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Monday, March 25, 2019

February's Budget Deficit Was the Largest in American History

By Eric Boehm - March 25, 2019 at 02:00PM

The U.S. Treasury reports that the federal government ran a record-breaking budget deficit in February. Meanwhile, the incumbent president, who has presided over a sharp increase in the national debt, has released a budget proposal that projects $1 trillion annual deficits for the rest of his time in office.

I'm talking about 2019. And also 2012.

The Treasury announced Friday that the federal government spent $234 billion more than it brought in during February, breaking the record for the largest monthly budget deficit. Barack Obama's Treasury Department set the previous record in February 2012, with a deficit of $231 billion. At that time, President Obama had just delivered his latest budget proposal to Congress, which anticipated $1 trillion annual deficits for the rest of the decade—almost identical to the projections offered by Donald Trump in his 2019 budget proposal, delivered earlier this month.

The similarities only extend so far. That Obama budget was roundly criticized by Republicans in Congress, who railed against the president's "failure to control spending," as Rep. Cathy McMorris Rodgers (R-Wash.) put it at the time. Obama's record deficit helped organize Republican policymaking around plans to cap spending growth and balance the budget. Those plans never came to full fruition, but the deficit did fall as the Republican Congress slowed the growth in government spending and as a recovering economy boosted tax returns.

It is highly unlikely we will see a similar outcome this time.

Indeed, the current record-high deficit is largely the fault of the same Republicans who once attacked Obama for spending too much. According to an analysis from the nonpartisan Committee for a Responsible Federal Budget, about 60 percent of this year's expected deficit is the result of policies—mostly last year's huge increase in spending that shattered those Obama-era budget caps—put in place by current legislators and signed by the current president.

They can't blame a recession. They can't blame Obama. After years of solid if not mind-blowing growth, the budget deficit should be shrinking, not expanding.

Failing to fix the budget now will have consequences for years to come. Over the next 30 years, Social Security and Medicare are expected to run a combined $100 trillion deficit. Addressing that issue will require tough decisions that have only been made more difficult by officials who have essentially wasted a decade of relative good times, leaving America exactly where it was seven years ago—except now there seems to be less political will to do anything about it.

If you're looking for a glimmer of hope, it might be found in the budget plan recently released by Senate Budget Committee Chairman Mike Enzi (R–Wyo.). Enzi's budget is supposed to reduce the deficit by $538 billion over five years by cutting spending—and also, alas, by projecting probably unrealistic economic growth in the next half-decade. His proposal includes cuts to mandatory spending on programs like Medicare and Medicaid (though it would leave Social Security untouched), which make up more than 60 percent of the federal budget in a single year.

Whatever it's flaws, Enzi's proposal is a serious attempt to bring the deficit back under control, even though it would not balance the budget. It will get a hearing later this week, but it likely faces a difficult political road forward.


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