Many lawmakers breathed a sigh of relief Monday when President Trump tweeted that his administration had reached a budget deal with congressional leaders from both parties to raise both the debt ceiling and the caps on federal spending for two years. That lessens the chance of a government shutdown or two before the 2020 election, although anything is possible with this president. More important, it rules out defaulting on the federal debt, which would be unthinkably bad.
So, dessert before vegetables: Treasury Secretary Steve Mnuchin deserves credit for not treating the debt ceiling as leverage and playing brinksmanship with the country’s credit rating. With any luck, Trump, who often shows a willingness to make deals only to scuttle them in the face of blowback from the far right, won’t throw Mnuchin under the bus on this one.
Still, this is a lazy piece of work. It actually had me rethinking the merits of a constitutional amendment mandating a balanced federal budget, albeit for only about eight seconds. Then I came back to my senses.
We are in a very strange place, fiscally. The economy has been growing for 10 years, unemployment hit extraordinarily low levels in 2017 and has stayed there, and inflation has been held in check throughout. Conditions have been perfect for reining in the federal deficit for quite some time. But Congress hasn’t shown any real interest in doing so since President Obama’s first term, when it would have been idiotic to tighten the federal purse strings.
Nor is Trump the least bit interested in the fiscal situation, despite having a chief of staff who models himself after Scrooge McDuck. Instead, Trump is determined to blow the roof off the budgets for defense and homeland security, while slashing potential federal revenues with a huge tax cut that most definitely has not paid for itself.
Democrats didn’t exactly cover themselves with glory either. Since the Budget Control Act of 2011 established separate annual spending caps on defense and non-defense discretionary programs (that is, anything that’s not an entitlement like Social Security or Medicaid), the party has seemingly been focused on one goal: making sure any increase in defense spending above the caps would be matched by an increase in non-defense spending. So they were happy to bust the caps for defense as long as they spent more on everything else as well.
Really, who needs to set priorities when your checks never bounce?
The incessant stimulus from the federal government in the form of giant deficits makes it hard to tell how strong the economy really is (or isn’t). Also, it reduces the government’s ability to provide a boost when the economy really needs it, as it will the next time the business cycle turns down.
But the worst aspect of the feds’ splurting red ink is that bigger, more intractable fiscal problems are just around the corner. With an aging population, a shrinking ratio of active workers to retirees and an ever-rising healthcare bill (thanks mainly to Medicare, but also Medicaid, the Affordable Care Act’s premium subsidies and veterans benefits), the federal government’s costs are going to rise dramatically even if Congress manages to slam the lid on discretionary spending.
The Committee for a Responsible Federal Budget issued what has become a distressingly familiar scolding Monday, saying the deal was “a total abdication of fiscal responsibility by Congress and the President” that “may end up being the worst budget agreement in our nation’s history.” Trump, a president who craves distinctions, can now add this one: He has racked up multiple trillion-dollar deficits despite being blessed with a fully functioning economy. By the way, that’s not #WINNING.