Skip to comments.Trillion-Dollar Deficit Deja Vu
Posted on 01/04/2018 10:55:19 AM PST by Kaslin
After failing to pass any significant legislation during most of President Donald Trump's first year in office, the Republican-controlled Congress was finally able to pass a major tax reform bill in the waning minutes of 2017. But beyond not getting in the way of the administration's efforts to crack down on abusive federal regulations, the party that never missed an opportunity to bemoan the previous Democratic administration's profligacy continued to show little interest in addressing the country's spending-driven fiscal problems.
Will 2018 be any different?
The country is now $20.6 trillion in debt, and a return to the annual trillion-dollar budget deficits that occurred under the Obama administration is on the horizon. Regardless of how one feels about the Tax Cuts and Jobs Act, a lack of revenue is not what's driving the mounting federal debt. The main culprit is simple: The federal government has gotten too big, and lawmakers on both sides of the aisle have a seemingly insatiable desire to borrow and spend.
Indeed, Republicans and Democrats have enabled an unsustainable explosion in so-called "entitlement" spending (i.e., Social Security, Medicare and Medicaid) while routinely teaming up to bust budget caps that were intended to provide a modicum of control over federal spending.
Spending on entitlement programs now consumes 60 percent of the federal budget. That share will grow as baby boomers continue their march toward retirement. Social Security, which is the federal government's largest program, has already been running a permanent cash flow deficit since 2010. Unless Congress intervenes, benefits will have to be cut by 25 percent in 2035 (or sooner, depending on the economy and other factors). Medicare is in even worse shape, and Medicaid isn't far behind.
Putting our country on sound financial footing requires reforming these programs in a way that reduces costs. There is no avoiding it, but the longer policymakers wait to act the more difficult it will be to tackle the problem. Yet at the end of December, Senate Majority Leader Mitch McConnell announced that he is unlikely to even discuss Social Security and Medicare this year. Not helping matters, President Trump appears to remain committed to his politically convenient campaign promise to not touch Social Security or Medicare while in office. Like most Republicans, he also supports further increasing military spending under the childlike notion that the bigger the price tag the better.
The Trump administration decided to start off 2018 with a push for a package on infrastructure that will assuredly require more spending and debt. That additional debt will be of little concern to most members of Congress, given the opportunities that infrastructure legislation offers to shovel federal funds to various special interests back in their district or state. And given that this is a midterm congressional election year, it's not much of a surprise that Republican policymakers are more than interested in starting off the year by further opening the federal spending spigot.
Like the average Democrat, the average Republican views federal spending as an opportunity to buy votes for re-election. With talk that the Democrats could win back control of one or both houses of Congress, the temptation for Republicans to get playful with Uncle Sam's credit card will be even stronger. Just look at the GOP's open desire to (once again) blow past spending constraints to lard up the Pentagon's defense contractor-friendly budget. Democrats will gladly go along, as long as non-defense spending gets to bust the spending caps, as well. That's a trade that too many Republicans will be happy to make.
As a result, I sadly predict that 2018 will bring more federal spending -- much to the pleasure of the special interest creatures lurking in the Beltway swamp that campaign Trump said he would drain. What Congress does with an infrastructure package in the early going will be telling. Preliminary policy announcements made by the Trump administration on infrastructure spoke of a need for market-based reforms. That offers a bit of hope, but I wouldn't count on it too much, given the growing desire in Congress to spend, spend, spend.
Blaa blaa blaa blaa blaa
One salient problem is the lack of a real budget for many years. Instead, the “continuing resolutions” turn the government into a giant unaccountable spending machine.
Which is exactly what the deep state wants.
Spending cuts require 60 votes in the Senate. Democrats will never agree to cut one dime, and Repubs can’t do anything about it.
Even though the Trump administration increased the debt by a trillion dollars in the first year. That is 200 billion less than Obama’s annual average debt increase. You take into account the rise in the GDP from 2.0 to 3.0 and you have quite a savings in debt as a ratio of GDP.
Well, lets see if post #5s message motivates more good Americans, who want more for their children, to vote R in their states. And also from us being locally involved in our R chapters, getting conservative control and good, strong conservatives on our tickets.
Can I quote you?
Oh the heck with it.
“Blaa blaa blaa blaa blaa...”
I could be wrong, but honestly I wouldn’t be entirely surprised if federal tax receipts actually went up this year.
There is massive economic activity out there.
Spending is the big thing. The Republican party needs to keep spending down. If it can do that...
Caww, the market went up 375 points on November 7th, 2016.
I see that as a sign Trump’s victory was figured in.
If it wasn’t a sign of that, the market would have tanked after the election. It didn’t. It went ballistic.
In 2016, under Obama, the market went up for 10 months, by only 3.4%. In less than one fifth of the time after Trump was elected, the went up 10% by the end of the year.
We could easily see a 30k DJIA this year.
The big thing was getting tax reform done.
Next, the wall. (make zero out a couple of programs like PBS)
Next, obamacare - probably after the mid-term elections
It’s gonna take time.
pbs, npr, pp,...
it’s a start
get to work on cleaning up welfare
pretty soon you’re talking big money
Trump’s cabinet has been steadily reducing the size of government. And as the economy takes off and the nation goes back to work the cost of food stamps and other allied costs will continue falling. If Congress can discipline itself and apply the savings to the deficit everyone should be pleased.
Yes indeed Doughty.....the market could see what was coming...fortunately they base their decisions ahead and not on ‘Polls’...
Exactly right....the Pres. is pulling in the purse to foreign ‘welfare’ countries as well....and you bad mouth the generosity of this country and the tap gets shut off!
Realistically, what do you think the chances are of them disciplining themselves - I mean, apart from whatever S&M games some of them might be up to?
If anyone can get both parties to cut spending. Seems neither side has been interested in doing so.
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