2018 Is The Year Of Federal Budget Debauchery

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I am not being hyperbolic or using click bait with the headline you see above.

I have been involved with the federal budget in some capacity for over 40 years and, based on that experience, it’s actually quite easy for me to conclude that 2018 has been the worst year in U.S. history for anything and everything related to the federal budget.

Consider this.

Big Permanent Increases In The Deficit. The numbers are indisputable regardless of whether you’re a budget traditionalist that hates red ink or a political or economic denier that thinks the federal deficit doesn’t matter. The U.S. budget deficit is going to be close to or exceed $1 trillion in fiscal 2019 and is projected by both Donald Trump’s Office of Management and Budget and the Congressional Budget Office to keep rising. A $1.5 trillion deficit in the near future is very likely and, if there’s an economic downturn, $2 trillion is definitely possible.

The blame for this year’s fiscal debauchery belongs squarely on the House and Senate Republican majorities and the GOP president.

What did Trump and the Republican Congress do this year when faced with these unprecedented-in-a-good-economy numbers? They ignored them and attempted to increase the deficit even further.

  • Trump still wanted $5 billion for his wall between the United States and Mexico
  • Trump proposed a new Department of Defense space force that will cost billions more than we’re currently spending.
  • Just before it recessed last week, the GOP-controlled House passed yet another tax cut that will add hundreds of billions more to the deficit and national debt if it’s enacted.
  • The fiscal 2019 appropriations that were enacted last week included billions of dollars in additional military and domestic spending.
  • There was also the $12 billion bailout for farmers to offset the impact of the Trump tariffs.
  • And there was the Trump $1.5 trillion infrastructure proposal.

About the only thing that occurred this past year that should be considered deficit positive was the decision to reconsider/reschedule/cancel the military parade Trump wanted to stage this November because its projected cost was much higher than expected. But, for the record, the deficit impact of cancelling Trump’s parade wasn’t even a rounding error in terms of the total deficit and national debt.

Two things made this all so much worse.

First, the spike in the deficit was due to enacted changes in law rather than the short-term tax decreases and spending increases that happen during an economic downturn. Contrary to the temporary trillion-dollar deficits that occurred during the Obama administration because of the Great Recession, these GOP deficits are permanent.

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Second, this huge deficit increase was put in place when the U.S. economy was in comparatively good shape and smart fiscal policy dictated the opposite of what was done. We’re already starting to see the impact of this with high interest rates.

The End Of The Congressional Budget Process. Congress’s decision to ignore the process this year effectively means that the Congressional Budget Act has been abandoned.

The biggest example of that abandonment started with the GOP leadership deciding early that, even though it was legally required, Congress would not adopt a budget resolution this year. The reasoning was quite cynical: they didn’t want the Republicans running for reelection to have to go on record in favor of the trillion-dollar budget deficits their tax and spending policies created.

Accountability for the deficit was one of the main reasons the Congressional Budget Act was adopted. The act created budget resolutions specifically to force representatives and senators to vote on a single piece of legislation that compared total revenues and spending o they could be held accountable for the deficit or surplus.

This year, House Speaker Paul Ryan (R-WI) and Senate Majority Leader Mitch McConnell (R-KY) unilaterally decided that the budget act didn’t need to be implemented specifically because that accountability could hurt the GOP’s chances of retaining its majorities.

It’s hard to see the Congressional Budget Act ever being fully implemented again because of the Ryan/McConnell ploy. While Congress has not adopted budget resolutions in other years, those failures were mostly the result of an inability or unwillingness to compromise rather than a willful disregard of the law.

The second biggest example of the budget process being abandoned was the House’s and Senate’s failure to oversee Trump’s repeated efforts to impound, transfer and reprogram funds away from congressionally mandated priorities. Appropriations were frequently used by the White House very differently from they way they were supposed to be used and Congress did nothing.

The blame for this year’s fiscal debauchery belongs squarely on the House and Senate Republican majorities and the GOP president. Their policies and decisions all made the federal budget situation much much worse.

It won’t be getting better any time — as in years or even decades — soon.

Follow Stan Collender on Twitter @thebudgetguy

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