN ERNST/REUTERS/Newscom

The federal government's fiscal outlook has been in decline since the Bush administration, and President Trump's new budget plan is another step in the wrong direction.

Trump's 2019 budget ramps up spending on the military and border security. Although the budget offers some ideas for domestic spending cuts, most of these won't see the light of day. In other words, it continues the long-term unwinding of the nation's fiscal discipline.

The newly released 2019 plan calls for $4.407 trillion* of expenditures while forecasting $3.422 trillion* in revenue, resulting in an anticipated deficit of just under $1 trillion. The budget forecasts a similar amount of red ink in 2020, followed by declining deficits—but never a budgetary balance—through the rest of the ten-year projection window.

Normally, it would be possible to benchmark White House forecasts against Congressional Budget Office (CBO) projections. Not this year.

In late January, CBO typically issues its own ten-year budget forecast. But that document has yet to appear, because CBO says it needs more time to calculate the impact of December's tax measure. CBO won't say when it expects the report to appear.

The delay is just the latest milestone in the collapse of federal budgetary procedure—one in which a deliberative annual review process has given way to last-minute continuing resolutions and omnibus spending bills.

Under Trump's new budget, the White House projects a $363 billion deficit in 2028. However, It only reaches that level by assuming over $1 trillion in unlikely cuts and reforms.

Among the major deficit shrinking proposals in the budget are the repeal and replace of Obamacare, elimination of Overseas Contingency Operations (i.e., ending the endless wars in Afghanistan and elsewhere) and the "two-penny plan" which involves annual unspecified 2 percent reductions in non-defense discretionary spending. These concepts are likely to be dead on arrival in a divided Congress.

The budget offers nothing on entitlement reform and combines increased military spending with new outlays for the President's wall, now that he has finally realized that Mexico won't pay for it. Trump's proposal might thus be called a "Guns and Walls" budget.

Back in the sixties, the Johnson administration gave us the concept of "Guns and Butter"—the idea that we could lavish money on new social programs while also funding the Vietnam War. That policy gave rise to runaway inflation and weak economic performance in the seventies.

After decades of deficits, Congressional Republicans and the Clinton Administration finally balanced the federal budget in the late 1990s. But fiscal restraint quickly unraveled under George W. Bush's administration, which launched wars in Afghanistan and Iraq as well as a Medicare prescription drug benefit without raising offsetting revenue.

Trump's new budget includes $686 billion for the Department of Defense—13 percent more than the 2017 level—and matching the amount in the bipartisan spending bill approved Friday morning. But DoD spending is only part of the true cost of America's national security establishment. Spending on Intelligence, the Department of Energy's nuclear stockpile activities and the Veteran's Administration also need to be included. Those additional functions together raise the total defense tab to around $1 trillion annually.

To get the higher defense spending they so desperately wanted, Republicans had to agree to Democratic demands for more domestic spending. Earlier in the decade we used to talk about a "grand bargain" between Republicans and Democrats to resolve the nation's fiscal problems through spending cuts and revenue increases. Instead, the bipartisan grand bargain we got last week busts through all previously agreed spending caps, and does not offset the added spending with new revenue. It sends us further down the road to fiscal Armageddon.

The Trump administration now suggests that Congress does not have to enact all the domestic spending it just agreed to. To enable this yet-to-be-achieved spending restraint, Trump recommends that the American people send more Republicans to Congress in the 2018 mid-terms. But given Trump's low approval numbers, the degree of enthusiasm among anti-Trump forces and a record number of House Republican retirements, it is the Democrats that are in the best position to gain seats.

So instead of the declining deficits fantasized in today's budget, we are more likely to enter a regime of permanent trillion-dollar deficits. And, as the recent financial market turbulence suggests, there is a limit to investors' patience with this new reality.

*CORRECTION: The original version of this piece uses billion, not trillion, for expenditure and revenue figures.

NEXT: If You Really Wanted to Ban Porn, Here's What It Would Take

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. As long as he is a spendthrift republican scum bag, then the camps can continue to hate each other. When the next spendthrift democrat scumbag gets in there, the camps can hate each other over the exact same guy.

