How Progressives Can Criticize Trump’s $7 Trillion Deficit Without Preaching Austerity

Kate Aronoff February 13, 2018

Office of Management and Budget Director Mick Mulvaney holds a news conference to discuss the Trump Administration's proposed FY2017 federal budget in the Brady Press Briefing Room at the White House May 23, 2017 in Washington, DC. (Photo by Chip Somodevilla/Getty Images)

Deficit spend­ing isn’t a sign of moral or eco­nom­ic fail­ure. But look­ing at the head­lines about the Trump administration’s last few weeks of eco­nom­ic pol­i­cy­mak­ing, you might think otherwise.

Refer­ring to Democ­rats and Repub­li­cans both, The Wash­ing­ton Posts Robert Samuel­son bemoans that, Ever-larg­er bud­get deficits have become their means of mak­ing pol­i­cy and prac­tic­ing pol­i­tics.” He points to the $1.7 tril­lion spend­ing agree­ment reached last week, the $1.4 tril­lion tax plan passed recent­ly and the White House’s 2019 bud­get pro­pos­al, which — if passed in full (some­thing that basi­cal­ly nev­er hap­pens) — would add $7 tril­lion to the fed­er­al deficit over the next decade.

As John Cas­sidy at the New York­er puts it, the country’s finances will be in a wretched state once the GOP’s recent tax-cut bill is ful­ly enact­ed.” He laments the sea of red ink that now stretch­es into the indef­i­nite future.” We have to keep the deficit num­bers in check,” he says. But Repub­li­cans — com­mit­ted to small gov­ern­ment and even small­er bud­gets — sim­ply aren’t up to the task. The irony!

Top Democ­rats adopt­ed a sim­i­lar line. If you’re a deficit hawk you’ve got to be a deficit hawk all the way through,” Sen­ate Minor­i­ty Leader Chuck Schumer (D‑N.Y.) told a crowd on in response to Rand Paul’s rejec­tion of the bud­get deal, not­ing the Republican’s hypocrisy in vot­ing for the GOP tax cuts. For both sides to get the deficit down, each side can’t say, Well I’m a deficit hawk on this issue but not on that issue.’ If we’re going to get the deficit down.”

In the push to con­demn Trump, it seems that everyone’s become a deficit hawk, blur­ring the line between call­ing out Repub­li­can hypocrisy and Democ­rats’ procla­ma­tions that Amer­i­ca needs to get its fis­cal house in order before slip­ping irrepara­bly into the red. Yet, the prob­lem with the bud­get the White House pro­posed yes­ter­day lies not in the amount of mon­ey it pro­pos­es to spend — but the pro­grams it aims to cut. The plan would take a sledge­ham­mer to America’s social safe­ty net and pub­lic sphere, cut­ting deeply into Medicare and food stamps while sell­ing off vital nation­al infra­struc­ture. So why are Democ­rats still fix­at­ing on the debt as Repub­li­cans aban­don the pre­tense that it ever mattered?

The GOP has been lying about the impacts of the fed­er­al deficit for well over 30 years. Despite cam­paign­ing against so-called waste­ful spend­ing, Repub­li­can admin­is­tra­tions have reli­ably dri­ven up huge deficits: Ronald Rea­gan, George H.W. Bush and Ger­ald Ford are respon­si­ble for the third, fourth and fifth largest debt hikes over the course of an admin­is­tra­tion, respec­tive­ly. Today’s breed of deficit hawk­ish­ness might most accu­rate­ly be traced back to bud­get talks in the mid-1990s, when Repub­li­can strate­gists inge­nious­ly com­pared the finances of the world’s largest econ­o­my with the every­day eco­nom­ic trade-offs of hard­work­ing Americans.

You sim­ply can’t draw enough par­al­lels to the fam­i­ly bud­get­ing process,” poll­ster Frank Luntz has advised GOP law­mak­ers. It forces vot­ers to eval­u­ate the U.S. bud­get for what it is, rather than as some abstract gov­ern­ing con­cept … Keep it sim­ple and force Amer­i­cans to apply some com­mon-sense kitchen-table eco­nom­ics to the bud­get process.”

NPR White House cor­re­spon­dent Scott Hors­ley echoed that refrain on Sun­day, argu­ing that if you out­spend your pay­checks a month, you might put the dif­fer­ence on your cred­it card. The gov­ern­ment does the same.”

Amer­i­cans por­ing over their month­ly bills, of course, don’t enjoy either the pow­er of tax­a­tion or access to a sov­er­eign cur­ren­cy. The issue when the fed­er­al gov­ern­ment deficit-spends mon­ey isn’t the amount they spend, but what they spend it on: There’s no finite amount of cash the Trea­sury is pulling out of a vault. There are also no omi­nous bill col­lec­tors — vig­i­lante Chi­nese bond­hold­ers, for instance — who are going to cross the Pacif­ic Ocean to shake us down for what they’re owed and threat­en our sov­er­eign­ty, no mat­ter which par­ty dri­ves up the bill. Sim­ply put, there’s no inher­ent rea­son to wor­ry about the size of the deficit itself.

