The Congressional Budget Office has predicted the federal deficit could reach $1 trillion by the 2020 fiscal year. Once again, President Trump has exposed a myth in American politics. That myth? That Republicans are the party of fiscal responsibility.
He is just the latest Republican president to demonstrate this. His drive for corporate tax cuts, which received strong Republican support, has blown a huge hole in the federal ledger.
Tea Party Republicans once railed against President Barack Obama’s spending habits. As the deficit has grown under Trump, however, they’ve suddenly changed their tune. Acting Chief of Staff and Office of Management and Budget Director Mick Mulvaney, who was once known as a fiscal hawk, has admitted the Trump administration “spending a bunch of money on stuff we’re not supposed to.
As we approach the 2020 election, we will likely hear the familiar refrain from Republicans claiming their party will keep the government’s books balanced while “socialist” Democrats will wreak havoc on the nation’s financial stability.
But President Trump isn’t the first Republican to break the mold — he is just one of a long line of Republican presidents since Ronald Reagan who have pushed for supply side tax policies, touting the idea that lower tax rates will boost economic growth. Throw in high rates of defense spending on top of that, and the delicate balance between taxes and spending is often thrown off kilter.
The main reason that the deficits keep growing under the GOP has to do with an insatiable appetite for regressive tax cuts, which have been at the heart of the conservative revolution since the 1970s. While it is true that the conservative movement has been about many things– ranging from culture wars to defense spending—the drive to cut taxes for wealthier Americans and business has been its heart and soul. Supply side economics offered an intellectual justification for slashing taxes based on the promise that over the long term they would generate higher revenue and bring down the deficit.
But deficits have increased under each Republican president since Reagan. Reagan, George W. Bush and now Trump have all pushed for regressive tax policies — in which the average tax rate decreases as the amount subject to taxation increases– which have severely aggravated the nation’s fiscal imbalance.
The only exception was President George H.W. Bush who spent an enormous amount of political capital to push for a deficit reduction package in 1990, which cost him much support among conservative Republicans.
Republicans often complain that Democrats in Congress refuse to go along with the spending cuts that would be needed to make the tax reductions financially plausible. Still, the GOP moves ahead understanding that most Americans won’t tolerate cuts to their federal benefits as they themselves drive for higher defense spending.
Nor is it true that Democratic presidents don’t care about balancing the budget. While there is a legitimate debate about how deep the commitment runs, there is a long record of Democratic presidents who have grappled with reducing the deficit.
President Jimmy Carter set the tone in the late 1970s by insisting on limited spending. President Bill Clinton left office with a huge federal surplus (which President Bush ate up through his 2001 tax cuts, eventually ending his second term with the deficit at over a trillion dollars) and President Barack Obama helped reduce the deficit from $1.4 trillion in 2009 to $485 billion in 2014, ending at $587 billion in 2016.
Democrats have a greater incentive than Republicans to balance the budget — doing so allows them to introduce new social programs. Republicans have been comfortable creating massive deficits so to “starve the beast” of government, as Ronald Reagan’s Budget Director David Stockman once said.
The right understands that the more politicians talk about the importance of curbing deficits, the more Democrats are pressured into cutting back on existing policies, and the harder it becomes to build support for new programs.
But the myth that Republicans care more about deficits persists despite the historical record. Perhaps President Trump’s clear record of combining reckless spending with tax cuts for the wealthy and corporation will expose the myth once and for all and remind voters that the Republican rhetoric on fiscal responsibility is all talk.
Republican presidents have not done a good job keeping the books balanced. If voters are looking for a president who will balance the budget, recent history suggests that a Democratic president might be the better bet.
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