Deficit Don? Red ink gushes in Trump era – Politico
President Donald Trump may have to hand out some new nicknames — for himself — after endorsing a bipartisan budget deal with Congress: “Trillion Dollar Trump?” “Deficit Don?”
With a new bipartisan budget deal that does nothing to cut federal spending, Trump is on track for another $1 trillion deficit this year. And there’s no reason to believe the following fiscal year will be any different, with ballooning deficits from higher spending, the 2017 tax cuts — Trump’s signature legislative achievement, which slashed revenue — and none of the entitlement reforms long preached by Republican leaders on Capitol Hill.
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Candidate Trump bragged that he would pay off the entire federal debt in eight years, but President Trump is governing as if deficits don’t matter.
In fact, Trump is approaching the level of red ink from President Barack Obama’s first term, when Obama racked up trillion-dollar deficits four years in a row. Trump is on pace to do the same, starting with this year’s yawning deficit of more than $1 trillion, according to budget estimates.
But there are huge differences: Trump has a growing economy with historically low unemployment and a soaring stock market, while Obama was battling a brutal downturn in the economy during the worst recession in 80 years, making it much harder to curb federal spending.
Though Trump’s administration has repeatedly proposed massive cuts in its annual budget plans, lawmakers in both parties have laughed off the proposals. Now Trump has agreed to a second sweeping budget deal with Democrats that increases spending by more than $300 billion.
“This was a real compromise in order to give another big victory to our Great Military and Vets!” Trump tweeted Monday night in announcing his support for the $1.37 trillion package.
But some in Trump’s party were far less excited, wary that the profligate spending under Trump makes Republicans look like hypocrites.
“Everybody here basically… talks about it in a campaign and then gets into the rhythm here and we keep generating all these deficits and adding to all that debt,” Sen. Mike Braun (Ind.) said. “That’s what I ran against. That’s one of the big things why people back in Indiana elected me.”
Other Republicans said Trump wasn’t to blame.
“It’s not the president who is spending too much. It’s Congress,” said Sen. Joni Ernst (Iowa), who argued there was little her party could do to take a harder line in the talks against spending. “Do we want a shutdown in the government again? We don’t want to shut down the government.”
Speaker Nancy Pelosi (Calif.), who served as the lead Democratic negotiator, and Senate Minority Leader Schumer (D-N.Y.) hailed the deal, saying it met their priorities for more domestic spending while “turning off” the tens of billions in automatic spending cuts slated to go into effect if no deal were reached.
“Democrats have always insisted on parity in increases between defense and non-defense, and we are pleased that our increase in non-defense budget authority exceeds the defense number by $10 billion over the next two years,” the two Democrats said in a joint statement. “It also means Democrats secured an increase of more than $100 billion in funding for domestic priorities since President Trump took office.”
Part of the deal would include a second debt ceiling increase under Trump, with few of the spending reductions demanded by the GOP in the Obama era.
Instead, Trump and the GOP’s biggest fiscal priorities — bolstering the Pentagon and slashing tax rates — have trumped the GOP’s deficit hawk rhetoric. The deal also seeks to prohibit Democrats from tying the administration’s hands on key border and spending priorities, which Republicans see as a big win.
Senate Majority Leader Mitch McConnell (R-Ky.) had pushed Trump to enter into budget negotiations for months, arguing that avoiding a default and shutdown was worth the price of increasing spending with a Democratic House in divided government.
But McConnell was careful to call it “The Administration-Pelosi Budget Deal” in his news release, despite the fact he’ll back it because of the increase in Pentagon spending. Not a word was included about the deficit.
“I am very encouraged that the administration and Speaker Pelosi have reached a two-year funding agreement that secures the resources we need to keep rebuilding our armed forces,” McConnell said. “This was our top objective: Continuing to restore the readiness of our armed forces and modernize our military to deter and defend against growing threats to our national security.”
House Minority Leader Kevin McCarthy (R-Calif.), a close Trump ally, is backing the agreement but said Democrats “refused to even discuss meaningful budget offsets and more importantly, any long-term reforms to the driving spending forces adding to our debt.”
Other Republicans complained about the increase in the deficit, but that doesn’t mean they’re prepared to vote against the package either — not with Trump giving them cover to vote for it.
“I’m very concerned about it. Particularly on the entitlement side, the mandatory spending side, which is where most of the money is. And that’s something that the president has not had a particular interest in doing anything about,” acknowledged Sen. John Thune (R-S.D.), the party whip. “We’re going to end up spending more than a lot of Republicans, I’m sure, would like. But that’s what it’s going to take to get a deal.”
Sen. John Cornyn (R-Texas), who is up for reelection next year, said Trump hasn’t done enough on the deficit but insisted the problem is caused by both parties. And Cornyn noted he’s likely to back the agreement, “reluctantly.”
“I don’t see the alternative,” Cornyn said. “We’re not going to deal with the growth in deficits and debt and mandatory spending this week. Sadly, that’s not on the table.”
The U.S. deficit is on track to exceed $1 trillion this year — the highest level since 2012, when much of the country was still climbing out of the recession. In fact, deficits have never been so high outside of wartime or an economic recession.
Within four years, the Treasury is set to spend more on interest payments than on the nation’s entire defense budget.
Some of Trump’s close advisers, including hard-line fiscal conservatives like acting White House chief of staff Mick Mulvaney and acting Office of Management and Budget Director Russ Vought, pushed for more cuts to spending or a one-year deal at current spending levels.
But Democrats refused to go along with such a plan, and at the end of the day, Mnuchin and Trump believed a happy Wall Street — along with voters who like federal spending and want to see the values of their 401K plans rising — was more important than the deficit, to the disappointment of GOP conservatives.
“We have to be focused on fiscal responsibility,” Rep. Mark Walker (R-N.C.) said on CNN on Monday afternoon. “It’s one thing for Republicans to talk about it, but we’ve got to live up” to it.
Sarah Ferris and Caitlin Oprysko contributed to this report.