As for­mer Sen­ate Bud­get Com­mit­tee chief econ­o­mist Stephanie Kel­ton said recent­ly, Repub­li­cans’ out­right embrace of deficit spend­ing in this con­text should be treat­ed as a gift to Democ­rats. Take that gift,” she said, and say, Look, you’re will­ing to do $1.5 tril­lion. We’re will­ing to do $1.5 tril­lion. But you’re mak­ing your check paid to the order of big wealthy cor­po­ra­tions and the rich­est peo­ple in this coun­try. Let me show you how we’re going to write our checks for $1.5 trillion.’”

Some push back against Kelton’s line of think­ing by argu­ing that that, while there’s a time and place for deficit spend­ing, an econ­o­my that’s close to full employ­ment sim­ply isn’t one of them. There is no com­pa­ra­ble case for deficits now, with the econ­o­my near full employ­ment and the Fed rais­ing inter­est rates to head off poten­tial infla­tion,” Paul Krug­man writes of the bud­get deal, ref­er­enc­ing big spend­ing out­lays dur­ing the recov­ery in 2012. If any­thing, we should be using this time of rel­a­tive­ly full employ­ment to pay down debt, or at least reduce it rel­a­tive to G.D.P.”

But why? A grow­ing deficit has lit­tle effect on the macro­econ­o­my, and can be spent on impor­tant goods like infra­struc­ture and job cre­ation that would be a sum pos­i­tive for the pub­lic. Mar­kets balked recent­ly over fears of infla­tion — some­thing which could the­o­ret­i­cal­ly rise if the econ­o­my tru­ly does become over­heat­ed — but there’s lit­tle rea­son to expect it will any­time soon. Com­mon wis­dom has held that a so-called nat­ur­al rate” of unem­ploy­ment around 5.5 per­cent is ide­al for ward­ing off infla­tion, yet the unem­ploy­ment rate has fall­en steadi­ly below that since 2015, with few signs of infla­tion on the horizon.

Econ­o­mist Dean Bak­er, of the Cen­ter for Eco­nom­ic and Pol­i­cy Research, sug­gests see­ing how low unem­ploy­ment can drop before infla­tion kicks in, in the process improv­ing the lot of peo­ple still strug­gling to recov­er from the last reces­sion. While the econ­o­my is rel­a­tive­ly close to what we call full employ­ment, near­ly all the jobs the Unit­ed States has cre­at­ed since 2005 have been tem­po­rary. Wages are only just now start­ing to rise for the first time in years. If the econ­o­my real­ly is mov­ing in the right direc­tion, why stop stim­u­lus spend­ing now?

The unem­ploy­ment rate has now been well below [5.5 per­cent] for more than two-and-a-half years,” Bak­er writes, and there is still no evi­dence of an infla­tion­ary spi­ral. In fact, the infla­tion rate remains well below the Fed­er­al Reserve’s 2‑percent target.”

Deficit hawk­ish­ness has been a Repub­li­can con for decades. That a few peo­ple were dumb enough to drink the Kool Aid in that time isn’t all that sur­pris­ing. Take Mick Mul­vaney, who is now inex­plic­a­bly both the head of the Office of Man­age­ment and Bud­get and the Con­sumer Finan­cial Pro­tec­tion Bureau. As a Tea Par­ty Con­gress­man from South Car­oli­na, he pushed to cap spend­ing and bal­ance the fed­er­al bud­get, and arrived to the Trump Admin­is­tra­tion promis­ing to restore fis­cal sanity.”

Intro­duc­ing the 2019 bud­get pro­pos­al yes­ter­day, Mul­vaney admit­ted that it wouldn’t amount to a bal­anced bud­get, going on to say, I will always be a deficit hawk … I am today, I was yes­ter­day, I am tomor­row.” But whether Mul­vaney, Paul Ryan or oth­er alleged deficit hawks actu­al­ly believe what they say can be left up to their ther­a­pists: What’s rel­e­vant is how they actu­al­ly vote.

For years, cable news chan­nels gave equal time to earth sci­en­tists and cli­mate deniers, poi­son­ing the nation­al debate on glob­al warm­ing to dis­as­trous effect. The con­ver­sa­tion around the deficit might be even more dire still: Deficit hawk­ish­ness — based on a series of fan­tasies about how mod­ern economies work — has by now become com­mon wis­dom, includ­ing among oth­er­wise shrewd pun­dits and politi­cians. Fear­mon­ger­ing about the debt is its own kind of trap. Doing so in the name of par­ti­san pol­i­tics is anoth­er. With any hope, Democ­rats will avoid both in craft­ing their own poli­cies mov­ing forward.

Kate Aronoff is a Brook­lyn-based jour­nal­ist cov­er­ing cli­mate and U.S. pol­i­tics, and a con­tribut­ing writer at The Inter­cept. Fol­low her on Twit­ter @katearonoff.
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