The nonpartisan Congressional Budget Office issued yet another warning Tuesday that the federal government is heading down a dangerous fiscal path, racking up debt at an alarming rate. The CBO projects that deficits will average $1.3 trillion a year over the coming decade, with the economy settling into steady but sluggish growth. That’s the most disturbing thing about the report: the expectation that giant deficits will be allowed to continue even when there’s no recession driving up spending on federal safety net programs and causing tax revenue to plummet.
It’s not inherently bad for the federal government to borrow money; extra spending by the government can help stimulate the economy during a downturn. But sustained and heavy deficit spending can have the opposite effect, raising borrowing costs and slowing GDP growth. The CBO projects that the fastest growing part of the federal budget will be interest payments on the rising debt — spending that delivers no tangible benefit for taxpayers while leaving less money for programs that do.
Rising healthcare costs and an aging population are contributing to the federal budget mess. But the problem has been exacerbated by the large and irresponsible tax cuts Republicans pushed through in 2017. The cuts were sold as a way to trigger a sustained surge in economic growth; instead, GDP bumped up only briefly, held back in part by the tariffs President Trump slapped on a broad array of imports.
We’ve seen this movie before. Some supposed fiscal conservatives will demand more tax cuts to try to jump-start faster growth (in fact, Trump and House Republicans floated just such an idea before the 2018 election and again last year). Others will blame the problem on federal spending and demand cuts — not to the military and security programs that Trump has vastly expanded, not to the vast tax giveaways and subsidies, but to the safety net programs the administration is already trying to restrain.
Slashing programs such as Medicaid and food stamps to help pay for the GOP tax cuts would be redistributing wealth in the worst way — from the impoverished to the well-to-do. The right answer starts with lawmakers rolling back the tax-cut and spending excesses of the Trump administration. They can then work on a longer-term plan to bring spending and revenue back into line.