Posted on 02/04/2018 12:03:25 PM PST by Kaslin
Allow me to confess that I’ve been right out there with the best of them (or is it the worst?) when it comes to high-fiving and back-slapping over the positive results of the tax cuts enacted before Christmas. Businesses are hiring, handing out bonuses and onshoring capital. Workers are seeing more money in their paychecks and will see significant benefits when they file their taxes next year. Yes, there is plenty to celebrate, but there’s also a second, far less pleasant reality to contemplate.
As the WaPo reports this weekend, the federal government is now on track to borrow a massive amount of money this year and add many more bricks to the national debt pile hanging over our heads. In fact, federal borrowing is expected to nearly double our 2017 totals.
It was another crazy news week, so it’s understandable if you missed a small but important announcement from the Treasury Department: The federal government is on track to borrow nearly $1 trillion this fiscal year — Trump’s first full year in charge of the budget.
That’s almost double what the government borrowed in fiscal year 2017.
Here are the exact figures: The U.S. Treasury expects to borrow $955 billion this fiscal year, according to a documents released Wednesday. It’s the highest amount of borrowing in six years, and a big jump from the $519 billion the federal government borrowed last year.
So the CBO estimate is looking at $955B in new debt. That’s still a far cry from the $1.78 trillion we racked up in 2009 (the year of the largely failed Obama stimulus package) and still below the rolling, trillion plus we tacked on each year until 2012. But don’t take much comfort in that. This is still really bad news. And the estimate pulls no punches as to the reason. Revenues will be down significantly because of the tax cuts and increased economic activity resulting from them isn’t projected to come anywhere near making up for it.
I seriously don’t want to be that guy, but I’m going to remind you that I was already raising the alarm about this back in early November when the tax cuts were being negotiated. At that time I attempted to warn our congressional majority that we needed to make sure that we didn’t turn the federal government into Kansas. After the massive tax cuts enacted by Sam Brownback went into effect, Kansas went broke and wound up having to cancel some of them. I quoted Ben Haller in a piece he wrote at Reason back in June of last year. Let’s look at that short summary of what went so badly wrong in Kansas again. (Emphasis added)
What went wrong? First, the legislature failed to eliminate politically popular exemptions and deductions, making the initial revenue drop more severe than the governor planned. The legislature and the governor could have reduced government spending to offset the decrease in revenue, but they also failed on that front. Government spending per capita remained relatively stable in the years following the recession to the present, despite the constant fiscal crises. In fact, state expenditure reports from the National Association of State Budget Officers show that total state expenditures in Kansas increased every year except 2013, where expenditures decreased a modest 3 percent from 2012.
Looking at the bold sections in that paragraph, is any of it sounding familiar, now that all the details of the federal tax bill have been examined? I realize I said this last time, but it bears repeating. This is the hard part of fiscal conservatism. You have to convince the public that sometimes they need to take their medicine without that massive spoonful of sugar to wash it down. If you don’t cut a lot of the popular deductions and reduce spending across the board accordingly, we blow another massive hole in the budget. And we can’t just pretend that the expected revenue growth from trickle-down theory is going to cover the entire bill and then just act surprised when it doesn’t. All we’ll wind up doing is compounding our debt and deficit problems rather than correcting them.
Right now the economy is zipping along at a brisk clip, but it’s starting to look overheated. Analysts are already worrying that we may be running into a significant inflation problem by the end of this year. Washington is jacking up the interest rates on government bonds already, which is great news for investors in the short term but will sour quickly if we seriously start looking at the possibility of rapidly spiking inflation and at least a partial recession in 2019.
This debt train doesn’t just keep rolling onward forever without going off the rails at some point. The GOP used to be the party of fiscal restraint, acting as a check on the profligate spending habits of the Democrats. But in 2018, nobody is minding the store in terms of debt awareness. We’re experiencing some high times right now, but without some fiscal restraint we’ll be paying the price for it and that bill may be coming due much sooner than some of you think.
Hot Air is so yesterday. Now part of the swamp.
The WaPo and CBO citations don’t exactly lend credence to the author’s assertions.
PDJT brings tax cuts in on time and under budget! ;)
Yes, there IS reason to be worried about our debt, but I’m LESS worried these days than I have been in the past 8 years.
CBO hasn’t gotten it right in my memory and that’s whether they call either way. They blew it big time on Obamacare by claiming the cost would be easy than half what it eventually turned out to be.
This is the WAPO and they will spread any manure they can to take away from his successes.
Same here.
Trump didn’t propose new spending to add to the deficit.
A high growth economy will actually reduce the deficit.
As long as we keep spending im check, we can be on our way to a balanced budget.
Funny, how no one worried about Obama’s massive deficit spending. And if money has to go somewhere, I’d rather have it go to the people than to the government.
We were going to have a trillion added Anyway.
If Trump was a dictator he would be a benevolent dictator and I’m sure the augean stables would be cleaned in record time, under budget and twice as good. 4 x the government with 25% less bureaucrats.
People have come off of food stamps and unemployment, while the Obama administration worked actively to increase the numbers of government dependents.
“Social” spending is one of the largest government expenses. Cutting those expenses should decrease the deficit.
The problem is not a lack of revenue to the government. The problem is too much spending.
The much bigger pie will be producing a bigger tax slice.
What is so hard to understand about the dynamic nature of a growing economy. See Reagan tax cut and the 1980’s revenue growth.
You obviously did not read the entire piece and HOT Air did not write the article, the blogger JAZZ SHAW did.
Taking a short term hit in additional debt, to reduce citizen’s taxes, in the interest of doubling the federal tax receipts, is the right direction to go.
Not taking this step would have left citizens paying higher taxes and the federal receipts not going up by much.
Lowered taxation
Increased federal tax receipts
We’ll have to give it a couple of years, but this will get better and we’ll be glad we did this.
If tax receipts double as they did under Reagan, we’ll have money left over to start paying down the debt and pay for some other things like infrastructure and improving our military.
That’ the goal IMO.
Along with that we hope to cut Welfare and reduce our nation’s spending on other things.
The plan is progressing...
At least there will be more taxpayers so that ought to help. But yes, the debt is a problem...our Congresa, Bush and Obama have looted the treasury.
CBO IIRC have never considered dynamic revenue models. They count tax cuts as a net loss.
Exactly... now to Institute voter ID and welfare reform as well as disability fraud. That ought to save trillions.
When it came to their "predictions" they basically lied through their teeth throughout the entire eight years of the Obama administration.
“Congress is not empowered to tax for those purposes which are within the exclusive province of the States.” Justice John Marshall, Gibbons v. Ogden, 1824.
"The smart crooks long ago figured out that getting themselves elected to federal office to make unconstitutional tax laws to fill their pockets is a much easier way to make a living than robbing banks." —me
"Federal career lawmakers probably laugh all the way to the bank to deposit bribes for putting loopholes for the rich and corporations in tax appropriations laws, Congress actually not having the express constitutional authority to make most appropriations laws where domestic policy is concerned. Such laws are based on stolen state powers and uniquely associated stolen state revenues." —me
The correct formula is cut taxes, cut regulations, cut spending, cut government, set our people free and let them get back to work. Trump is doing it correctly! Less government and more freedom allows a vibrant economy and, God willing, makes the American dream possible. Makes the pursuit of happiness achievable.
He still added to the debt pretty badly.
Ditto that.
Government spending for social manipulation is the problem.
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