An exploding federal budget deficit can spell political trouble for the White House and opportunity for the opposition party as a presidential election approaches. But this week’s announcement that the annual deficit is expected to surpass $1 trillion for much of the coming decade may actually put more pressure on Democratic challengers than on President Trump.
It’s a sign of how much Trump’s presidency has upended the traditional economic and political philosophies of the two major parties. Now it falls to Democratic candidates vying to oust Trump to explain to voters how their policies would curb the mounting deficit — or, in the alternative, why the deficit doesn’t matter. And it’s not enough to simply point their fingers at Republicans and say, “Why should we care if they don’t?”
The budget deficit is the gap between the amount the government collects in taxes and other sources of revenue and how much it spends in any given fiscal year. That’s different from, although it adds to, the national debt, which is the nation’s cumulative unpaid balance and currently exceeds $22 trillion. The last time the federal deficit exceeded $1 trillion was in 2012, when the economy was still shaking off the effects of the last recession.
Deficits aren’t a bad thing if they’re relatively small and don’t grow faster than the U.S. economy, or if the spending is needed to offset a downturn. But operating with the current level of red ink will arguably make it harder for Congress to respond when recession strikes again. Meanwhile, an ever-larger share of the budget is being eaten up by interest payments on the accumulated debt, a problem that will become nightmarish if interest rates shoot back up to the double-digit levels of the late-1970s.
Republicans have professed a commitment to balancing the federal budget and driving down the national debt. But their words haven’t aligned with their deeds; every Republican president since Ronald Reagan has left office with a bigger federal deficit than when he arrived. The only times the GOP pressed hard for smaller deficits were when Democrats were in the White House.
Trump scoffs at deficits — at least those run up under his leadership. After his election in 2016, his party was quick to jettison even its posturing about fiscal conservatism to embrace the president’s more populist approach. The GOP-controlled House and Senate adopted Trump’s huge tax cuts in 2017, adding at least $1.8 trillion in red ink over a decade, and in July Trump struck a budget deal with Republican and Democratic lawmakers that added $1.7 trillion more over the same period. For Republicans, the justification was a $45 billion increase in defense spending over two years; for Democrats, it was an even larger increase for domestic programs.
So will Democrats now be the fiscal adults, as they tried (albeit reluctantly) to be during the Obama presidency? If so, they may be caught between two unpopular policy positions: reversing the GOP tax cuts or cutting spending deeply. Or they could adopt Trump’s cheerful carelessness about deficits. In any of those cases, they may play into the political hands of Republicans, who have shown a willingness to tout their (lapsed) fiscal conservatism when it suits them.
The Democratic presidential candidates are generally divided between a more progressive contingent, led by Sen. Bernie Sanders of Vermont, that promotes popular but costly programs such as free college tuition and universal healthcare, and a more moderate group led by former Vice President Joe Biden. While they all want to boost taxes to help pay for new spending, some, like Sen. Elizabeth Warren of Massachusetts, argue that the cost of these programs should be discounted because of the economic benefits they yield over time. That echoes the (debunked) Republican argument that tax cuts pay for themselves.
Voters need to hear more from all of the candidates about their views on the burgeoning deficit. As Trump flirts with additional tax cuts, Democrats ought to consider whether their GOP counterparts have adopted the same devil-may-care attitude toward the budget as they have toward climate change.
Both phenomena arguably pit present-day comfort against future disaster. If Democrats are to present themselves as the grownups on climate change, acknowledging science, facts and the need for action, they have to explain why they don’t feel the same way about the budget.
And if they do believe that growing deficits are harmful, they need to tell us why — and how they plan to improve the federal government’s fiscal health.