Taken together, the Trump agenda stands to drain hundreds of billions of dollars a year from the federal balance sheet. His proposed tax cut alone, according to independent analysts, could cost the Treasury as much as $7.2 trillion over a decade.
Some Republicans in Congress, including House Speaker Paul D. Ryan, have indicated that some sacred cows might be up for slaughter. Those include federal entitlement programs such as Medicare, long considered a “third rail” of American politics, that Trump himself has shied away from touching.
“You fix the health care problem, you are dramatically fixing the fiscal health of this country,” Ryan (R-Wis.) said Thursday. “Those are among the things that we have to do if we’re going to truly nurse ourselves back to fiscal health.”
In interviews with more than a dozen congressional Republicans this week — including staunch supporters of Trump and his agenda — most dismissed concerns about potential deficits in a big-spending Trump administration.
Rep. Tom Price (R-Ga.), who favored austere spending blueprints as House Budget Committee chairman and is now a candidate for a Cabinet post in the Trump administration, said it would be a matter of “priorities.”
“If you prioritize on the things that he and we believe are important … it can actually save money,” Price said.
Most Republicans on Capitol Hill, including former presidential candidate Sen. Marco Rubio (R-Fla.), simply dodged questions about Trump’s plans: “We have a debt problem in America that needs to be addressed, but we’re going to wait and see what the proposals are.”
Several Republican lawmakers who call themselves deficit hawks simply expressed faith that implementing GOP policies would unleash levels of economic growth the nation hasn’t seen in more than 15 years, boosting government revenue to compensate for any new spending.
“If we were at 4 percent GDP growth consistently, we could afford all that,” said Rep. Andy Harris (R-Md.), echoing the views of other House conservatives.
Economists argue that those growth targets for the U.S. economy are ambitious at best. Experts on both the left and the right are projecting growth rates closer to 2 percent, and even under the most generous circumstances, most believe Trump’s proposals would cost far more than the economy could recoup through economic growth alone.
“The suite of policy proposals that Trump put forth would explode the debt,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, which estimates Trump’s plans would add $5.3 trillion to the existing $19.5 trillion national debt.
“A lot of times in campaigns, candidates talk about what they would do and later turn to talking about how they would pay for it,” she added. “But because he walled off the major entitlement programs, there is nowhere to go to get the money to pay for things.”
Should Republicans support deficit spending under a Trump administration, it would mark a 180-degree reversal in rhetoric. The current Republican majorities in the House and Senate were built on the midterm waves of 2010 and 2014, where GOP candidates preaching fiscal austerity ousted Democrats who favored deficit spending to jump-start a sluggish economy.
Ryan himself warned in 2010 that federal spending would “mortgage our children’s future” in a series of editorials he and current House Republican Conference Chairman Jeb Hensarling (R-Tex.) co-wrote for the Washington Examiner.
“By acting now, a debt crisis can be averted by reforming government on our own terms,” Ryan said.
Trump, on the other hand, made nary a mention of budget deficits on the campaign trail. He briefly suggested renegotiating the country’s debt obligations, a move that would likely decimate America’s global creditworthiness.
“Like [Andrew] Jackson’s populism, we’re going to build an entirely new political movement,” Stephen K. Bannon told the Hollywood Reporter. “The conservatives are going to go crazy. I’m the guy pushing a trillion-dollar infrastructure plan.”
Left-leaning fiscal experts, meanwhile, see new evidence in the Trump agenda that Republican attacks on President Obama’s fiscal policy were driven less by conviction and more by a political desire to undermine a Democratic administration.
“There’s no plausible pathway that gets you from a huge trickle-down tax cut to a doubling of the growth rate,” said Jared Bernstein, a senior fellow at the liberal Center on Budget and Policy Priorities and former chief economic adviser to Vice President Biden. “What will happen is what always happens in these moments: You exacerbate after-tax inequality, and you generate large deficits.”
Trump’s spending plans come amid warnings from the Federal Reserve that the economy is operating at close to full employment and productivity growth is at a near-term low. Federal Reserve Board Chair Janet Yellen testified Thursday at a hearing of the Congressional Joint Economic Committee that racking up more debt under those conditions could put the economy at serious risk in the future.
“There’s not a lot of fiscal space, should a shock to the economy occur, an adverse shock, that did require fiscal stimulus,” Yellen said.
Some Republican deficit hawks have said they remain worried about the debt and deficit but refused to address Trump’s proposals directly. “I think we’ll stand up to that problem,” said Sen. Pat Roberts (R-Kan.). “It is going to be difficult, but I think we need to operate within our budget rules.”
What remains to be seen is whether Republican leaders undertake a serious effort to pursue cuts to Medicare or other major federal programs in the early months of the Trump administration. Ryan has pointed to Medicare, Medicaid and the Children’s Health Insurance Program — and, to a lesser extent, Social Security — as the main drivers of the nation’s long-term fiscal pressures.
He said in a Nov. 10 Fox News Channel interview that Medicare has “serious problems” that would need to be addressed when Congress moves to repeal and replace the Affordable Care Act. He did not say, however, how far-reaching those changes might be.
A policy agenda advanced by Ryan and House Republicans favors reworking Medicare from a public insurance program into a “premium support” model where beneficiaries would be given vouchers to purchase private insurance plans. Medicaid, which now covers more than 70 million low-income Americans, would be converted into a “block grant” where states would be handed a fixed sum and given wide latitude to administer benefits.
Ryan on Thursday declined to say whether those initiatives would be considered as part of an Obamacare replacement: “We’ll get into all this stuff down the road.”
One key Republican, Senate Finance Committee Chairman Orrin G. Hatch (Utah) — whose committee oversees taxes and entitlement programs — seemed concerned about unfettered spending and how the numbers would all add up. Asked if entitlement reform was necessary to making the Trump agenda fiscally sustainable, Hatch said, “I think that’s probably the understatement.”
Hatch said Wednesday that “we’re going to have to” consider Medicare reforms in the coming year and did not rule out a privatization push. “For some people, you’d have to have premium support,” he said.
Even if Republicans don’t immediately pursue entitlement cuts, Bernstein said, the deficits that Trump’s policies stand to create would make such cuts all but inevitable.
“When their phony growth agenda doesn’t work,” he said, “they’re going to throw their hands up and say, ‘Sorry, folks, we’re going to have to cut entitlements.'”
Democratic lawmakers, meanwhile, appear to be horrified policy-wise and salivating politically at the prospect that Republicans might pursue Medicare cuts.
“It’s not going to happen,” Sen. Charles E. Schumer (D-N.Y.), the incoming Senate minority leader, said Friday. “I’d like to see how many Republicans in the Senate will vote for privatization of Medicare, or in the House.”
He challenged them, in fact, to do so: “Make our day.”