Thursday, April 23, 2020

GOP Debt Hypocrisy  

By Peter Suderman - April 23, 2020 at 06:00AM

Republicans in Congress, on the whole, no longer care about debt or deficits—at least not in any substantive sense. That's a problem for a number of reasons, not least that it increases the risk of a debt crisis in the future.

Those same Republicans spent the better part of Barack Obama's presidency complaining bitterly about the trillion-dollar budget gaps the country ran during his first term, and President Donald Trump promised on the campaign trail to eliminate all federal debt. But since Trump's election, deficits have increased even faster than expected, and the total federal debt has risen accordingly. That, in turn, is likely to have long-term consequences for both the economy and for the broader politics of debt and deficits.

You can see the nation's trajectory spelled out in painstaking detail in the annual budget outlook from the Congressional Budget Office (CBO). Not only does it show that the trillion-dollar deficits that followed the financial crisis have returned, it projects that deficits of that magnitude will be a fixture throughout the coming decade. Indeed, the next decade's cumulative deficits are now projected to be $160 billion higher than was projected as recently as August 2019.

By 2030, CBO projects the deficit—the annual gap between spending and revenues—will reach $1.7 trillion, which was roughly the size of the entire federal budget in 1999. Rising debt and deficits, the budget office predicts, will coincide with slowing economic growth, dropping from 2.2 percent this year to 1.5 percent a decade from now. The federal government will be borrowing more, and the economy will be expanding at a slower pace. It may not lead to an immediate economic crisis, but the nation is spending and borrowing into stagnancy and decline.

The GOP's acquiescence to this eventuality has been driven mostly by political considerations: In the absence of a crisis, lawmakers have little incentive to close the budget gap, because doing so requires some combination of raising taxes and cutting spending, neither of which are particularly popular. The biggest drivers of long-term debt are Medicare and Social Security, which benefit seniors, many of whom are reliable Republican voters. Trump ran against cutting those entitlements, and although his rhetoric has wavered slightly in recent months, he has not pressed the issue. Republicans in Congress don't exactly seem eager to tackle it either. (Trump's 2020 budget proposed reducing some Medicare payments, similar to proposals made by the Obama administration, but would leave the program's essential benefit structure intact.)

Trump also does not appear to worry much about what happens down the road. When his advisers in 2018 raised the possibility of a future deficit crisis, the president reportedly shrugged it off, saying, "Yeah, but I won't be here." Absent some event to force his hand, it's unlikely that attitude will change.

One possible forcing event would be the election of a Democratic president in 2020, which would almost certainly see the GOP return to its Obama-era complaints about sky-high debt and deficits.

Yet if that were to happen, Democrats would most likely dismiss these complaints as hypocritical—not as honest efforts to enforce needed fiscal restraint but as self-interested attempts to check the opposite party's agenda. The Democratic primary race, which has prominently featured calls for tens of trillions in new spending, has already provided evidence for this view.

That view is also evident in the liberal intelligentsia's embrace of simplistic deficits-don't-matter economic theories and in complaints about how the CBO's emphasis on basic budget math hampers the progressive agenda. The GOP's rank deficit hypocrisy is empowering liberals who view concerns about fiscal soundness as barriers to political and policy success.

With every passing day, the Trump-era GOP lends credence to the idea that Obama-era Republicans cared about deficits only as a means of hampering a Democratic president. By demonstrating how little they care about fiscal restraint while in a position to do something about it, Republicans are creating a political environment that makes it even more likely that Democrats will proceed with a deficit denialist agenda of their own.

Republicans under Trump haven't just carelessly let deficits rise and debt pile up. They've made it even harder to find a politically plausible way of righting the nation's fiscal trajectory.


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