Deficits Don't Matter: At least not for now.

Author:Ullmann, Owen
Position:View from the Beltway

"Nobody cares."

That's what President Donald Trump's budget director and acting White House chief of staff, Mick Mulvaney, reportedly told congressional Republicans during a preview of the State of the Union address in February, when they asked why Trump would not devote a single word to a ballooning federal deficit without precedent during a time of strong economic growth.

He's right about that, politically, at least. Neither Trump nor Georgia gubernatorial candidate Stacey Abrams, who gave the Democratic response to the speech, mentioned the deficit. In fact, hardly any elected politician of either party talks about the deficit.

There was barely a ripple of comment in Washington when the total U.S. federal debt surpassed the $22 trillion mark in mid-February, or when the debt bumped up against the congressionally mandated debt ceiling on March 2. In addition, Trump, who promised as a candidate to reduce the national debt, showed no remorse for proposing a new budget plan on March 11 that foresees annual deficits of $1 trillion or more through at least 2022.

The issue was ignored during the 2018 midterm elections by candidates as well as voters, and the recent actions of both parties in Congress show they certainly don't care about the deficit now.

While in control of both the House of Representatives and the Senate, Republicans enacted a $1.5 trillion tax cut projected to add $ 1 trillion to the deficit even after accounting for increased economic activity, and they gave a generous boost to the Defense Department. More recently, newly elected Democrats vowed to fight "PAYGO"--the pay-as-you-go rule requiring offsets for increased outlays--so lawmakers won't be hamstrung by the cost of social welfare programs they are eager to enact.

It seems the only time Washington's politicians care about the deficit is when they are attacking their opponents for being fiscally profligate. Republican conservatives created the Tea Party and House Freedom Caucus to counter President Barack Obama's Affordable Care Act and stimulus programs aimed at combating the Great Recession of 2007-2009. Democrats, for their part, have hammered Trump and congressional Republicans for enacting the massive tax cut in late 2017.

Republican disregard for deficits is hardly new. A balanced budget had long been GOP orthodoxy, in contrast to Democrats' belief in Keynesian stimulus policies, but President George W. Bush's administration shrugged off concerns about amassing red ink when it pushed through a major tax cut, turning a budget surplus inherited from President Bill Clinton into a massive deficit within a few years.

Did the widening deficit upset Bush and company? Hardly. Bush's first Treasury Secretary, Paul O'Neill, revealed in a 2004 book that he had warned Vice President Dick Cheney the swelling red ink risked derailing the economic expansion. "Reagan proved deficits don't matter," Cheney replied, according to The Price of Loyalty: George W. Bush, the White House and the Education of Paul O'Neill by journalist Ron Suskind. "We won the midterms. This is our due."

That viewpoint represents quite a change from bipartisan presidential policies...

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