Free Minds & Free Markets

Politics Trump Policy Once Again in Budget Debate

The trouble with President Trump’s new budget.

The Trump administration just delivered a massive budget to Congress. A look at the numbers and the talking points drafted to defend it confirms that budgets favor politics over policy. This also confirms that it really doesn't really matter who is in the White House. Big spenders will spend and then dissemble to cover up their fiscal irresponsibility.

The fiscal year 2020 budget proposes spending $4.7 trillion. That's up from $4.5 trillion last year and $4.1 trillion in FY 2018. Meanwhile, assuming that the tax cuts set to expire in 2025 do not expire, tax revenue will grow to $3.6 trillion in FY 2020, up from $3.4 trillion last year and $3.3 trillion in FY 2018. Spending between FY 2020 and FY 2029 will grow by 40 percent, and thanks to projected GDP growth averaging 3 percent over the next decade, revenue may grow by 72 percent during that time.

Despite a growing economy, relative peace in the world and no recent national emergencies, the annual deficit will reach $1.1 trillion in FY 2020. Also, $2 trillion have been added to the debt during the last two years. While the deficit is projected to be cut in half over the next decade and the debt may stabilize, as we shall see, these numbers carry little credibility.

The prediction of 72 percent growth in revenue is propped up by very unrealistic economic growth rates and should put to bed the notion that economic growth rates alone (even fallacious ones) can get us out of this fiscal mess we are in. That's because this deficit is not driven by a lack of economic growth or a shortage of revenues but by constant overspending.

If you lift the optimistic growth projections, the reality looks grimmer. According to the Committee for a Responsible Federal Budget, "Absent these rapid growth assumptions, debt under the President's budget would likely be about $2 trillion higher by 2029. And debt as a share of GDP would reach roughly 85 to 90 percent." That means a public debt of $27.77 trillion, up from this year's $16.9 trillion. It's worth noting that this year's gross debt totals $22 trillion.

In spite of these numbers, the administration claims that the budget promotes fiscal responsibility. Russ Vought, acting director for the Office of Management and Budget, said, "Look we're $22 trillion in debt. We have trillion-dollar deficits that are far as the eye can see and we need to do something about it." And to be fair, the budget does propose $2.7 trillion in spending reduction over the next 10 years. But, as the numbers above make clear, for the most part these spending cuts are not actually cuts in spending: they're a reduction to the growth in spending.

While many of these spending reform proposals are worth implementing, they simply aren't realistic. The administration's proposed reforms for food stamps, student loans, disability payments, Obamacare subsidies, or Medicare cost controls are great but have no chance of seeing the light of day with a Democrat-controlled House. They have also little chance of being approved because half of them apply to the non-defense discretionary side of the budget. The budget proposes cutting these expenditures 9 percent between this year and next, and 26 percent over the next 10 years.

I have no objections to cutting non-defense spending or cutting it as much as the proposed budget does. However, cuts of this size are dead on arrival because the amount that the administration cuts from non-defense is almost entirely given to national defense. What's more, the administration uses an old trick practiced by previous administrations. It simply increases non-war spending through the Overseas Contingency Operations fund, which will grow from $69 billion in FY 2019 to $165 billion for FY 2020. This is particularly annoying when considering that many members of this administration understand full well this is a blatant accounting gimmick.

Apparently, Republicans don't learn from their past mistakes. Fiscal responsibility can never be achieved on the back of non-defense spending alone, especially if it's offset by massive growth to defense spending.

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  • MollyGodiva||

    These articles are all the same. Good points about the deficit and run away spending. Then at the end the focus on any solutions is squarely on the social welfare programs. How about some balance and discuss cutting our insane defense budget, or raise taxes, or cut corporate subsidies?

  • Radioactive||

    or cutting some throats...just sayin...

  • Jerryskids||

    Throat-cutting is relatively quick and painless. Slowly strangling on a short length of piano wire while dangling over the side of a bridge provides a better public spectacle and a punchier object lesson. Just sayin'.

  • Mithrandir||

    Because you can do all those things you mentioned, but if you don't reform the entitlement programs, it doesn't matter because you will never get to a balanced budget in the long-run otherwise.

  • sarcasmic||

    Entitlements, unlike the other things mentioned, are backed with good intentions. They could not possibly be the culprit, because good intentions. It must be those other things. You know, the ones backed with greed and bad intentions.

  • Moderation4ever||

    Again the use of the term "reform" because you and everyone else cannot bring yourself to say what you mean, which is "cut" social security, Medicare and Medicaid. Program that I paid into with the expectation that they would be there when I retired. We can not start discussing reforming these programs until we can first decide if what we want to do is reform or cut. What is it you want?

  • sarcasmic||

    Expectations suck, don't they? The money you paid into those programs is long gone. It's been spent on benefits. Your entitlements are based upon a promise to rob your children and grandchildren. It's a pyramid scheme, plain and simple. And like all such schemes, it's going to go to shit when there isn't enough new investment to pay the old investors. I don't know what the solution is, but I do know that entitlements will implode if nothing changes.

  • Moderation4ever||

    I don't know the solution either, but I am willing to discuss and explore solutions. What I object to is using the term "reform" when it is only applied to cutting benefits. As for expectations, I have a good retirement and can get by without SS and likely Medicare. I am concerned for those less fortunate than myself and can not say the same.

  • sarcasmic||

    What I object to is using the term "reform" when it is only applied to cutting benefits.

    Then you're not willing to discuss and explore solutions. It can't be fixed by raising taxes. The math doesn't work. Benefits must be cut.

  • Mithrandir||

    Reform does mean cuts. Face reality and deal with it.

  • Mithrandir||

    The reality is that if we do nothing, cuts are going to happen regardless when we can inevitably no longer afford to give everyone everything they were promised. You're basically hoping you get your benefits before the whole house of cards collapses. Sorry, but I'm not willing to entertain your selfish delusions as a matter of policy for entitlements.

  • Obama ate a dog||

    "Program that I paid into with the expectation that they would be there when I retired. "

    No one gives a fuck about your unrealistic expectations and they're a stupid reason to make policy.

    What now?

  • Obama ate a dog||

    "How about some balance and discuss cutting our insane defense budget, "


    "or raise taxes,"

    Fuck off slaver

    "or cut corporate subsidies?"

    Do that thing Maryland says I'm not supposed to tell you to do anymore.

  • Rossami||

    Because none of those have a hope of actually fixing the problem. The defense budget, as "insane" as you consider it, is trivial compared to the size of our aggregate social welfare programs. Corporate subsidies should definitely be slashed because they distort the market - their total dollar amount is negligible. Raising taxes just makes it easier for spending to increase. The only real answer to solving the deficit and the run-away spending is to address the elephants in the room - Social Security, Medicare and Medicaid.

  • TJJ2000||

    ^Don't forget Obamacare -- Which actually has a pretty good change going away in the future and will probably cut spending significantly.


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