National Debt Passes $21 Trillion Mark As Republican Budget Deficits Begin To Rise
The National Debt has passed $21,000,000,000,000 for the first time in history just as the nation begins its return to the era of trillion dollar budget deficits.
Since Donald Trump became President, the National Debt has increased by nearly $2 trillion and hit $21 trillion for the first time in history:
About a year ago, President Trump pledged to eliminate the national debt “over a period of eight years.” But for the first time in history, the national debt surpassed $21 trillion this week, according to the U.S. Treasury.
The landmark comes shortly after Congress passed, and Mr. Trump signed, a suspension on the federal debt limit last month, allowing the government to borrow an unlimited amount of money until March 1, 2019.
When Mr. Trump took office on Jan. 20, 2017, the national debt was $19.9 trillion, according to U.S. Treasury data. Since then, the GOP-led Congress has passed a $1.5 trillion tax cut bill and a two-year spending deal which, together, are expected to drive the deficit and debt further upward. The Committee for a Responsible Federal Budget estimates annual deficits could top $2.1 trillion per year in the next decade, which would send the national debt soaring even higher.
Republicans railed against the national debt level under the Obama administration, when it jumped from $10.6 trillion to $19.9 trillion, nearly doubling, but few have been as outspoken about the situation with Republicans controlling Capitol Hill and the White House. Sen. Rand Paul, R-Kentucky, held up the spending bill last month on the Senate floor, blistering Republicans for doing exactly what they had criticized the Obama administration for doing.
“I ran for office because I was critical of President Obama’s trillion-dollar deficits,” Paul said at the time. “Now we have Republicans hand-in-hand with Democrats offering us trillion-dollar deficits.”
This comes at the same time that one of the President’s top economic advisers has been claiming, falsely, that the debt and deficits are declining:
Larry Kudlow, the president’s top economic adviser, claimed on the Fox Business Network on Friday that the federal deficit is “coming down rapidly,” as a result of President Trump’s pro-growth policies. But the Treasury Department, Congressional Budget Office, and outside think tanks disagree with him.
“As the economy gears up, more people working, better jobs and careers, those revenues revenues come rolling in, and the deficit, which is one of the other criticisms, is coming down, and it’s coming down rapidly,” Kudlow told Fox Business’ Maria Bartiromo, who did not appear to challenge him on that statement. “Growth solves a lot of problems.”
Kudlow did not say how he believes the deficit — essentially the amount the government spends that is more than what it takes in as revenue — is going down, when the Treasury Department and Congressional Budget Office say otherwise. (The deficit is not to be confused with the national debt, which is the accumulation of deficits, year over year.)
The federal deficit in fiscal year 2017 was $666 billion, according to the Treasury Department. It is projected to be $804 billion in 2018 and $981 billion in 2019, according to the Congressional Budget Office’s (CBO) figures in April.
The CBO issued a grim report Tuesday on the country’s fiscal future, finding the GOP tax law is expected to add $1.84 trillion to the deficit over the next decade. Economists, as well as the CBO, blame a combination of increased spending and the tax law changes that are resulting in lower revenues, on top of already-rising spending on programs like Social Security and Medicare.
The Treasury Department also disagrees with Kudlow’s assessment that the deficit is headed in the right direction.
In May, the Treasury Department posted a $147 billion budget deficit, which is 66 percent higher than the deficit posted in the month of May 2017.
The Committee for a Responsible Federal Budget released a statement later Friday claiming Kudlow’s claim was untrue.
“We rate this claim as false,” the CRFB wrote. “Not only are deficits not falling rapidly – they aren’t falling at all.”
“Kudlow is correct that a growing economy can produce more revenue, which would help reduce the deficit,” CFRB added. “However, unpaid-for legislation, such as the 2017 tax law and 2018 spending deal, only widens budget deficits, negating the effect of a growing economy.”
This hardly surprising, of course, because as I’ve said many times in the past the supposed Republican fidelity to fiscal responsibility and their concern about rising Federal Budget deficits and the National Debt is something that has proven to be little more than a political slogan that was largely based on who controlled the White House. During the Presidencies of Bill Clinton and Barack Obama, for example, Republicans 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. Don’t expect Republicans to do anything about it.