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Trump’s New Budget Plan Proves He Won’t Even Pretend to Care About the Debt

The era of big government is far from over.

Sipa USA/NewscomSipa USA/NewscomPresidential budgets are usually declared dead soon after their release. President Trump's budget for FY2019, however, was dead before it even arrived. It was doomed by the horrendous budget deal that was made by congressional Republicans and Democrats—and then signed by Mr. Trump himself. Even still, the budget is yet another sign of how little this administration cares about maintaining the barest pretense of fiscal responsibility.

Last week's budget deal made the numbers proposed in his administration's budget instantly obsolete.

The administration just signed a budget agreement that busted the non-defense budget caps and increased funding for this category by more than 10 percent. This makes the proposed cuts in non-defense spending laughable. The administration would concentrate $1.5 trillion in cuts over ten years exclusively on the non-defense side if the budget, while defense spending would grow by $800 billion over that same period of time. Even if the administration was serious about fiscal restraint, the imbalance between defense and non-defense would make the cuts politically impossible.

Just because the administration's budget outlines some potential ways to cut spending, one shouldn't actually believe that spending is going to go down. It won't.

According to the budget document, the government will spend $4.4 trillion in FY2019 and will grow spending by $1.7 trillion over ten years to $6.1 trillion in FY2028. Discretionary spending, both defense and non-defense, will increase, as will the mandatory side of the budget—and federal debt and deficits with it.

The budget proposal's spending cuts, in other words, are totally imaginary. The main outcome you can expect is that the promised savings won't materialize.

The budget also counts on a serious increase in tax receipts as a result of optimistically high economic growth rates. These projected rates are sustained over the entire ten-year budget window despite the historical record showing that it is extremely unlikely to happen. To be fair, Trump is not unique in pretending that a booming economy will occur during his tenure; however, the assumptions made by his administration are eyebrow-raising to say the least.

Short of some miraculous technological innovation that blows the American economy's mind, the tax receipts the administration envisions won't come through either. And economic growth could be really impaired if the administration decided to follow through in its campaign promise to withdraw from NAFTA.

Yet that didn't stop the fiscal fantasists at the Office of Management and Budget from projecting budget deficits falling to levels not seen since the early 2000s.

After growing to almost $1 trillion in FY2020, the administration projects that deficits will drop to $363 billion in FY2028. No fundamental and structural changes worth noting are made to the largest drivers of our future debt, Social Security and Medicare in this budget proposal. Yet the administration claims that the privately-held federal debt to GDP level will recede from 80.3 percent in FY2019 to 72.06 percent in FY2028…and our gross debt will fall down from 108.1 percent to 91.8 percent!

It's not hard to come up with overly optimistic assumptions to make one's budget look more fiscally responsible than it actually is. And although I understand the instinctual desire to hide the truth, this isn't the first time Republicans have resorted to fuzzy math.

Indeed, they've never had any problems using budget gimmicks to pretend that they would balance the budget within ten years. (My favorite trick, which has been employed many times, is cutting projected spending by repealing Obamacare—but keeping the health law's taxes in order to inflate revenues!)

What I can't understand is why, if OMB is okay with baking so much magic fairy dust into its projections, the administration didn't put out a budget that eventually arrives at balance? The economy is not in a recession. We aren't currently engaged in a major war, so it should have been easy to just cook the books in a favorable direction.

That the Trump administration didn't even bother to fake budget balance shows that not only has it totally given up on the pretense of being fiscally responsible, it doesn't even feel any shame in its spending spree.

President Bill Clinton famously claimed that the era of big government is over. The sad truth is that the budget deal signed by President Trump is the latest evidence that it's not. And the administration's latest budget proposal, despite all its gimmickry and practical irrelevance, is proof that this administration doesn't even care to pretend otherwise.

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  • Brett Bellmore||

    Since it would only be pretending, isn't the honestly refreshing?

    I'd like to see some pressure to get Trump to return to his campaign proposal to reduce the debt by selling off excess federal properties. Probably a non-starter in Congress, but from an economic standpoint it has a lot to recommend it.

  • Frank White||

    I'd like to see some pressure to get Trump to return to his campaign proposal to reduce the debt by selling off excess federal properties.

    He is, isn't he? Trump administration wants to sell National and Dulles airports, other assets across U.S.

  • Brett Bellmore||

    Cool! Now, this is the sort of thing a Reason article on Trump and the deficit ought to mention.

  • JFree||

    Ooh goody. Debt, deficit spending and cronyism.

