The Trump Republicans Have Completely Abandoned Fiscal Responsibility
“The national debt is currently higher than at any time in history outside of World War II and the years immediately after, and it is rising unsustainably. Moreover, recent tax and spending legislation have made a bad situation even worse.…. Spending under our baseline projections will rise from 20.8 percent of GDP in 2017 to 24.3 percent by 2028 (25.3 percent in our alternative scenario), the second highest level in modern history. Revenue will remain between 16 and 18 percent of GDP until the recent tax cuts expire (and beyond that under our alternative scenario), which is unusually low for a healthy economy.” (CRFB, Updating the U.S. Budget Outlook, March 2, 2018)
Because of the substantial number of changes to American tax and expenditure legislation, the CBO has not yet released its updated longer-term budget projections. However, The Committee for A Responsible Federal Budget (CRFB) has set out some rough estimates of future budget trends based on the CBO methodology and data.
Frankly for a person who is not normally thought of as a budget hawk, one can’t help but conclude that the fully employed U.S economy will face a rapidly worsening budgetary problem in coming years. Moreover, it is abundantly clear that the American government’s fiscal situation has significantly deteriorated since Trump and the Republicans have taken over.
Note that the deficit and debt projections become much worse if one assumes that the all of the temporary spending increases and the tax cuts are made permanent.
The CRFB estimates indicate that, by using this very realistic alternative budgetary assumption, the U.S. government debt will exceed GDP within a decade and in fact that the U.S. could encounter a $2.4 trillion deficit and a 113% debt to GDP ratio by 2028.
Bear in mind that even starting with the advantage of having a strong and roughly fully employed economy, the U.S. government was still running a $753 billion deficit in 2018.
In closing, according to the CRFB projections the U.S. government’s deficit could exceed $2 trillion as of 2026. Of course, the deficit to GDP ratio also soars into territory it has never been in before.
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Disclosure: None.
It is a problem. None of the politicians wants to upset any of the special interest groups. There are actually some solutions that wouldnt badly hurt anyone, including:
1. Make hospital CEOs personally liable for fraud the way CEOs of publicly traded companies are. Go after doctors more aggressively for MEdicare/Medicaid fraud. About five years ago IBM estimated we could save $1 trillion over ten years by going after fraud.
2. Eliminate farm aid. Why should they get special help? Why should taxpayers pay for their insurance? We have plenty of food. Thats $10 billion per year btw.
3. Make wealthy people either pay social security taxes on more of their income or sign away their social security.
4. Make wealthy people pay higher copays for Medicare.
5. Get wealthy countries like South Korea and Taiwan and western European countries to pay us for defending them.
6. Have Medicare negotiate drug prices. Have Medicare lower payments to other vendors such as hospitals and home healthcare companies. Have the PEntagon negotiate lower payments to weapons makers.
7. Cut college to three years as in Europe.
8. Sell unused govt property. Eliminate duplicate govt programs.
I think Trump will work on some of these things if he gets a second term.
those are many interesting ideas for saving money. However, my priorities would be different.
The tax cuts were very unbalanced, favoring the wealthy. I think that this is wrong, even though the American public seems almost unaware of this.
When wealthy people pay a large percentage of the federal income tax it's hard to do a large tax cut and make it "balanced." However, the vast majority of all taxpayers did get tax cuts. Also, a large percentage of the tax cuts was devoted to lowering the corporate tax which should spur job creation. and help the working and middle classes that way.
Also, by many measures the working class and middle class are doing much better under this administration than the previous one.