Last week, Senator Rand Paul (R-KY) heroically railed against Democrats and Republicans alike for disregarding U.S. taxpayers and plunging the country deeper into debt. During the years of President Barack Obama, Sen. Paul explained, Republicans shrieked about budget deficits and massive spending bills. Now it seems they’ve adopted the fiscal practices of the Democrats.
This was put on display on Monday, when President Donald Trump unveiled a $4.4 trillion draft budget for 2019. Ben Shapiro, Daily Wire Editor-in-Chief, described it as an “Obama-level budget,” ushering in guaranteed chasms for the next five years ranging from $778 billion to $987 billion. It is projected to add $5.4 trillion to the national debt by 2023 – with rising interest rates, just to service that debt would be astronomical.
Under the proposal, Washington plans to spend $200 billion for infrastructure, $23 billion for border security, and $13 billion to combat the opioid crisis. The budget fails to tackle the real meat and potatoes of Capitol Hill’s outlay: entitlements. The president has suggested reforming food stamps and $1 trillion worth of cuts over ten years, but since it will likely be a DOA budget, politicians will compromise and agree to the status quo: spending increases.
Simply put: Americans can anticipate the U.S. government to bleed red ink for several more years.
GOP Defending Budget Proposal
Conservatives, and even libertarians, get duped every election cycle by Republicans. They talk a great game, disparaging the improvident behaviors of their opponents. Echoing the words of greats like Milton Friedman or F.A. Hayek, GOP candidates promise to cut spending and balance the ledger. Except for a few brave men and women, it does not happen – the coquettish, Mephistophelean appeal of Washington is hard to resist.
For eight torturous years, the GOP championed balanced budgets and lamented budget gaps. Today, controlling the White House, the House, and the Senate, the Republicans appear to embrace the Keynesian deficit-financing policies of Paul Krugman. And that’s never a good thing – with a Republican residing on 1600 Pennsylvania Avenue, Krugman has suddenly declared that deficits matter.
Congressional leaders are already espousing the Keynesian talking points: deficit spending now for economic growth tomorrow. At least that’s what House Budget Committee Chairman Steve Womack (R-AR) said on CNBC on Tuesday:
“While there are going to be some near-term deficit increases, we think the long-term health of the American economy is going to be much better as a result. If we can achieve 3 percent growth, then we have achieved a great victory.
We’re still the party that believes in a very strong national defense posture. National security is very important to a lot of us. Building the nation’s infrastructure is a key to helping jump-start an economy that’s been in some anemic growth pattern for the past several years.”
Taxpayers have heard these statements for years.
Deficits Don’t Create Economic Prosperity
There is a myriad of problems with budget holes. Future generations are burdened with yesterday’s recklessness, real wealth and production are diverted, and the current crop of taxpayers see more of their purchasing power eroded through money printing.
Not to mention that paying for the debt requires a vast sum of money. The U.S. government allocates around $500 billion annually to service the debt in an environment where interest is still at historic lows. Now, envision what would transpire when rates go up to fight inflation; politicians will be in panic mode!
But are deficits the biggest concern?
As Friedman regularly argued, the deficit is a symptom, and spending is the disease. In other words, don’t only be astonished by the deficit, examine why the government has a shortfall in the first place. The simple answer is this: the state spends too much of your money.
The left slams the massive defense budget, even though they contributed to it. The right lambasts the welfare state, even though they contributed to it. This is what compromise breeds in the swamp: the welfare-warfare state, a never-ending crusade to spend more of your money on waste.
Sen. Paul alluded to some of that waste: $700,000 to study what Neil Armstrong said on the moon, $500,000 to determine if taking selfies makes you happier, and the Pentagon losing $29 million of heavy equipment in Afghanistan.
Considering that the U.S. spends more than $1 trillion every year on entitlements, you may think that these are mere peanuts. But as the adage goes: if you follow the pennies, the dollars will follow.
Every April, the government extracts a chunk of your income to pay for these boondoggles and blunders. Think what you could have done with that cash: paid off your credit card debt, renovated your bathroom, contributed to your emergency fund. Nobody spends your money better than you do.
Democrats Unhappy with Trump Budget
You would think that the Democrats would be pleased by President Trump’s draft budget. Let’s look at what Democrats should be ecstatic about: $4.4 trillion worth of spending, entitlements are hardly touched – in fact, a new one is introduced: federal paid family leave benefits – and a $200 billion down payment on a nationwide infrastructure investment.
Shouldn’t Democrats be thrilled? Nope. They have a grimace on their faces, including Representative John Yarmuth (D-KY), who shrieked:
“The Trump budget proposal makes clear his desire to enact massive cuts to health care, anti-poverty programs, and investments in economic growth to blunt the deficit-exploding impact of his tax cuts for millionaires and corporations.”
During the Bush years, the Democrats and the media slammed the president for shortfalls. During the Obama tenure, the Republicans knocked the president for red ink. Now that Trump is president, shortfalls suddenly matter to Democrats and the media. Meanwhile, the American people lose.
The ubiquitous political gamesmanship will not prevent the pending fiscal Armageddon. Should Republicans lose the midterm elections in 2018 and the White House in 2020, the GOP will once again decry deficits and spending. This will help them win back the White House, and then return to their spending ways. It is a perpetual cycle that makes for great partisan shouting matches, but it only hurts the American people since they will be the ones footing the bill and suffering the consequences.
Are you worried about the budget deficit? Let us know in the comments section!
Andrew has written extensively on economics, business, and political subjects for the last decade. He also writes about economics at Economic Collapse News and commodities at EarnForex.com. He is the author of "The War on Cash." You can learn more at AndrewMoran.net.