    Your GOP hard at work

  • Curly4||

    The additional spending was to get some democrats to sign on to the bill to get it to pass. But the deficit mentioned did not take into consideration on additional tax revenues that would be generated. The first month's tax collection is one of the highest in a very long time. If Trump and the republicans had just put in the spending that they wanted the bill would not gone anywhere. To get the budget bill to pass both houses and the president democrats had to support the bill also. This is a republican democracy that depends on both parties to pass the bill. Now if it took only a simple majority to pass the bill there would not have been so much added to the spending to get it passes.

  • loveconstitution1789||

    Plus, that Harvest Box idea is a pretty good one.

    It is sending lefties into a tailspin of despair, which is also worth it.

  • Brett Bellmore||

    If you can get the poor weaned off of fast food, and cooking, the next step is that they notice that the same ingredients at the grocery store are cheaper than Harvest Box.

  • loveconstitution1789||

    I think the welfare fraud is the bigger deal. Gamers of welfare love them some $10 in cash for $20 in EBT purchases. Plus, the Harvest Box is a publicity thing.

    Cutting fraud and giving welfare kids actual food is good enough for now.

  • Brett Bellmore||

    Personally, I've suggested that we pay Purina to come up with a "welfare chow", perfectly nutritional and bland, and drop off a 50 pound sack of it each month. It could even make its own gravy!

  • Nuwanda||

    Since it would only be pretending, isn't the honestly refreshing?

    In a strange way, it is.

    We all know why the US can get away with these huge deficits and it's because the dollar is the de facto world currency. People trust it and the US gets to export the inflation.

    Further, the US debt by many measures is not exactly high. France and the UK have debt levels far higher, and Japan's is more than three times larger.

    http://bit.ly/1HrE4Vc

    You could argue that since hypocrisy and double talk rule in Washington, and since neither party actually intends to reduce the debt only "manage" it, Trump is pursuing a reasonably honest course. Is it sound? Probably not unless the US can grow its way out of trouble but that would take a few years of surpluses and would require entitlement reform.

  • tlapp||

    The only problem with selling Federal properties is we already know the politicians in office will just see the revenue as new spending which becomes the new baseline for future budgets.
    Until managing to a budget and reducing deficits becomes a priority no amount of new revenues will help.

  • SteveDDD||

    T-securities (federal debt) is paid off at maturity. The government does this continually via the Fed. In fiscal 2017 the federal govt paid off in excess of 84 trillion dollars. Don't believe me? Google "Daily Treasury Statement."

    Do you know that every penny of the federal debt remains in those T-security accounts at the Fed until maturity? The federal govt does not spend any of the so-called borrowed dollars (debt). You've heard of "money printing?" If you can print the money why would you have to borrow what you can print?

    Oh wait, the Fed is a private entity that charges the federal govt interest on the money it creates, correct? If that is so then why did the Fed send nearly $90 billion dollars (all but 6% of its total earnings) back to the US Treasury in fiscal 2017?Don't believe me? Google "Fed returns earnings to the US Treasury."

    The simplest way to pay off the entire federal debt would be for the Fed to transfer all those savings account dollars held as T-securities(US dollars with a coupon) back over to the reserve accounts (checking non-interest earning bank accounts) of each and every debt holder. This could be done instantly but is not allowed by federal law. If it was possible the debt would be ZERO immediately.

    The primary reasons why the federal debt exists: 1. An as anti-inflation measure 2. As the worlds safest depository for interest earning dollars in the world's largest bank, The Fed.

  • Fist of Etiquette||

    Time for the LP to step up as the opposition party on spending issues. THERE'S NO ONE ELSE LEFT.

  • creech||

    Already a letter has appeared in the paper mocking the Tea Party for not re-organizing to protest the same deficit spending that caused them to protest when a black president did it. Perhaps the writer is correct: isn't it time for a New Tea Party? (Though I doubt it would get any traction if led by the LP)

  • JFree||

    It will get traction - if people actually do something about it themselves. eg - actually reregister as Libertarian and become active in that party.

    It will gain no traction as long as posting on the Internet is deemed a substitute for actual activity

  • loveconstitution1789||

    *shuts off Reason to go do some Libertarian activity.

    Maybe all our online activity has gotten the word out about Libertarianism and that is helping to get this movement rolling a bit. Clearly the left is a bit upset with Libertarians based on the increase in lefty articles about "free market allowing fascism" type nonsense.

  • JFree||

    I'm half-seriously waiting for some media outlet to actually say - Folks. Turn us off. We are the problem. Get out of your house and start talking to your neighbors again where we can no longer control your thoughts. Maybe you can come up with better ideas than the blowhards we put in front of you.

    OK. Well maybe I'm not actually waiting for that to happen.

  • Rich||

    Serious question: How large does the Debt have to get before there is, um, trouble? I mean, what's magic about $20T? Is, say, $50T "sustainable"?

