Our Scary Return To Trillion-Dollar Budget Deficits
February 20, 2018
With Congress’ passage of an additional $368 billion in federal spending over the next two years on February 9, our government budget deficits could approach, and perhaps exceed, $1 trillion annually for the next several years. That’s very scary!
Particularly disappointing for conservatives is the fact that numerous Republicans voted for this huge government spending boondoggle. It is now clear that many Republicans have abandoned their commitment to fiscal restraint and limited government. Surprise, surprise.
President Trump’s latest federal budget proposal for fiscal year 2019 asks for record-large spending of $4.4 trillion, well above President Obama’s previous record of $4.2 trillion. The budget deficit under Trump’s fiscal year 2019 plan is estimated to be over $900 billion, and that’s based on some very optimistic economic assumptions – so it could be even higher.
This is a lot of bad news that has only come to light in the last two weeks. Maybe that helps explain in part why the stock markets fell out of bed earlier this month. At the very least, the thought of trillion-dollar deficits over several years (at least) suggests that market volatility is likely to remain elevated indefinitely.
Last Wednesday, President Trump told Republican and Democratic leaders that he could support a 25-cent per gallon increase in the federal gasoline and diesel tax. Apparently, this is true as it was reported later the same day by Bloomberg, CNBC and elsewhere.
This is a bad idea! As I will discuss below, one credible economic forecast estimates that such a rise in the gas/diesel tax, along with higher fuel prices expected this year, would wipe out 60% of the tax cuts that Americans are now experiencing. Let’s hope this is just another controversial idea the president threw out there before thinking it through.