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