The GOP Is Now The Party Of Deficits And Debt, But Then It Always Has Been
Republicans spent the eight years of Obama Administration railing against fiscal irresponsibility. Now that they have power, they're the ones being fiscally irresponsible.
When it passed the budget deal that ended a roughly five-hour government shutdown last week, I observed that the Republican Party in both the House and the Senate had quite obviously abandoned whatever concerns it had regarding the Federal Budget Deficit and National Debt. Both of these themes had, of course, played a huge role in the party’s opposition to President Obama during his eight years in office and were also a significant part of its appeal to voters in the 2010 and 2014 midterms as well as the 2012 Presidential election. Rather than reducing the deficit or adhering to the spending guidelines that had been set, thanks to a bipartisan agreement, during the Obama Administration, Republicans instead chose to massively increase spending across the board and to effectively end the mild restraints on spending put in place by the Budget Control Act of 2011. As The New York Times notes, this effectively means that Republicans have learned to love the deficits and debt they once claimed to :
WASHINGTON — Big government is officially back in style.
Republicans propelled themselves to power in Washington by promising an end to fiscal recklessness. They are now embracing the kind of free spending and budget deficits they once claimed to loathe.
On Friday, Congress passed a bipartisan spending deal that blows through the caps imposed by the 2011 Budget Control Act, unlocking $300 billion in additional spending for the military and domestic programs over the next two years. That comes on top of last year’s $1.5 trillion tax cut package and as the White House prepares to unveil on Monday a $1.5 trillion infrastructure plan that would require $200 billion in government funding.
While the White House says it plans to offset that $200 billion through unspecified cuts, none of the other spending is paid for at a time when the nation’s debt already tops $20 trillion.
The long-term implications of all this borrowing put the United States on track to ultimately owe more to its creditors than the economy produces over the course of a year. The nonpartisan Committee for a Responsible Federal Budget projects that the United States will run $2 trillion annual budget deficits by 2027 and have a debt-to-gross domestic product ratio of 105 percent — a level not seen since the end of World War II.
“With this deal, we will experience trillion-dollar deficits permanently,” said Andy Roth, vice president of the conservative Club for Growth. “That sort of behavior, the last time I checked, is not in the Republican platform.”
The seeds of this ballooning debt load are already taking root — the Treasury Department said last month that it expects to borrow $955 billion this fiscal year and more than $1 trillion in both 2019 and 2020. That money appears set to get only more expensive to borrow, as the Federal Reserve looks to continue raising interest rates and investors demand higher returns from an increasingly debt-laden government.
Indeed, the borrowing spree is contributing to recent volatility in financial markets, as investors fret that the additional fiscal stimulus, paired with a strengthening economy, could fuel inflation and translate into higher interest rates more quickly than anticipated. Major stock indexes dropped sharply again late Thursday afternoon, falling into a market correction, or a drop of more than 10 percent from their peak, largely on comments from the Bank of England that it might raise interest rates sooner and higher as it looks to fend off possible inflation. Investors poured into bonds in a flight to safety, pushing the yield on the 10-year Treasury bill to a four-year high of 2.88 percent.
For many Republicans, backing the budget agreement is a break with conservative fiscal orthodoxy that carries risk going into the midterm elections. The party’s professed commitment to limited government and deficit reduction helped Republicans regain control of the House and Senate during the Obama administration and also helped President Trump win election, with the candidate promising to get federal spending under control.
Some budget experts have pointed out that the budget deal, which Mr. Trump supports, is more costly than the fiscal plan that Hillary Clinton proposed during her 2016 presidential campaign.
Paul Winfree, an economist at the conservative Heritage Foundation, calculated that the 2019 base level of nondefense discretionary spending surpasses what President Barack Obama sought in his final budget request.
“This is getting comical,” Mr. Winfree, who recently left a job as an economic adviser to Mr. Trump, said in a post on Twitter.
While the current pact is only for 2018 and 2019, those who preach fiscal restraint fret that the spending spigot is unlikely to be shut off after that. The Committee for a Responsible Federal Budget projects that the two-year deal would set the stage for $1.7 trillion in additional deficits over the next 10 years because Congress will be operating from a higher budget baseline and will be unlikely to adopt a fresh round of austerity.
