Trump's Path to Fiscal Ruin

By Ronald Horvath | Aug 20, 2018

It became very clear this month that neither the Trump White House nor its allies on Capitol Hill want you to know that the federal budget is already in very bad shape ... and getting worse.

It happened when the Treasury, the official keeper of Washington’s financial results, issued its monthly statement for the first 10 months of fiscal 2018 about federal revenue, spending and, therefore, the budget deficit.

Treasury showed what no president ever wants to admit: The deficit is spiking. The federal government’s red ink this year is already 21 percent above what it was in 2017, and there are few prospects that the bottom line will improve anytime soon.

Except with infrequent and unsubstantiated platitudes about how the situation is going to get better, the Trump White House and Republicans in Congress have been doing everything possible not to talk about the budget this year. To avoid tough questions and politically embarrassing votes, the House and Senate have even refused to consider a budget even though they are required by law to adopt one.

But this year isn’t the real issue.

Trump's deficits are permanent

Unlike the trillion dollar budget deficits that occurred during the Obama administration that were temporary and largely the result of the Great Recession, the Trump deficits that will soon reach and exceed $1 trillion are permanent and will only get worse in the years ahead.

The Trump deficits are the result of changes in federal spending and revenue that will continue to be in place until some president and Congress decide to reverse them, that is, to increase taxes and make cuts to popular programs.

Not only has there been little appetite to do that, many in Congress and the Trump administration seem to be hellbent on ignoring the deficit and national debt and increasing spending and reducing revenue even further.

For example, the White House last week proposed a new Space Force that would likely add billions, if not hundreds of billions, to the Pentagon’s budget. Trump has asked for $25 billion for the wall he wants to build between the U.S. and Mexico. His much talked about but still unseen infrastructure plan would cost countless billions more.

When the House returns to Washington in September, it is set to consider another tax cut that could reduce revenue by an additional trillion dollar. None of this includes the natural and man-made disasters — everything from earthquakes, forest fires and hurricanes to military, terrorist and foreign policy situations — that occur each year and cost more than planned.

Nor does it include interest on the national debt. The combination of big increases in federal borrowing from the very large deficits and the need for Washington to roll over its sizable short-term debt at higher interest rates will make this the fastest growing spending of all.

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