ECLECTIC RANT: Public Debt And Deficits Be Damned

Ralph E. Stone
Friday November 08, 2019 - 12:23:00 PM

The public debt has surpassed $23 trillion for the first time in history, rising more than 100% in less than a decade and more than a trillion dollars this year alone.

The Fiscal Year 2019 (October 1, 2018-September 30, 2019) budget created a $1.09 trillion deficit. A budget deficit can cause concern when the economy is doing well. The government should be reducing the deficit in an effort to lower the debt. Deficit spending in a healthy economy will make it overheat. An economy that's churning too fast creates a boom and bust cycle. It always leads to a recession.

As The New York Times put it, “If we are not going to saddle future generations with ever-increasing government debt, we need to find a great deal of money. That means either spending less or taxing more.” 

Traditionally, deficits have been anathema to Republicans. Remember when then House Speaker Paul Ryan warned of the dangers of deficits, “The facts are very, very clear: The United States is heading toward a debt crisis. We face a crushing burden of debt which will take down our economy — which will lower our living standards.”  

And remember when congressional Republicans denounced President Barack Obama for the size of the national debt. During his presidential campaign, Trump said he would pay off the national debt in eight years. Instead he has lived up to his “King of Debt” claim with four corporate bankruptcies under his belt. 

Experts estimate that the Republican tax overhaul signed into law in 2017 will result in about $1.45 trillion in net deficits over a decade. The Republican tax “overall” made no attempt to eliminate the deficit, much less the debt. It provided for tax cuts, which means $1.5 trillion less revenue for the next decade. The Tax Policy Center concluded that federal government “revenue would fall by between $2.4 trillion and $2.5 trillion over the first 10 years and by about $3.4 trillion over the second decade.” And further concluded, "Those with the very highest incomes would receive the biggest tax cuts." 

The U.S. has the weakest safety net among the Western industrialized nations, devoting far fewer resources as a percentage of gross domestic product to welfare programs than do other wealthy countries. Cutting social safety nets will only widen the gap. Yet to close the deficit caused by the tax overhaul, the Republicans are continually talking about cuts to safety nets to those forgotten by Trump and his enablers in Congress. If the Republicans had their way such cuts would include Medicare, Medicaid, other health programs, welfare and other anti-poverty programs. 

The fiscal year technically ended in October, but Congress couldn’t come to an agreement on how much to fund the government, so they passed a short-term spending bill that keeps last year’s spending levels and expires Nov. 21. If they can’t agree on a year-long budget by then, they’ll fund another short-term spending bill. Or the government will shut down. We should be worried that Trump will use a shutdown as a distraction from impeachment.