The economy of the United States is booming, but its finances are going bust. In the first 11 months of fiscal 2017, the nation’s budget deficit was $674 billion. For the first 11 months of fiscal 2018, it was $898 billion, an increase of 33 percent. President Donald Trump’s administration now says the annual shortfall will exceed $1 trillion in 2019 and remain above that level for at least three years.
The deficit has exceeded $1 trillion in only four years, from 2009 through 2012, when unemployment of 8 percent to 10 percent depressed income tax receipts, low corporate profits reduced tax revenue and federal spending spiked to provide for struggling Americans, stimulate the economy and help fund state and local governments.
Such colossal deficits now lack any such excuses. Unemployment is around 4 percent, a historic low, and corporate profits are at all-time highs. Happy days should be here again when it comes to fiscal sanity, but corporate tax receipts have dropped 20 percent since President Donald Trump’s tax cuts took effect in early 2018. Income tax payments are up just 1 percent. And government spending under Trump has skyrocketed.
The answer, Trump economic adviser Larry Kudlow told the Economic Club of New York on Monday, is being “tougher on spending” when it comes to the “larger entitlements.”
The growth in spending on social programs is a real problem. Social Security outlays are up 8 percent this year, reflecting an increase in recipients, and Medicare spending is up 9 percent. But interest on the national debt has increased 13 percent this year. And military spending is up almost 10 percent, to $700 billion.
The average monthly Social Security check is $1,404. Cutting such benefits or making people work much past the current full retirement age of 67 before they can claim that benefit would not be humane, sensible or popular. Neither would cutting the Medicare benefits that provide health care to seniors or the Medicaid benefits that pay the costs of 62 percent of nursing home residents and the health care costs of 30 million children.
Trump is trying to nickel-and-dime the people who least deserve such treatment. He recently canceled next year’s scheduled 2.1 percent pay increase for federal employees, writing that he can do so because of “national emergency or serious economic conditions affecting the general welfare” of the United States. And he is fighting for a farm bill that would take food stamps from several million recipients.
Trump and his advisers are crowing about a booming economy and crying poverty when it comes to caring for the nation. They have cut taxes, benefiting mostly the very wealthy, at a cost of $1.5 trillion over 10 years, and now say they must cut the social safety net, which mostly benefits the nation’s children and elderly, to pay for it.
Republicans may not implement their plans to slash social programs, but the increasing costs of those programs are real, as are the spiraling deficits generated by Trump’s tax cuts and huge hikes in military spending. If denying Americans needed benefits is the GOP plan to restore fiscal sanity, that’s disturbing. And if that awful scheme isn’t the GOP’s way to restore fiscal sanity, then it has no plan at all. — The editorial board