    This shit matters not because the path to ruin has been laid with absolutely no chance of altering it for the better. Americans are too chicken shit to face austerity, just like those european piece of shit cowards reacted.

    That is why I wish it would collapse already. Arm yourselves and hope not to be collateral damage when the zombie horde goes looking for food.

    1. This shit matters not because the path to ruin has been laid

      And this “path to ruin” consists of what exactly? We can print the money to cover the debt and lenders will be pissed and not give us any more money. What you call ruin is simply austerity imposed through markets.

      That is why I wish it would collapse already. Arm yourselves and hope not to be collateral damage when the zombie horde goes looking for food.

      How exactly is this “collapse” supposed to come about? Why would people not have food?

      1. Start earning $90/hourly for working online from your home for few hours each day… Get regular payment on a weekly basis… All you need is a computer, internet connection and a litte free time…

        Read more here…….. http://www.startonlinejob.com

    2. Start earning $90/hourly for working online from your home for few hours each day… Get regular payment on a weekly basis… All you need is a computer, internet connection and a litte free time…

      Read more here…….. http://www.startonlinejob.com

  2. The newly released 2019 plan calls for $4.407 billion of expenditures while forecasting $3.422 billion in revenue….

    You mean Trillion of course.

  3. thought that has been floating around for a long while now:

    – Balanced budgets, fiscal restraint, is bedrock ‘traditional conservative’ political position.

    its something i personally agree with.

    but, imo, it has little-to-nothing to do with libertarianism.

    whether the govt spends itself into insolvency and crisis, or whether it pinches pennies and passes procedural rules requiring cuts for any new spending… doesn’t necessarily have shit to do with whether govt policies are liberty-affirming or liberty-destroying.

    to wit: if government could figure out how to surrepticiously surveil the citizenry *for much less money*, it wouldn’t necessarily be a better govt. If we suddenly invented a way to wage war *more cost effectively*, it wouldn’t be a great improvement.

    organized-infringement of liberty isn’t significantly altered merely by being more frugal and prudent.

    its just sort of besides the point. nice to have, sure. but its not exactly core to the NAP.

    similar point could be made about many other topics; some have more relevance than others, but the degree of emphasis seems to be skewed towards angles which have fairly low relevance to the majority of citizens.

    I mean, mexicans and whores ‘sex-workers’ and weed are nice and all. but even were policies in those areas to change in some more-libertarian direction, the average american citizen’s liberty still wouldn’t be significantly improved.

    1. and weed are nice and all. but even were policies in those areas to change in some more-libertarian direction, the average american citizen’s liberty still wouldn’t be significantly improved.

      So I’m better off in the 90s when I could have been thrown in jail for years for growing a pot plant in my college dorm closet as opposed to now when I can grow it in my garden? How so? How many hallucinogens do you have to take to so effectively shill for the conservatives you make excuses for. I mean, you’re the expert, I guess.

      1. Please ask the question again, because i can’t make heads or tails of what you’re actually trying to say.

    2. Sometimes I think the only good to come from a balanced budget amendment is that Washington’s trickery would be a little more obvious and perhaps a tad less exuberant. I know they’d find ways around it.

      The only other way I can think of reducing debt each year would be to return to an idea from the Articles of Confederation, but on steroids. Start at the bottom. Only cities and counties could tax people. What they have left over, they send to the state, and what the state has left over, it sends to the feds. Never fly, of course.

      Another fun idea is to let Washington (and states/cities/counties too?) make up whatever budget figures they want. Per department, earmarks, doesn’t matter. Tally all those up and prorate all tax sources to match that. BUT those who pay the taxes get to designate where they go, into whatever departments and earmarks they feel like, AND none of those departments or earmarks or other designated sinks could exceed what was budgeted. All the rest would be returned back to taxpayers.

      So: Washington says $700B for defense, $1T for ObamaCare, $1T for Medicare, etc. Total $4.4T. People send in $4.4T, but a lot of smart asses designate it to national monuments, global warming, studies for hookers and blow. All those budgets are way over-designated, so all that money goes back to the taxpayers. I’d imagine defense would still get a healthy chunk, but the others? Naw, they’d be underfunded.