“This is the new baseline,” said Steve Bell, a senior adviser at the Bipartisan Policy Center and former Republican staff director of the Senate Budget Committee. “With this and the tax cuts, a balanced budget becomes a pipe dream.”
None of this should really be a surprise, of course. During those times that they have controlled Congress starting all the way back in 1994, Republicans have proven that their fidelity to the ideas of limiting deficits and debt was largely based on who controlled the White House. During the Clinton and Obama Administration’s, for example, they argued that out of control spending and deficits were destined to drive up interest rates, cause the national debt to explode, and increase interest rates. They used these issues as political cudgels against the Democratic White House during both Administrations and, of course, as a way to appeal to voters and supporters during the elections that took place during those Presidencies. During those times that the GOP managed to take control of both the White House and Congress, though, the message was quite different and the true nature of the Republican Party and its alleged concern for deficits and debt was revealed for the fraud it that it is.
During the Administration of George W. Bush, for example, Republicans managed to preside over massive increases in spending that were quite plainly fiscally irresponsible. On the domestic side of the equation, they introduced a massive new trillion dollar entitlement in the form of Medicare Part D without finding a way to pay for it. Similarly, they introduced education policy legislation such as the No Child Left Behind program that led to increases in Federal spending, again without any provisions about how it was going to be paid for in the future. Under President Bush’s leadership, they authorized and fought two wars, only of which was actually justified and necessary, that imposed serious financial burdens on the Federal Government both while the war was being fought and well into the future. On top of all that, they cut taxes. While that is not a bad thing in and of itself, and I’m certainly not going to argue against the lower tax burden that I and most other Americans had during the Bush years, from the perspective of fiscal responsibility it’s an utterly insane strategy. This is especially true with respect to the issue of the Iraq and Afghanistan Wars. In the past, we had traditionally found ways to finance wars via what usually ended up being a combination of higher taxes and short-term debt in the form of war bonds and other means of financing. No such effort was made to do this during the Bush years even though it’s likely that the White House could have made a convincing political argument that we needed to find a way to pay for the war that was necessitated by the September 11th attacks. Instead, President Bush chose to basically let the political capital he had gained in the wake of the attacks and the Republican Party in Congress took the position of Alfred E. Neuman and adopted a “What, me worry?” position when it came to fiscal responsibility.
Now that there’ another Republican in the Oval Office, the GOP is returning to form. The latest budget deal, when combined with the tax plan passed just prior to the holidays in December, guarantee a return to the era of trillion dollar deficits at a time when financial markets are becoming particularly sensitive to fears about increased debt and interest rates. On top of this, today the Trump Administration is unveiling an infrastructure plan that will ultimately cost more than $1,500,000,000,000 much of which will be passed onto states and localities that will likely be forced to raise taxes in an era when deducting those taxes will be much more difficult for even the average taxpayer. What the economic impact of all of this might be is unclear, but many analysts are already expressing concern.
In the end, I suppose, none of this should be surprising. As I said, the pattern of Republicans only seeming to care about fiscal responsibility when a Democrat is in the White House is one that was set at least twenty-four years ago and there was no reason to believe that things would change. Additionally, this Republican President has never really given any indication that he cares at all about either the deficit or debt. This is laid bare in the Fiscal Year 2019 budget that the Administration unveiled today. Instead, now that they have all the levers of power in Washington, Republicans are spending like the “drunken sailors” they accuse Democrat of being. So rather than having “changed” in any significant way, what we’re really seeing here is a return to form.
This is going to go no where fast. States just don’t have the money to do this. The Blue States are already supporting most of the Red States, and the new tax bill was specifically written to hurt the Blue States even more. The Feds paid for more than half of the new Tappan-Zee bridge across the Hudson north of NYC. Under this formula they would have paid 20%? It’s simply un-workable.
The biggest problem here is what I’ve been saying on this forum for years; Republicans are pursuing upside-down economics. Now that times are pretty good, they want to spend everything they have. When the next recession hits we will again be ill-prepared to do anything to get out of it. Republicans spent the entire 8 years of the Obama Administration intentionally sabotaging the economy and doing everything they could to slow down the recovery. The last couple months prove that, as they have reversed course on every single thing they were saying then.