  • JFree||

    The debt will cause trouble when either a)there is an alternative reserve currency or b)Americans start talking about repudiation of the debt. The former will cause the mother of all financial crises/depressions along with trade (and probably international) wars. The latter will cause either hyperinflation and/or actual intergenerational warfare (the killing kind not the rhetorical kind) to reduce spending.

    Until then - just expect lower and lower growth going forward and that can honestly last for decades/generations. Japan is going on 40 years now. The notion that the future will be better than the present is not really ingrained in our DNA. That's a post-enlightenment conceit.

  • loveconstitution1789||

    Technically we are already in trouble. Inflation is artificially low. The interest rates should be higher but are kept low to hide that the Great Recession lasted more years than the government will admit. Obama's administration and Congress does that on purpose to provide the illusion that the economy is okay.

    Then a republican gets swept into office and talks to economists who warn that you need to raise interest rates again. The economy does well for a time but then corrects because of all the government artificial tweaking.

    This is how Republicans get blamed for "bad" economies and Democrats say they have "good" economies.

    Trump is going to get hit with a market correction because of signing the ridiculous budget Congress passed and because Obama so fucked up the recovery from the Great Recession it will take multiple market corrections and more realistic interest rates to get right.

    Unfortunately, rising interest rates make everything we borrow for more expensive.

  • Brett Bellmore||

    The answer is that it's already big enough for there to be "trouble", in the sense that an improving economy can be expected to increase the cost of carrying the debt through higher interest rates more than it increases the capacity to pay that interest through higher revenues. It crossed that line back during the last Bush administration.

  • JFree||

    Seven years a blogger put up a great chart showing the debt saturation of the economy - https://goo.gl/PKCcrE

    I wish it had gotten more attention. It's not just political either (re public/govt) debt. It's about the marginal value $1 of new debt produces now in this economy.

  • Palin's Buttplug||

    The Con Man fully conned idiots here like 'LoveCons' and Sevo into thinking he was a small government type.

  • loveconstitution1789||

    Trump is not into small and limited enough government for my tastes, but it will do for today. Trump is rolling back government as we speak. Even if it is lefty bureaucrats quitting. Its a win-win-win for America.

    He has you lefties freaking out, so he must be doing something right.

  • Brett Bellmore||

    Not rolling back government as a percentage of the economy, but possibly rolling back the extent to which it damages the private sector beyond sucking out money.

    If he can get government back to being a parasite instead of a disease, that would be an improvement. Symbiont is probably beyond hoping for.

  • Tony||

    He is the self-proclaimed King of Debt, boasting well before the election about how his business model was to screw other people out of money (gladly taking advantage of such welfare programs as bankruptcy protection). Then he promised to run government like the businessman he was. Nobody should be surprised, except by the fact that so many people thought it was a good idea to vote for him.

  • EscherEnigma||

    Not even going to read the article, just responding to the headline†.

    If you ever thought he cared, you weren't paying attention. If you thought he was even pretending to care, then you weren't paying attention.

    Trump does not care about deficits or the debt. More broadly, Republicans don't care about deficits or the debt. They may use that as grounds to ding Democrats when Democrats are in power, but that's just political opportunism, it's not actually caring.

    And it shouldn't have taken you this long to figure this out.
    ________
    †"Trump's New Budget Plan Proves He Won't Even Pretend to Care About the Debt"

  • Per Kurowski||

    And against all this... for how long are regulators, for the purpose of setting capital requirements for banks, assign the sovereign a risk weight of 0%?

    http://bit.ly/2o6sUAM

  • ||

    this applies to every political issue in America today,

    The problem = Our Problem,

    is that any country can be taken over by 'stupid 'Kommunism' like 1070' Rhodesai; or, Russia in the 20's, Germany in the 30's' China in the 40's, India and Cuba in the 50's, Congo in the 60's, Vietnam in the 70's Afghanistan in the 80's, Bosnia in the 90's, Venezuela in the 2000's. These countries are cited because they are handy for YOU to check out.

    And because I am always saying 'the record of 'Stupid 'Kommunism' is perfect, and the countries I list are EACH tidy examples of the NEVER FAIL success of 'stupid 'Kommunism' using social justice 'Krap to reduce the countries it takes over to perpetual poverty and squalor.

    And, because they and their poverty and squalor 'stupid 'Kommunist' social justice policies and practices are totally repudiated by every country that adopts and implements 'beneficial communism'.

  • tlapp||

    Time to recognize the truth. Those of us here are libertarians and can do enough analysis to realize the threat of debt and unfunded liabilities. The problem is that is bad politics. Majority of Americans find someway to rationalize it. Usually saying the other party did the same thing. The fact that there are so few in office that will take up the fight for fiscal responsibility is a problem of the people not the politicians.

  • andy85||

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