The Congressional Budget Office says the economy is relatively stable for now, but the balance between how much the government spends and takes in every year (the deficit) and how much money the government owes (the debt) is about to spike, reports The Post's Kelsey Snell.
That's bad news for Trump. He's proposed several expensive items that he'd likely have trouble getting a majority of Republicans in Congress to agree to pay for even if the debt and deficit were zero.
GOP budget leaders are very much aware that if the debt and deficit rise in a Republican-controlled Washington, they'll have no one to blame but themselves.
And it's a big reason why fiscally minded congressional Republicans' willingness to approve an estimated $4 billion on an Obamacare replacement, or as much as $25 billion on a wall/fence along the U.S.-Mexico border, or a trillion on Trump's infrastructure plan, is likely to sink as the deficit spikes, say budget experts.
Making matters worse for fiscal hawks, Trump wants to leave Medicare and Social Security untouched — something Republican leaders such as House Speaker Paul D. Ryan (R-Wis.) say is financially untenable.
"How long will the deficit hawks sleep with their heads underneath their wings?" says Steve Bell, a GOP budget expert now at the Bipartisan Policy Center. "This is the beginning of starting to alert them."
Put another way, this CBO report could signal the beginning of clashes between Trump and his party. Interestingly, Trump's pick to lead the Office of Management and Budget — Rep. Mick Mulvaney (R-S.C.) — is one of those deficit hawks. The tea partyer and leader of the conservative House Freedom Caucus will now be in charge of writing the president's proposed budgets and advising Trump on fiscal policy.
Which means Mulvaney could be in a position where he has to choose between the president's big-money projects and a Republican orthodoxy that's anathema to big-money projects. Because, despite evidence that some Republicans may be willing to show a bit more ... flexibility to requests from a GOP president, and put deficit worries on the shelf for a while, that attitude does not equal a blank check.
It doesn't help Republicans that the CBO report says that a big reason for rising deficits is a tax cut deal they passed last summer and which then-President Barack Obama signed into law. It will contribute to the deficit rising by as much as 24 percent since there's that much less income to pull from.
A rising deficit could be just one factor that will make Republicans skittish about spending money on a border wall or rebuilding bridges or replacing Obamacare, Bell predicts.
As the economy improves, the Federal Reserve is widely expected to raise interest rates. Rising interest rates will in turn make money more expensive, for everyone from the federal government to a prospective homeowner.
Rising interest rates could have the double-whammy effect of eating up the federal budget — "In reasonably short order, we will be spending about 15 percent of our national budget on interest payments alone," Bell predicts — and making Americans more restless about the economy.
The Pew Research Center released a report Tuesday that showed Americans' fixation on the debt and deficit has actually dropped during the Obama years. So has the deficit: Obama inherited a $1.4 trillion deficit in 2009, which dropped to $439 billion by the end of 2016.
Today, slightly more than half of Americans (52 percent) say the budget deficit is a top priority, less than those who say terrorism (76 percent), the economy (73) and jobs (68) are a top priority.
Bell predicts that Americans' focus on the deficit will spike as the actual deficit spikes. Which in turn could put even more pressure on GOP lawmakers to stick to their deficit hawk values, no matter what their president wants.
"They will begin to notice it when they buy cars at a higher rate, when they buy houses at a higher rate," he said. "It's going to start hurting the average guy's pocketbook."
And it could start hurting Trump's opportunity to work with Republicans to push through his agenda. Of course, on things like infrastructure spending, he can always turn to Democrats.