In his January 20th Inaugural Address, President Trump laid down the gauntlet. He pretty well parroted Bill Clinton’s 1994 premature notice to the nation, to wit, “the era of big government is over.” The new president declared war on the Washington Establishment, pledging to return government to the people. Mr. Trump spoke for all the “forgotten men and women” who work harder and harder and have less and less to show for it Never mind that the 16-minute address was short on specifics. There’s time to get down to brass, budgetary tacks. But there’s also time for a little addition and subtraction.
Unfortunately, things do not add up.
Donald Trump rightly emphasizes the urgent need to rebuild the nation’s national defense and will appropriate significant sums for that purpose. Given the manifest, manifold global threats we now face and the cuts caused by sequestration and eight long years of hostility to this country’s combat readiness, it makes perfect sense to support a robust military buildup. Just as necessary, is the President’s intention to honor and properly care for the nation’s veterans, our wounded warriors. That too, will add additional billions to the federal budget. The aggressive infrastructure projects that will soon get underway will do likewise. And, the wall across America’s southern border will have to be financed, as well, while we wait for an eventual reimbursement from Mexico.
To finance current and future expenditures, the Trump Administration will do something else that, in itself, is abundantly reasonable, namely, lift the heavy tax burden individuals and corporations currently bear. Tax reduction will awaken the “animal spirits,” incentivize entrepreneurs and let them keep more of the capital they need to open new and expand existing enterprises. Eventually, the benefits will “trickle” down to every American looking for a job and boost revenues to the Treasury. But, first, those tax cuts will leave Washington with far less revenue to fund its operations and thus create substantially larger annual budget deficits. The increased borrowing needed to finance those ballooning deficits and the $20 trillion public debt already on the books will drain pools of capital from the financial markets and leave much less capital available for private investment.
Hence, the question: Do you believe in magic?
Now, the Administration has already announced an audacious plan to slash federal spending by $10.5 Trillion over the next ten years. That is a step in the right direction, but just a baby step. Even if it passes, the many Congressional hurdles to come and land on the president’s desk, may well come too late and accomplish too little. The thing about 10-year plans is that they work about as well as the old Soviet Union’s famous “5-year plans” did. The idea that anyone can foresee events over so long a period is simply fanciful. No one can say what market conditions will be three years or three months down the road. Down to the day the housing bubble burst in September 2008, the justly acclaimed supply-side economist, Larry Kudlow, bellowed about the “greatest story never told,” the “Goldilocks” economy – not too hot, not too cold, but just right. And then came the crash.
With public indebtedness being so steep on all levels of government, today, with so much wealth invested in fragile financial markets (awaiting the next “Panic” and frenzied “rush for the exits”), is it hard to imagine what sudden jolt could jar the projections of anyone’s ten-year plan? Will the dire need to respond to some international crisis in this troubled world demand decisive remedial action and incur who knows what attendant costs? What blown-up bubble of ill-begotten gains (think subprime mortgage bundling) will unexpectedly burst? In fact, there is no telling. Families and nations gripped by runaway indebtedness do not consider carefully enough the long-range. In the end, they do no service to themselves.
Consider the details of the 10-year plan. At present, it calls for (1) closing the National Endowment for the Arts and the National Endowment for the Humanities, (2) privatizing The Corporation for Public Broadcasting, and (3) cutting appropriations for the Departments of Commerce and Energy. Targeting these programs and agencies, said Brian Darling, a former Capitol Hill staffer, “would be a good first step in showing that the Trump administration is serious about radically reforming the federal budget.”
Is that so? The combined budget for the National Endowments for the Humanities and Arts agencies is south of $300 million. That’s a fraction of 1% of Washington’s annual expenditures. The Corporation for Public Broadcasting consumes another $445 million. Closing all three agencies would not rate an asterisk in the battle to bring the federal budget into balance. What special interest lobbying efforts will be waged to thwart the cuts for the Departments of Commerce (now $9 billion) and Energy ($32 billion) and what ultimate budgetary compromises Congress will make are anyone’s guess. Eliminating all these agencies altogether would cut around 5% of next year’s anticipated $1 trillion budget deficit and make not a dent in the $3.5 trillion Washington is already spending, each year. No serious person will confuse this smoke-and-mirrors parlor game with honest fiscal reform.
So the questions are these: will there come a day when real budget cutting begins, and will that day come in time?
Jerome Huyler is a former assistant professor at Seton Hall University. He earned his Ph.D. in political science from the New School University in 1992 and his bachelor’s degree from Brooklyn College, where he majored in philosophy. Dr. Huyler’s doctoral dissertation was edited for publication as Locke in America: The Moral Philosophy of the Founding Era (University Press of Kansas, 1995, 2001). He also authored Everything You Have: The Case Against Welfare (1980). Click on the links below to get your copies today.