Economics

The annual Budget Games begin: Trump vs. Congress to control spending

Summary: Now that the Anything But Issues election is over, the media realize that there are issues other than racism and sexism — and debates other than those over the ephemera that dominated the election. Alexander Bolton of The Hill kicks off serious coverage of the Trump administration with “Deficits could stand in the way of Trump’s agenda“. It’s a powerful sequel to yesterday’s post, See the warnings about Trump’s infrastructure plan. It’s betraying populism.

Remember all those GOP tirades about Obama’s deficits?

The GOP majority seems unlikely to allow the fantastic deficits necessary to fund Trump’s promised hat trick of programs: more money for America’s already massive military, rebuilding America’s infrastructure, and tax cuts for the rich. Unfortunately for the 1%, the Federal government doesn’t spend enough on the poor to feasibly balance the budget on their backs. Congress seems likely to fully fund only increases for the military (fertilizing the MIC money tree) and tax cuts for their 1% paymasters.

Net impact on America: zero, leaving only debts for the future — much like the Reagan and Bush Jr. deficits. The tax cuts of those two Presidents came close to wrecking the government’s solvency. Third time’s the charm!

When reading this, remember that a properly led Congress is the most powerful branch of the Federal government. A President inexperienced in managing Congress further boosts their power.

Excerpt from “Deficits could stand in the way of Trump’s agenda
by Alexander Bolton at The Hill.

“Trump called during the campaign for a $1 trillion infrastructure package, $5 trillion in tax cuts, increases in military spending and the repeal ObamaCare, which could cost more than $350 billion over 10 years. At the same time, the president-elect has promised “not to touch” Social Security or make cuts to Medicare.

“…’We did not hear anything about entitlement reform from either of the candidates, and that’s a serious issue,’ said Michael Sargent, a research associate at The Heritage Foundation. ‘You cannot address the growth in spending without addressing entitlement issues.’

”…Congressional Republicans assailed President Obama early in his tenure over soaring federal deficits, which exceeded $1 trillion dollars during his first four years in office. Debt reduction was the main focus of GOP leaders after they took back control of the House in 2010.

Trickle down economics

“…Trump advisers have suggested the new administration will be able to trigger massive private sector investments in infrastructure without a huge increase in spending. They say federal expenditures in the form of tax credits could be enough to get projects underway.

“…’In regard to infrastructure and the things that have been talked about, nobody really knows the details. As we talk about them, our conference will be very concerned about how they affect both the debt and the deficit,’ said Sen. John Boozman (R-Ark.), a member of the Environment and Public Works Committee, which has jurisdiction over infrastructure.

“Sargent, of the Heritage Foundation, said he’s seen as many as four different iterations of Trump’s infrastructure plan …’I’ve seen everything ranging from direct stimulus to a $1 trillion in tax credits, both of which would obviously raise the deficit. The tax credits, he claims, would pay for themselves. I do not see that at all. The assumptions that are built into it I think are wildly optimistic,’ he said.

“Lawmakers spent months negotiating ways to pay for a six-year, $300 million highway bill that passed last year. It was the first multi-year highway bill to pass in years, and Senate Majority Leader Mitch McConnell (R-Ky.) lauded it as a major, hard-won accomplishment. Conservatives, however, complained that many of the offsets used to pay for the highway bill were “gimmicks.”

“Many Republicans in Washington are also skeptical that additional infrastructure spending will provide a boost to the economy. They would prefer to focus on tax reform that closes loopholes and lowers rates.

“…Trump could alleviate some of the concerns brewing in the Republican conferences by pushing new proposals to curb spending. Already he has modified his stance on Medicare, adopting language favored by Speaker Paul Ryan (R-Wis.) that Democrats are interpreting as a sign Trump will embrace Ryan’s vision for a dramatic overhaul of the entitlement program. The transition website states the incoming administration will act to ‘modernize Medicare so that it will be ready for the challenges of the coming retirement of the Baby Boom generation — and beyond.’

“…Several Republicans said Trump’s plan to replace ObamaCare with healthcare reforms could open the door to overhauling Medicaid, which was expanded in 31 states under the healthcare law.

“’One of the things Donald Trump emphasized in his campaign was the risks of a $20 trillion debt and at the same time he put forth proposals that would increase the debt by another $5 trillion,’ said Maya MacGuineas, president of Committee for a Responsible Federal Budget. …”

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For More Information

For more information about Trump’s budget based on what we learned during the campaign, see “Promises and Price Tag” by the Committee for a Responsible Federal Budget, 22 September 2016.

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4 replies »

  1. This assumes that the Republican Party actually cares about deficits and that it’s not just rhetoric to use against any Democratic administration. Given the behavior of Bush, Jr. and Reagan, I’m not sure most of them do. The idiot ideologues are in charge now. Some fundamentalist Christian, some followers of Ayn Rand. But both believe that their cause is righteous.

    I think the ultimate goal of a lot of the people around Trump is to further expand the looting of the public money for private profit. Medicare vouchers will make health insurers happy, all education will wind up with vouchers that can be used at Christian schools, Wall Street will get privatized Social Security accounts. Public land will be strip mined or sold to developers. And the rich will get tax breaks.

    And none of them care if it breaks the US economy. And we’re not even talking about their social agenda.

    Like

    • Camilla,

      “This assumes that the Republican Party actually cares about deficits”

      That’s a powerful point! As you note, in the past the GOP talked big about deficits when the Democrats were in power — then broke the budget when they ran the show.

      My guess is that Congress is now stocked with hard-core right-wing people who will not fund infrastructure with borrowing. Trump’s idiotic idea of using tax credits — far more expensive to the public — might be an acceptable dodge, especially with the campaign juice it will generate.

      “I think the ultimate goal of a lot of the people around Trump is to further expand the looting of the public money for private profit.”

      I agree.

      Like

    • Some Republicans in Congress definitely care about deficits. (The Tea Party backbenchers / freedom caucus, as opposed to the establishment GOP — i.e. those the Bannon wing would call “cuckservatives”.)

      Like

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