When are deficits good?
When they fund tax cuts for donors and rich people.
When are deficits “dangerous”?
When they fund health care for poor people and children, training for workers, and infrastructure and other long-term investments in our economy.
That is the worldview of late of the Trump administration, based on the budget proposal it released Monday and recent comments from its chief budget honcho, Office of Management and Budget Director Mick Mulvaney (who also happens to be working part-time dismantling the Consumer Financial Protection Bureau).
On “Fox News Sunday,” Mulvaney touted the virtues of the newly passed Republican tax cuts, which punched a $1.5 trillion-size hole in the budget over the coming decade. This is a plutocratic law that primarily benefits the wealthiest Americans (and foreigners, for that matter), with more than 80 percent of tax cuts going to the top 1 percent by 2027, according to the Tax Policy Center.
It’s also incredibly ill-timed, given that it amounts to a major fiscal stimulus when the economy is doing well. Normally, you pass a stimulus when the economy is underperforming — as was the case back in 2009, when Mulvaney railed against President Barack Obama’s stimulus proposals.
Of course, Mulvaney had a different take.
“This is not a fiscal stimulus,” Mulvaney insisted on Fox. “It’s not a sugar high. It’s not the same thing as what President Obama did.”
“If we can keep the economy humming and generate more money for you and me and for everybody else,” he added, “then government takes in more money, and that’s how we hope to be able to keep the debt under control.”
Oddly enough, not a single independent forecaster agrees with Mulvaney’s glowing characterization. Even relatively generous assumptions have this bloated tax cut adding just a tenth of a percentage point to economic growth each year over the next decade, and nearly $2 trillion to our federal debt, according to the Penn Wharton Budget Model.
In a separate interview Sunday, however, Mulvaney suddenly became much more concerned about growth in our national debt. Asked to weigh in on the recent congressional budget deal, which added $300 billion to deficits over the next two years, Mulvaney remembered that he was supposed to be a budget hawk.
Rising budget deficits are “a very dangerous idea, but it’s the world we live in,” he said on CBS’s “Face the Nation.”
The budget proposal that his team put out the following day reflected these priorities: deficits for me, but not for thee.
The president’s budget — a statement of principles rather than anything binding, especially given the recent congressional deal — would slash funding for lots of programs that lower- and middle- income Americans rely on.
The budget would cut hundreds of billions from Medicaid, food stamps, educational programs, Temporary Assistance for Needy Families (a program whose funds go toward cash welfare, child care, services related to child abuse and neglect), disability programs and Section 8 housing. Even Head Start and nutritional assistance for impoverished infants and pregnant mothers are not spared.
It would also completely eliminate a number of programs, such as the Social Services Block Grant, which funds public services for the most vulnerable Americans, including poor children, the elderly and those with disabilities.
It cuts $31 billion from training and employment programs.
The budget also includes $178 billion in cuts to transportation, plus cuts to other government infrastructure programs involving water, broadband Internet, energy and rural economic development. In other words, Trump’s grandiose announcement of a $200 billion ramp-up in federal infrastructure spending is offset by roughly equivalent cuts to infrastructure elsewhere in the budget.
Most gallingly, the budget tucks away almost $600 billion in additional tax cuts.
Democrats are, rightly, lambasting this budget for its heartlessness, and all the ways it favors the wealthy and well connected at the expense of the Forgotten Man whom Trump claims to champion.
But there’s another way to critique this proposal, and which purposes and programs the Trump administration has decided are worthy of going into further debt to support.
It has to do with its mistaken impressions of what will pay off economically in the long run.
Now, most economists would probably tell you that if you want to boost the economy, you need to invest: in the young (and in poor kids especially), in good education, in our workforce’s skills and in our crumbling infrastructure.
This plan does the opposite. What does the Trump proposal invest in instead? Tax cuts for the wealthy. It’s enough to make you wonder just whose future we’re really concerned about.