The proper response to Republican politicians that pontificate about the evils of federal budget deficits is laughter, the kind reserved for profound hypocrisy. The kind Robin Williams said comes from outrage over cruel absurdities.
The reality of federal deficits in the last 40 years exposes how fraudulent the GOP go-to deficit speech is in the face of their tax cut and military spending policies that have periodically exploded the nation’s debt.
U.S. Treasury data on historic national debt tells the story.
Reagan’s years were marked by huge tax cuts and big increases in military spending. Supply-siders assured us tax cuts would pay for themselves. At the start of the Reagan budgets, 1981, the national debt, which took a couple hundred years to accumulate, was $1 trillion. After eight years of Reagan’s budgets it nearly tripled to $2.9 trillion.
The George W. Bush budgets were also formed by big tax cuts, tilted toward the wealthy, big military spending increases, and assurances tax cuts would pay for themselves. Bush inherited a national debt of $5.8 trillion. After his last budget the debt was $11.9 trillion, a doubling of the debt.
The Obama budgets aren’t much better. From 2009 to 2017 the debt went from $11.9 trillion to $20.25 trillion. The Great Recession had a lot to do with it, but according to the Congressional Budget Office, the biggest reason was that the GOP insisted the temporary Bush tax cuts become permanent.
Now comes Trump. The Republican Congress abandoned the fiscal restraints they’d previously imposed on Congress so they could pass big tax cuts for the wealthy and additional increases in defense spending, again arguing the tax cuts would pay for themselves.
But the Treasury Department now reports the deficit for the 2018 fiscal year was $779 billion, a 17% increase, and the national debt is now $21.46 trillion. The CBO projects the 2019 deficit will be near $1 trillion. It’s estimates for national debt in 2021 (the end of Trump’s first term budgets) are $23.7 trillion and for 2025 (at the end of a Trump second term) $30.42 trillion.
That’s based on current law. But Republicans are poised to make it even worse.
Exhibit 1: Trump and the GOP are planning to make the temporary tax cuts in the 2017 tax bill permanent. They’ve also implemented a delay in some health care taxes they want to eventually eliminate through repeal of the Affordable Care Act. According to the Government Accounting Office, those changes could add another $27 billion to the deficits in 2021 growing to $84 billion in 2025.
Exhibit 2: Trump wants to by-pass Congress and administratively change the definition of capital gains by indexing them to inflation, enabling the wealthy to get another tax break under more claims the new break will pay for itself.
GAO estimates the current preferential capital gains tax rate costs the Treasury $105 billion a year. Seventy-five percent of taxes paid under the lower capital gains rates are paid by taxpayers with over $1 million income.
A budget analysis by the Wharton School of Business (from which Trump graduated) found the inflation indexing would cost the Treasury another $102 billion over the next decade. The conservative-leaning Tax Foundation concluded it would cost even more – $148 billion.
Exhibit 3: Trump is threatening to shut down the government if Congress doesn’t provide $25 billion to fund the border wall he promised Mexico was going to pay for.
Exhibit 4: After the budget deficit figures were released, Senate Majority Leader Mitch
McConnell dismissed the GOP tax cuts as a cause, then began talking about cutting Medicare and Social Security.
To be perfectly clear, I’m not saying the deficits and debt are good. They’re dangerous and the longer we keep ignoring them the harder it will be to do anything about it. Especially when Trump and his GOP keep adopting policies that fill the ballooning deficits with hot air.