“WE MUST think big and dream even bigger,” President Trump announced in his inaugural address. In the days since, the Washington air has been fairly thick with big plans and dreams. Huge tax cuts. Repeal of Obamacare, to be replaced by something even better. Billions more for national defense. A massive national infrastructure plan. What there hasn’t been, however, is a lot of credible talk about how to pay for any of this.
To the contrary: Mr. Trump and his fellow Republicans have started to waffle on their party’s traditional (if notoriously frequently violated) commitment to fiscal responsibility. Sounding like a 1960s-era Keynesian, the new president himself told Sean Hannity of Fox News that balanced budgets were no longer a top priority because “sometimes you have to fuel the well in order to really get the economy going.” A strong military, he added, is “much more important than anything,” a growing national debt included, apparently.
Meanwhile, erstwhile budget hawk Sen. Rand Paul (R-Ky.) chimed in with his support for Trump’s $10.5 trillion tax cut even if it is not offset by spending cuts, as did former House Freedom Caucus chairman Jim Jordan (R-Ohio), who told Politico, “I’ve never subscribed to the Washington ‘revenue-neutral thinking.’ It’s like: Put together a tax plan that produces economic growth; don’t let it be constrained by anything else.” The hypocrisy is stunning, although Democrats are not in a good position to call the GOP on it, given their own proposal, trumpeted by Senate Minority Leader Charles E. Schumer (N.Y.) for a 10-year infrastructure plan whose $100 billion annual cost would be supposedly be paid for by closing tax “loopholes” to be named later.
Sorry, folks, neither the past few years’ worth of moderating deficits nor the remaining slack in the economy provides enough justification for this casual — almost reckless — return to deficit spending. The Congressional Budget Office made that clear in its annual update on federal finances, which showed that the government’s publicly held debt will rise from a postwar record of 77 percent of gross domestic product in 2016 to 89 percent in 2027 unless there are major changes in current law. As always, the key sources of spiraling debt are the major entitlement programs, Social Security and Medicare, which, along with interest payments, account for 70 percent of the projected debt growth over the next decade.
Fiscal irresponsibility, of course, is the bane of populist governments, left and right. Around the world they have often borrowed and spent their way to short-term popularity, only to come to grief when the easy money runs out. Some Republicans may still understand that. House Speaker Paul D. Ryan (R-Wis.) is holding out for the principle that any tax cuts must be paid for. Mr. Trump’s designee for budget director, Rep. Mick Mulvaney (R-S.C.), said at his Senate confirmation hearing that he still backs entitlement reforms and that he would be “completely and brutally honest with” the president about fiscal reality. That reality, simply put, is that the country cannot borrow ever-increasing amounts without consequence, especially not when one of the main purposes is to fund tax cuts for upper-income individuals and corporations.
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