Donald Trump appeared on Rush Limbaugh's program last week and boasted that the United States is "taking in more revenue now than we did when we had the higher taxes because the economy's doing so well." It's a familiar thought in Republican circles: lower taxes fuel stronger economic growth, which leads to increased revenue. Ergo, the argument goes, tax cuts pay for themselves.
The trouble, of course, is that the president's claims were false. A Washington Post fact-check piece explained, "Trump gets virtually everything wrong in his framing.... The president needs a remedial lesson in budget policy."
It was against this backdrop that the New York Times reported on the latest deficit figures from the Treasury Department. Are the increased revenues Trump pointed to bringing the budget closer to balance? Not exactly.
The federal budget deficit surpassed $1 trillion in 2019, the Treasury Department reported on Monday, as tax cuts and spending increases continued to force heavy government borrowing amid a record-long economic expansion. [...]The deficit has grown nearly four times as fast, on average, under Mr. Trump than it did under Mr. Obama. Mr. Trump has already added more to the national debt than Mr. Obama did in his entire second term -- $2.6 trillion, compared with Mr. Obama's $2.1 trillion.
Those hoping to see a smaller deficit probably won't like next year's numbers, either: in the first quarter of the current fiscal year (October through December), the budget deficit widened to $356.6 billion, just over these three months. It suggests the shortfall will likely be quite a bit larger this year than last.
Circling back to our earlier coverage, these aren't exactly the fiscal results Donald Trump promised the electorate before his election.
As regular readers may recall, in February 2016, the future president appeared on Fox News and assured viewers that, if he were president, he could start paying off the national debt “so easily.” The Republican argued at the time that it would simply be a matter of looking at the country as “a profit-making corporation” instead of “a losing corporation.”
A month later, in March 2016, Trump declared at a debate that he could cut trillions of dollars in spending by eliminating “waste, fraud, and abuse.” Asked for a specific example, he said, “We’re cutting Common Core.” (Common Core is an education curriculum. It costs the federal government almost nothing.)
A month after that, in April 2016, Trump declared that he was confident that he could “get rid of” the entire multi-trillion-dollar debt “fairly quickly.” Pressed to be more specific, the future president replied, “Well, I would say over a period of eight years.”
By July 2016, he boasted that once his economic agenda was in place, “we’ll start paying off that debt like water.”
As Catherine Rampell explained a while back, “Federal deficits have widened immensely under Trump’s leadership. This is striking not only because he promised fiscal responsibility – at one time even pledging to eliminate the national debt within eight years – but also because it’s a historical anomaly. Deficits usually narrow when the economy is good and we’re not engaged in a major war.... Trump’s own policies are to blame for this aberration.”
That’s plainly true. The White House and congressional Republicans swore up and down in late 2017 that they could slash taxes for the wealthy and big corporations without increasing the deficit because, as they repeatedly insisted, “tax cuts pay for themselves.” We didn’t need additional evidence that their ridiculous belief was, and is, wrong, but we have the evidence anyway.
As Paul Krugman added, “[T]he Trump tax cut caused a huge rise in the budget deficit.... This tidal wave of red ink is even more extraordinary than it looks, because it has taken place despite falling unemployment, which usually leads to a falling deficit.”
It’s an important detail. Every time we discuss the deficit, I feel compelled to point out again that I’m not a deficit hawk, and I firmly believe that larger deficits, under some circumstances, are absolutely worthwhile -- and at times, necessary.
These are not, however, those circumstances. When the economy is in trouble, it makes sense for the United States to borrow more, invest more, cushion the blow, and help strengthen the economy.
The Trump White House and the Republican-led Congress, however, decided to approve massive tax breaks for the wealthy and big corporations when the economy was already healthy – not because they were addressing a policy need, but because they were fulfilling an ideological goal.
The results speak for themselves.