      Silly fantasy.

    3. “its just sort of besides the point. nice to have, sure. but its not exactly core to the NAP. ”

      You forget that the way the government is funded is through force. You’re forced, with the threat of fines, jail, or worse, if you don’t agree to comply with the theft that funds their spending.

      The libertarian position that I espouse is minimal government spending, and minimal state-sponsored theft.

      1. Bravo. Now consider adding a denominator in which delta x approaches zero, and you’re there, gradient and all. The anti-life will continue to convince millions to attempt suicide-by-communism and suicide-by-nationalsocialism, so there will always be pushback.

      2. “”You forget that the way the government is funded is through force.”‘

        Not at all. Whether they confiscate 30% of your income, or 10%, the infrastructure and rationale of confiscation is still the same.

        iow, its not “less force” simply because the bill they give you has a smaller number.

        And to be clear – what Reason has made their signature argument of late is *balanced* budgets. Not some very-specific demand for X or Y to be slashed or minimized. their concern is primarily “anti-deficit” – not “smaller govt no matter what”.

        and my point was that this posture is, while nice from a traditionally-conservative fiscal POV, basically nothing to do with libertarian ideas/arguments

      3. The libertarian position that I espouse is minimal government spending, and minimal state-sponsored theft.

        I don’t see anything intrinsically un-libertarian about government spending. As long as government funds itself through voluntary transactions, it seems to me it can spend as much as people like.

    4. Republican argument-from-prophesy-and-Revelation detected!

  4. The newly released 2019 plan calls for $4.407 btrillion of expenditures while forecasting $3.422 btrillion in revenue

    FTFY.

    Among the major deficit shrinking proposals in the budget are the repeal and replace of Obamacare, elimination of Overseas Contingency Operations (i.e., ending the endless wars in Afghanistan and elsewhere)

    At least there’s one silver lining. I wonder how many political journalists are going to mention that little tid-bit in their coverage of this?

  5. Read the platforms. Trump has no “plan” any more than Brad Pitt or Kurt Russell have a “plan” for the movies in which they are cast. Everything Trump has said and done–including setting Beauregard to burn the economy alive as a sacrifice to Prohibition–is in God’s Own Prohibitionists’ platform for looting Amerika. Trump is the guy from Central Casting hired to play the outsider. They won the election because the Dems were stupid enough to try to ban electricity and teevee vidiots too dumb to realize the LP even exists as the only sensible option, thanks to Nixon. Oh, their platform still promises to push that 1976 Prohibition Party Amendment to force women to reproduce at gunpoint.

  6. To be fair, the fiscal decline started under Regan who also pursued guns and tax cuts. To quote Cheney “Regan proved deficits don’t matter.” Fiscal rectitude was restored for a time with Bush I and a democratic congress and Clinton and a democratic Congress, and then new spending or tax cuts were largely blocked from 94-97 when capital gains tax cuts were joined with children’s health insurance.

  7. Under Trump’s new budget, the White House projects a $363 billion deficit in 2028. However, It only reaches that level by assuming over $1 trillion in unlikely cuts and reforms. Among the major deficit shrinking proposals in the budget are the repeal and replace of Obamacare, elimination of Overseas Contingency Operations (i.e., ending the endless wars in Afghanistan and elsewhere) and the “two-penny plan” which involves annual unspecified 2 percent reductions in non-defense discretionary spending. These concepts are likely to be dead on arrival in a divided Congress.

    Sounds like Trump produced a reasonable budget. It’s not his fault that Congress isn’t going along with the spending cuts.

    The budget offers nothing on entitlement reform

    I suppose he could have added yet more cuts that Congress wouldn’t accept, but at that point, why bother?

    1. Crazy what qualifies as a reasonable budget.

      Also, he should be held accountable when his actions don’t line up with his proposals. The point is that it’s easy to propose cuts that you have no intention of even trying to force Congress to make and you don’t deserve brownie points for it. Everything we’ve seen from him so far, such as signing a spending bill just a week ago that increased spending by $400 billion in two years, indicates that he has no intention of making a serious effort to control spending.

