One does not have to be an economic genius to grasp the concept that a government cannot marry a significant reduction in revenues due to a major tax cuts bill in 2017 with an huge increase in spending, before there is a forecast for an economic doomsday.
The republican President Donald Trump and his GOP cronies in the US Congress tried to sell the concept to the American peoples, that the 2017 GOP tax cuts bill would create added revenues when the US GDP numbers exceeded 4%. This is not going to happen. As of the first quarter in 2018 the GDP grew at 2.3 %. This means that there will not be sufficient additional revenues to cover the cost of the tax cuts bill which included an increase to the US deficit over 10 years of $1.5 trillion dollars.
Soon after, the president and the US congressional republicans passed a spending bill with a huge increase going towards the US military. As per a 12/17/18 Politico report, “But on Capitol Hill this week, just hours before they jet away for the holidays, the GOP-led Congress is going on a $680 billion spending spree — none of which will be paid for by budget cuts or other tax offsets. And all of which will be added to the national debt, according to budget watchdogs.”
This has been done while the US economy is doing great. What will happen if the economy takes a downward turn as it is prone to do on a cyclical basis?
The president’s economic instincts only gets worse with his decision to impose tariffs on our allies. Since the president never reads, he is totally unaware of the devastation that tariffs caused in the past, in 1930.
Another drag on the US economy has to do with the president and his fellow anti-immigration GOP contingency pushing for a cut to legal immigration up to 50%. Business leaders back an increase in legal immigration for a reason. An increase in legal immigration spurs economic growth while the opposite is true. But you would never know this by listening to the president’s anti-immigration rhetoric.
Businesses, including even the Koch brothers. are advocating for a fix to DACA (Deferred Action for Childhood Arrivals). Without an adjustment to DACA, the young adults who came to the US as children with undocumented parents will be subject to deportation to countries that they have little familiarity.
In addition to all of the above, the president is now demanding even a further major increase in spending without any consideration based on reality as to how he intends to pay for this foolishness that we can ill afford. And there is no one in the US congress who is standing up to him.
Here’s the rest of the story…
On May 18, 2018, Stan Collender of Forbes penned the following report, “Trump May Be The Most Fiscally Reckless President In American History”
“I have no doubt that your first response to the headline above is some combination of “Duh!,” “You just realizing this now?” “This is what we get from someone whose Twitter handle is @thebudgetguy?”
“You need to chill. I first posted about Trump’s federal budget follies more than two years ago and have chronicled his fiscal foolishness since before his inauguration.”
“I’m posting this now because this tweet from just a week ago made me realize yet again that Trump’s budget recklessness continues to reach new lows.”
The Senate should get funding done before the August break, or NOT GO HOME. Wall and Border Security should be included. Also waiting for approval of almost 300 nominations, worst in history. Democrats are doing everything possible to obstruct, all they know how to do. STAY!
“But think about why Trump is asking for rapid action on the 2019 appropriations: He wants even more spending. Even though his policies have spiked the annual budget deficit to a new normal of a $1 trillion (with $2 trillion definitely within view) and interest rates are now starting to go up in large part because of his out-of-sync-with-the-economy stimulative fiscal policy, Trump is demanding that federal spending and the government’s red ink be increased even further.”
“There was no hint in this or any other subsequent tweet that Trump is going to propose offsetting spending cuts (or, heaven forbid, revenue increases) to compensate for the additional spending he’s demanding.”
“Trump’s recently-announced rescission package (which is already in a great deal of political trouble with congressional Republicans) doesn’t come close to offsetting the new spending Trump said he wants. It also won’t come close to being an offset even if the first package is followed with that second rescission plan Trump has said is coming.”
“(In) less than 18 months into his administration, Donald Trump is the most fiscally irresponsible president at least in recent American history…and quite possibly of all time.”
“Trump’s behavior on everything and anything having to do with the federal budget has become blatantly predictable and painfully obvious. It always includes some combination of:”
1. “Proposing whatever he wants on revenues and spending regardless of whether it is the right policy for the economy.”
2. “Making up his own rules of economics, mathematics and budgeting to justify what’s being proposed and make them politically palatable.”
3. “Discrediting the facts when they get in the way of what he wants to do and demeaning those that produce them.”
4. “Ignoring reality when what actually happens turns out very different from what he swore would occur.”
5. “Paying no attention whatsoever to the budget deficit and national debt.”
“Trump’s big tax cut demonstrates every ingredient of this witches’ brew.”
“First, the bill’s $1.5 trillion revenue loss, debt increase and stimulus was the absolute wrong fiscal policy with the economy so strong.”
“Second, no amount of Trump insistence and bullying about dynamic scoring was going to make that tax cut revenue neutral.”
“Third, even when they came from Republican-led groups like the Joint Economic Committee, nonpartisan groups like the Congressional Budget Office and Wall Street, the analyses (and those that did them) showing Trump to be wrong were trashed by the White House.”
“Fourth, now that the tax cut has been enacted, Trump doesn’t seem to care that his promise of a deficit-neutral bill was flat out wrong even though it will cause the budget deficit to reach record heights in good economic times.”
“But the tax cut is hardly the only example.”
“Trump’s combination of a big increase in military spending and a very large reduction in revenues meant rapidly growing interest payments both because of higher deficits and debt and fast-rising interest rates. There was also Trump’s “skinny budget” that wasn’t a budget at all; the two full Trump budgets the White House abandoned seemingly moments after they were released; and the health care debate during which the White House scurrilously criticized CBO for daring to produce highly credible analyses showing the president’s numbers were wrong.”
“The worst thing about all of this is that, even after his policies have done so much damage, neither Trump nor any other members of his economic policy team — Office of Management and Budget Director Mick Mulvaney, Treasury Secretary Steven Mnuchin, National Economic Council Director Larry Kudlow and Council of Economic Advisors Chairman Kevin Hassett — have hinted about there being a problem that requires attention.”
“Even in the face of interest rates hitting new recent highs and concerns increasingly being raised on Wall Street about an economic slowdown, Trump has said nothing except, that is, to tweet that he wants to make the situation even worse.”