Welcome to a new era of federal budget spending
For years, Republicans defined themselves as distinct from Democrats by saying they alone had a commitment to fiscal discipline. They even created the budget mechanisms to all but guarantee that federal spending levels decline for at least a decade to come.Posted — Updated
The new budget agreement President Trump signed into law blows a hole in that ongoing promise and marks a new era in federal spending. It temporary does away with the mechanisms put in place to control spending and replaces the 2011 GOP of the tea party with the 2018 GOP that controls all levers of the federal government. It makes an attempt to arrive at the fiscal baseline Republicans tried to make a legislative mandate in 2011 even more a remote possibility.
According to an analysis by the nonpartisan Committee for a Responsible Federal Budget, the passed budget resolution requests more spending than President Trump sought for the military or that Obama requested in non-defense spending. With the cost of the tax cuts passed in December, it sets public debt levels on a path to be higher as a share of GDP than the economy has ever seen at a similar point of peacetime economic prosperity.
These spending levels are achieved by temporarily lifting automatic spending cuts Congress put in place to force itself to make difficult spending cuts. But it turned out even the specter of automatic cuts wasn't enough. For years, lawmakers have passed temporary spending to exceed the sequestration layer of caps. (The caps were not originally meant to go into effect, but rather spur the parties to work together and control spending.) The bill Trump signed Friday breaks through both cap levels enacted as a result of the 2011 legislation and sequestration.
The remarkable part of this is that for years Republicans stood in lockstep that they would never accept debt levels this high. This bill is a break from that rhetoric.
House Speaker Paul Ryan used to say (based on math that was later corrected) that "when the debt gets to 90% as a share of the economy, you start slowing down, and we stagnate." With the tax cut legislation, the budget passed today will push debt levels past the 90% marker in 2022 unless future cuts are made.
Nevada Republican Sen. Dean Heller's website still says that "as our national debt grows, the dollar is weakened and Americans have to work more so they can buy less." The budget resolution is the largest increase in deficit spending since the stimulus passed during the Great Recession.
"The fact that they are exceeding the Budget Control Act caps themselves really is striking given that the Republican majority pushed to have those changes," said Ben Ritz, an incoming director at the Progressive Policy Institute. To return to the levels of debt charted by the Budget Control Act, Republicans will now need to find even more spending to reduce.
Economists warn that the danger from federal borrowing at this level is different from what it was in the years after the economic downturn of 2008 and 2009, when the economy needed help. Still, this bill is nothing short of a nail in the coffin of previous ideas of fiscal austerity.
Copyright 2023 by Cable News Network, Inc., a Time Warner Company. All rights reserved.