Republicans Again Running Up Massive Fiscal Deficits
Reprinted with permission from AlterNet.
A popular talking point in the right-wing media—from Fox News to AM talk radio to the National Review, Townhall and the Weekly Standard—is that Republicans are the party of low taxes, small government and fiscal responsibility while Democrats are the party of “tax-and-spend liberals.” But that argument is bogus for a number of reasons. First, the modern-day Democratic Party on the whole is much more centrist than liberal or progressive (apart from liberal/progressive champions like Massachusetts Sen. Elizabeth Warren, Florida Rep. Alan Grayson and various allies of the independent Vermont Sen. Bernie Sanders). And second, fiscal responsibility is practically nonexistent in today’s Republican Party. The GOP, in recent decades, has been the party of huge deficits and corporate welfare—and thanks to President Trump and the Republicans who presently dominate both houses of Congress, the U.S.’ federal deficit will be growing by leaps and bounds in the not-so-distant future.
The fact that Republicans are great at cutting taxes for the 1% while butchering social programs for the poor doesn’t mean that they don’t spend tax dollars like crazy. Rather than the pay-as-you-go approach that characterized some Republican residents prior to President Ronald Reagan—including Dwight D. Eisenhower in the 1950s and Richard Nixon in the late 1960s and early 1970s—modern-day Republicans believe in using Uncle Sam’s credit card. And that is certainly true of the Trump administration, Senate Majority Leader Mitch McConnell and House Speaker Paul Ryan.
In an annual budget review this month, the White House’s Office of Management and Budget (OMB) reported that the U.S.’ federal 2019 budget would be even higher than originally thought. According to the OMB, various Trump-era spending since the release of the February budget will be adding $101 billion more to the 2019 deficit and pushing it beyond $1 trillion.
Some of the blame lies with the Tax Cuts and Jobs Act, passed by Republicans in both houses of Congress and signed into law by Trump last year. Economist Robert Reich, who served as secretary of labor in President Bill Clinton’s administration in the 1990s, has been vehemently critical of the law—which he characterized as a massive tax break for the 1% that will occur on the backs of the poor and the middle class. Reich has been warning that the Tax Cuts and Jobs Act, which lowered the corporate tax rate from 35% to 21%, will send federal deficits through the roof. And the OMB’s projections for 2019 bear that out.
But beyond 2019, the federal deficit could be even higher if Trump gets his way and a giant wall along the U.S./Mexico border becomes a reality. According to an internal report from the Department of Homeland Security last year, Trump’s border wall could cost about $21.6 billion—and that isn’t even including the cost of maintenance. Maintaining a four-state wall that goes all the way from San Diego County to Texas and passes through Arizona and New Mexico along the way would cost a fortune to build and maintain.
Trump has been assuring Americans that taxpayers in Mexico, not the U.S., will be paying for the wall. But Andrés Manuel López Obrador, Mexico’s new left-wing president, disagrees. Obrador considers the idea of a border wall racist and xenophobic—not to mention insulting to his country—and he has made it abundantly clearly that on his watch, Mexican taxpayers won’t be funding something they don’t want. And Obrador has also stressed that while he wants to have a friendly, warm relationship with Mexico’s neighbor to the north, it won’t be one of subordination.
If Trump’s border wall comes about, it won’t be financed by taxpayers in Mexico City, Acapulco, Cancun or Guadalajara. It will be paid for on the backs of the U.S.’ middle class whether they like it or not.
When Barack Obama was president, Republicans repeatedly claimed that he was a tax-and-spend president and promised that when they regained the White House, the days of large federal deficits would be ending. And that promise is truly laughable in light of not only Trump’s spending patterns, but also, the huge federal deficits that President Ronald Reagan in the 1980s and President George W. Bush in the 2000s left the U.S. with. President Bill Clinton, in contrast, left the U.S. with a balanced budget and a $63 billion surplus when he left office in January 2000—and that surplus vanished under the Bush administration, which increased the federal deficit by 57%.
The election of Ronald Reagan as president in 1980 marked a departure from the tax policies of Democratic President Jimmy Carter and Republican President Nixon. Although Nixon was considered an arch-conservative in his day and was detested by many liberals and progressives of the 1960s and 1970s, he supported elements of President Franklin Delano Roosevelt’s New Deal and President Lyndon Johnson’s Great Society. Nixon expanded Medicare and Social Security, favored universal healthcare via the private sector and believed that the ultra-rich should pay their fair share of the taxes—all of which would be deal-breakers in today’s GOP. Left-wing author Noam Chomsky has even gone so far as to characterize Nixon as “America’s last liberal president.”
Reagan, unlike Nixon, brought trickle-down economics and voodoo economics to the forefront, claiming that if the super-rich receive generous tax cuts, their gains would trickle down to the middle class and even the poor. Under Reagan, the top marginal tax rate went from 70% to 28%. But as Reich has pointed out in 2011, the notion that “tax cuts for the rich trickle down to everyone else” is “baloney” because “Ronald Reagan and George W. Bush both sliced taxes on the rich, and what happened? Most Americans’ wages, measured by the real median wage, began flattening under Reagan and have dropped since George W. Bush. Trickle-down economics is a cruel joke.”
As president, Reagan favored draconian cuts to social programs while almost doubling the national debt. President George W. Bush, similarly, favored huge tax cuts for the rich while spending lavishly.
The Obama era saw large federal deficts as well, and Obama—like Reagan and Bush—was a war hawk who wasn’t shy about generously funding the U.S. military budget. But Obama favored more social spending than either Reagan or Bush and didn’t promote the discredited theory of trickle-down economics. While Obama was never a genuine liberal on economics the way that FDR and LBJ were, he was very much a centrist and not a student of Reaganomics.
Trump’s economic policy, however, has been one of tickle-down economics on steroids—and the end result will be exploding federal deficits, the rich getting much richer and a very bad deal for America’s poor and middle class.