  8. Gosh, if only there was some kind of grass roots movement for fiscal responsibility. One that would unite people who otherwise disagree on social and other issues. That would attract regular folks, not just basement dewelling policy wonks. That would start to challenge established leaders in primaries, even if they wouldn’t always win. Why *ahem* you could name that group with a reference to revolutionary America that would be catchy and memorable. I wonder if such a movement might get at least a few sane people elected to Congress.

    Nah…never happen. Besides, libertarians would have to tolerate anti abortion folks in their midst. Ewww. Nah, let’s just go back to arguing minutia in our echo chamber.

  9. I am making $89/hour telecommuting. I never imagined that it was honest to goodness yet my closest companion is acquiring $10 thousand a month by working on the web, that was truly shocking for me, she prescribed me to attempt it. simply give it a shot on the accompanying site.

    +_+_+_+_+_+_+_+_+ http://www.homework5.com

  10. I am making $89/hour telecommuting. I never imagined that it was honest to goodness yet my closest companion is acquiring $10 thousand a month by working on the web, that was truly shocking for me, she prescribed me to attempt it. simply give it a shot on the accompanying site.

    +_+_+_+_+_+_+_+_+ http://www.homework5.com

  11. Well, look on the bright side.

    Trump proposes eliminating federal funding for PBS, NPR

    http://thehill.com/homenews/me…..or-pbs-npr

    ahahahaaaaa

  12. After decades of deficits, Congressional Republicans and the Clinton Administration finally balanced the federal budget in the late 1990s.

    Oh for fuck’s sake, not this bullshit myth again? At no time was there a balanced budget in the late 1990s. The only reason the deficit the last year was $17bil was because they raided the Social Security “Trust Fund” to do it.

    1. You are absolutely right. A reading of the treasury daily report shows that there was no balance or surplus. The debt rose every year of the Clinton presidency. In fact the national debt was doubled during every administration since Carter.

  13. Graphic illustration “What does one TRILLION dollars look like”

    http://www.pagetutor.com/trillion/index.html

  14. The article makes it look as though W. ruined our budget through adventurism in Afghanistan and Iraq. The truth is more complicated:

    *Prior to the close of the Clinton administration, the Gingrich Congress proposed ending all ag subsidies, which throughout their history, helped the wealthiest 30% of “family farms” with70% of aid. Instead, Bush doubled them, in effect forcing Americans to finance grain purchases by China.

    *Medicaid Part D was predicted to be a horrendous expense, although some oversight of drug prescriptions are a pathway to reduced chronic care expense. They are still a gateway to medical inflation — financing such programs by cutting down on waste fraud and abuse, especially automatic and unrescinded approval for medicaid (subsequently revealed as a backdoor subsidy to “workfare” in the 90’s) would have reduced cost inflation to zero.

    *Assistance for ethanol has essentially quadrupled since yr. 2000, with no apparent benefit to the trade deficit or cost of petroleum, or self-sufficiency for ethanol.

    *Ineffective and wasteful tax eforcement reasonably costs the economy an extra 2% GDP per annum, as noncompliance, with or without fraudulent, incorrect, or costly disputed returns, may cost 10% of possible revenues. One tax oversight was tax exemption of FNMA before the financial crisis (now corrected). What did keeping this essentially profit making concern a not-for-profit do to protect our economy?

  15. If Republicans ever had the balls/sense to flat line, or GAWD FORBID, cut defense spending, while demanding cuts to other stuff we might actually get somewhere someday. I think spending cuts, along with tax cuts in the exact same bill is the only way it could ever be done. You’d have to sell states on the idea of “We’re cutting 1 trillion a year, this is ALL going back home to the states, you can then decide what you want/need to do with it to best serve the interests of your people.”

    Probably never gonna happen though…

  16. If you’re ever in the Withlacoochee area, try some of the deep fried suckfishes. They’re to die for.

  17. God, I hate the fact that our budget is politicized. BBA anyone?

Please to post comments

Comments are closed.