@Daryl’s other brother Darryl: I would think that at some point we’re going to have a splendid crash.
@grumpy realist:
It is statistically inevitable. When it hits it’s going to be a huge problem, exacerbated by all the programs that have been slashed to pay for tax cuts for the 1%ers. And if a Democrat then takes the White House, we will again have a slow recovery due to a new found love of austerity.
(full disclosure…I go a decent tax cut. I’m banking it, not spending it, so it’s not helping the economy…other than my own.)
This goes back to Reagan.
Two questions.
One, now that the MSM have finally figured out GOPs lie about fiscal responsibility, do you think they’ll remember?
Two, think the supposedly liberal MSM will now figure out that Paul Ryan is NOT a policy wonk?
Gee whiz, you mean tax cuts and increased military bloat leads to bigger deficits? Who knew?
Like, its only the third time we’ve done this in the last 40 years? Maybe, this time it will work?
Wait, dreamer Lupe wants to go to law school, so lets shut down the gov’t over that and not the 900 other issues that the neolib Dems ignore. For example, Senate vote:
“To authorize appropriations for fiscal year 2018 for military activities of the Department of Defense, for military construction, and for defense activities of the Department of Energy, to prescribe military personnel strengths for such fiscal year, and for other purposes.
Senate Vote Counts: YEAs 89…..5 Dems voted against it…all the others supported it.
And you wonder why we are in such a mess?
@the Q:
No. We know we are in such a mess because low-information voters with limited cognitive abilities, like you, make up 40% of the electorate.
Oh, I am the low cognitive voter? Go phuck yourself. Its out of touch neolibs who are getting torched by the morons on the right, and I am the low cognitive voter?
Rich never richer, Pentagon never more bloated considering the threat level. Income gap surpassing the jazz age and I’m the low cognitive voter?
I guess low cognitive voters thought Hillary a disaster (she lost to a psychopath) thought Bill should have resigned in shame (he ;’s a serial harasser) and warned that tying dreamers to shutting down the gov’t would be a huge mistake, and I am the low cognitive voter. Did I tell you to go phuck yourself.
PS being a boomer means never having to admit being an idiot.
@the Q:
Well…you voted for all those things. If it walks like a duck….
Hold on a second. The administration is proposing a $1.5 trillion infrastructure plan that calls for $200 billion in Federal spending? Where does the other $1.3 trillion come from? The Lost Dutchman mine? A unicorn tears bottling plant? Is there even that much market for unicorn tears?
Daryl, yes I voted Dem my whole life, not once for a wingnut. So you are just proving my point. The feckless, neolib Dems have paved the way for all the above outcomes of runaway Pentagon spending, further destruction of the middle class and GOP hegemony the last 20 years.
Congratulations on your success. If it walks like a duck….admit the duck is incapable of defeating the loons on the right.
@Just ‘nutha ign’int cracker: The rest of the money is supposed to come from private investors, who will demand and get a guaranteed generous income stream in return. How can Trump be expected to build a proper oligarchy unless he has oligarchs who depend on him?
@Just ‘nutha ign’int cracker:
Bitcoin!
Isn’t that the new(est) magic word?
I suppose the Orange Clown expects private investment.
Good luck with that.
I’m not opposed in principle to private highways and bridges. These things have to be paid for, after all. Directly or indirectly, everyone pays for them, be it in tolls or in the prices of things that are shipped by road (all things). But paying the cost of building and maintaining the roads is one thing, paying the cost of building and maintaining the roads plus the profit is something else.
Mexico has had success with privately operated highways. But it took time to fine tune things. For example, at one point driving from Mexico City to Acapulco (about 4.5-5 hours) cost more than flying there. The highway between Mexico City and Toluca cost about $7 one-way for a 20 mile stretch of pavement.
Things like that can become very unpopular very quickly. In particular if you make frequent use of the highways.
@the Q:
Kind of begs the question: If the so-called “Greatest Generation” was so great, how did they manage to completely f*** up raising their “Boomer” children?
@Daryl’s other brother Darryl:
You left out “and we nominated a candidate who ran a clueless, over-confident campaign.” Blaming the voters for Democratic losses is not going to help us win in 2018 & 2020.