The Oxford English Dictionaries named “toxic” the word of the year for 2018. Merriam-Webster picked “justice.” Two words that were never considered because hardly anybody talks about them in Washington anymore: “debt” and “deficit.”
This is particularly alarming because every fiscal warning light is flashing brightly. The deficit, the annual gap between government revenues and spending, hit $779 billion during the fiscal year ending in September, an increase of $113 billion over the previous year. In November alone, the government spent twice what it took in, and the deficit for the current fiscal year should top $1 trillion.
The national debt, the total accumulation of past deficits, is approaching $22 trillion. Maya MacGuineas, head of the Committee for a Responsible Federal Budget, told a Congressional hearing last week that this trend line signals “an unsustainable course.” Such a huge gap during an economic boom is especially worrisome, she said, and “is unprecedented in our nation’s history.”
Yet elected officials, in both parties, refuse to pay attention. They’re not burying just their heads in the sand, but their whole bodies. “The issue has just disappeared,” lamented Sen. Mark Warner, a Virginia Democrat, in The New York Times. “There’s collective amnesia.”
With lawmakers losing interest, the public has tuned out as well. In a recent Pew poll, only 48 percent of Americans said cutting the deficit should be a top national priority, a sharp drop from 63 percent in 2014 and 72 percent in 2013.
The reason for this amnesia is obvious. Correcting the “unsustainable course” of budget imbalances requires only unpopular options: higher revenue, lower spending or both. During President Trump’s first two years, exactly the opposite choices were made.
Congress passed and Trump signed a massive tax cut that will add at least $1.5 trillion to the deficit. At the same time, Republicans enacted a spending measure containing $300 billion in additional outlays, and no mention of how to pay for their profligacy.
Yes, Democrats were co-conspirators on the spending bill (although opposing the tax measure), and they have adamantly resisted any reforms to the entitlements — Social Security, Medicare, Medicaid — that are key drivers of the deficit.
But the primary blame for the current fiscal fiasco rests squarely with Trump and the Republicans, who have totally controlled the government for the last two years.
During the campaign, the president proudly called himself “the king of debt” on CBS, and he seems relentlessly unrestrained by any sense of financial responsibility.
The Washington Post reports, “Three former senior administration officials said the deficit issue was rarely brought up in Trump’s presence because he had no interest in discussing it.” And according to the Daily Beast, when Trump was told how his policies would explode the debt, he replied, “Yeah, but I won’t be here.”
The only Republicans who seem willing to criticize the president’s irresponsible indifference are out of office and insulated from pro-Trump hit squads. One is John Kasich, the outgoing governor of Ohio, who battled Trump for the Republican nomination in 2016 and might again.
Writing in the Post, Kasich said that his fellow GOPers “sound like cost-cutting deficit hawks” on the campaign trail. “But once the TV lights go off, they turn tables to support record spending and deficit-driven borrowing that have left us with an unprecedented burden of national debt.”
Why does it matter? After all, a certain amount of deficit spending is good for the country, stimulating economic activity and job growth. But the current shortfalls are particularly dangerous because they are coming during good economic times, when deficits should be shrinking. When the inevitable downturn occurs, and Fed chief Jerome Powell recently warned about a “softening” in the economic outlook, the “government’s financial capacity and willingness to respond to emergencies” will be severely crippled, notes MacGuineas.
Moreover, rapidly rising debt payments will squeeze the government’s ability to serve as a safety net for needy Americans. As MacGuineas warned: “Next year, the country will spend more on interest than on children, which means we will be spending more on financing our past than investing in our future.”
This is not just a domestic issue either. Close to half of the national debt is held by foreign creditors, starting with China, and Dan Coats, the director of national intelligence, told Bloomberg that those expanding exposures represent “a dire threat to our economic and national security.”
But when it comes to that threat, the word of the year from most of official Washington is simply “silence.”