Trump's budget cuts $2.7 trillion over next decade. It's not nearly enough
Under Barack Obama, the national debt increased more than $8.6 trillion — a 74% increase from when he took office.
Now that a supposed fiscal conservative is in the White House, the situation isn't much better. The national debt is scheduled to increase from $22 trillion to $31 trillion — a 40% rise. And that's only if the rosy economic scenarios the White House has come up with actually come to pass.
What happened to the Republican deficit hawks?
During the Obama era, Paul Ryan spent years presenting lean, entitlement-reforming budgets in the House, knowing they would go nowhere with Democrats in control of the Senate and the White House. Still, it was a political move to lay out priorities that Republicans would presumably enact should they ever get full control of Washington. Among those most prominent Tea Party conservatives pounding the table for significant spending cuts was Mick Mulvaney, a pugnacious Republican lawyer and state lawmaker from South Carolina.
The high point of GOP fiscal hawkishness came in 2011, when House Republicans pressed Obama into signing the Budget Control Act, which raised the debt limit of the US government in exchange for a significant reduction of the budget deficit. Those cuts eventually came in the form of across-the-board sequestration of most mandatory and discretionary spending. That satisfied some budget hawks, but the indiscriminate cuts ignored the real drivers of the long-term deficit: entitlement spending.
Social Security and Medicare are long past the point of being in crisis. Both programs will collapse without immediate and drastic action. The last three presidents could have done something about entitlements but didn't. There would have been some painful choices, to be sure, but the programs were at least salvageable.
The Medicare trust fund will be depleted in less than eight years. This means that funding Medicare after that will have to come from the federal budget, crowding out all other priorities, especially defense. Social Security has a little longer — 16 years before it goes belly-up.
If we had confronted these problems a decade ago, the fix would have been relatively mild — gradual cuts along with gradual tax increases could have extended the life of both programs.
That option isn't open to us anymore. When we are forced to deal with the entitlement crisis, only drastic action will work. That's a recipe for economic disaster and a budget catastrophe.
The stage was set in 2017, when Trump took office, to really do something about the debt. Alas, the budget hawks were nowhere to be seen:
Rather than fight, Mulvaney got in line with the new deficit-spending Republican party, perhaps realizing that fighting was futile. "I've been here six and a half, seven years now. And I've come to the realization that we are never going to balance the budget based just on spending reductions," Mulvaney told Yahoo Finance in October 2017. "We are not going to cut our way to balance. The attitude just doesn't exist for that on Capitol Hill."
Mulvaney has joined the Republican chorus that economic growth will help raise the revenue and curb budget deficits. "America's booming economy will create increased government revenues — an important step toward long-term fiscal sustainability," he said in a statement last October, responding to the news that the deficit rose 17% in 2018 from the previous year.
There's no doubt that growth increases revenue. But by how much? The economy under Trump has been growing like gangbusters, and the deficit increased by 17% last year. Clearly, there are limits to the supply-side formula, and Trump has vastly exceeded them.
We will continue to kick the can down the road on entitlements — until we run out of road. Then there will be a reckoning. I, for one, hope I'm not around to see it.