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June 17th, 2019

Insight

Do budget deficits even matter in 2020?

Ed Rogers

By Ed Rogers The Washington Post

Published April 15, 2019

Do budget deficits even matter in 2020?
So far, several Democrats running for president in 2020 and their allies in Congress have embraced socialism as more of a fashionable buzzword than as an economic plan.

Let's face it, there isn't really a socialist economic model out there that Democrats can seriously claim they want to bring home to the United States. Today's democratic socialism is really just about politicians not saying no to anyone. They tell their audience what they think they want to hear.

There is so much pandering and box checking that nobody really has much time to articulate a governing point of view. And nobody appears to want to bring up anything unpleasant, such as the cancerous growth of our national debt. My favorite 2020 budget-busting giveaway so far is the universal basic income proposed by businessman Andrew Yang that would guarantee every American age 18 or older $1,000 per month regardless of their work status.

Well, what is wrong with $1,200? Why not $1,500? Are our elections going to become bidding wars for cash payouts?

The 18th-century Scottish historian Alexander Fraser Tytler is famed for having once said, "A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury." And here we are.

None of America's budget problems are new. We are spending much more than we take in. Today, the national debt is $22 trillion and counting. The numbers are so big that they have become meaningless. Voters and now even candidates appear uninterested in hearing about them.

Regardless of whether the economy is doing poorly or performing well, our overspending is disconnected from the realities of bad times and good times. Our annual deficit produced under President Donald Trump's watch with robust economic growth is about the same today that it was during the period of anemic growth under President Barack Obama. According to the Office of Management and Budget, the 2019 deficit is predicted to be $1.091 trillion - about $15 million more than it was in 2012 under Obama. By the way, today's deficit is not caused by the Trump tax cuts and a resulting lack of revenue: Treasury Department data shows that federal revenue in fiscal 2018 was higher than they were in any year under Obama.


But so was federal spending. In fiscal 2018, federal spending reached $4.1 trillion, $300 billion higher than spending in fiscal 2016. Shouldn't robust economic growth and nearly full employment lessen the government's need to pay benefits and provide social services? Spending is out of control, and nobody is really talking about it.

Historically, when any enterprise overspends, its future is certain. However, the calamity that deficit spending was supposed to cause has not occurred. And yet we must be mindful. Economic conditions have political consequences. But today's historic anomaly has emboldened the Democrats.

"No consequences for deficit spending" has become the norm in Washington. While Democrats call for more programs and more spending, Republicans are left only to shrug and mostly ignore the subject and try to avoid looking like killjoy scrooges. Serious academic economists are left scratching their heads, rethinking their models and backing away from their "the end is near" forecasts.

Trump offers up some symbolic budgets that meaningfully cut discretionary spending but leave entitlements alone. This is just another form of dishonesty as entitlements represent approximately 60 percent of the federal budget. If we are ever to get spending under control, it is going to be via entitlement reform.

No one is laying the groundwork to come away from the 2020 elections with a mandate to put any breaks on our spending. Those who used to talk about deficits are mostly silent, and even worse, there is an emerging, convenient new belief in some quarters that deficits no longer matter. But deficits will matter. We are witnessing an abdication of leadership, and we will all pay the price.

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Ed Rogers is a a political consultant and a veteran of the White House and several national campaigns. He is the chairman of the lobbying and communications firm BGR Group, which he founded with former Mississippi Gov. Haley Barbour in 1991."

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