The words “deficit” and “debt” disappeared from the Republican lexicon once Donald Trump became president. Members of what was once the party of fiscal responsibility passed the president’s tax-cut proposal, which will add $1.5 trillion to the national debt over the next decade. On Monday, the Treasury Department announced that the 2018 federal deficit climbed by 17 percent to $779 billion.
Most Republicans are singing the old Ronald Reagan refrain: tax cuts pay for themselves by boosting economic growth. It didn’t work then. It won’t work now. The debt will be passed on to children and grandchildren.
It wasn’t always so for Republicans. New Hampshire has produced some of the staunchest deficit hawks in Congress, starting with the late senator Warren Rudman, who joined with the late Massachusetts Democratic senator Paul Tsongas to create the deficit-fighting Concord Coalition. Former governor and U.S. senator Judd Gregg, as chairman of the Senate Budget Committee, conducted a war on deficits that he continues to fight to this day. Here’s Gregg writing earlier this month in the Washington political journal The Hill.
“The deficit will be approximately $850 billion this year. Next year, it will be $1 trillion. During the next decade, under the spending plans proposed by President Trump and endorsed by Congress, the deficit will each year exceed $1 trillion.”
The largest purchaser of U.S. debt, at least until recently, has been China, which is owed nearly one-fifth of a national debt that now tops $21 trillion. China, Gregg warns, has been selling more U.S. debt than it’s been buying. Blame Trump’s ill-reasoned trade policies. China was happy to loan America money because it’s been that country’s best customer. That began to change when Trump slapped a huge, unnecessary tariff on imports from China and a host of other countries. China selling rather than buying U.S. debt will raise America’s cost of borrowing and that means the debt will grow even faster.
Gregg says China’s goal, one of them anyway, is to replace the U.S. dollar with the yuan as the currency of choice for world trade. That would do great harm to America’s economy and its standing in the world. The solution? Scrap the tariffs. Reduce the deficit.
“The failure of this administration to even acknowledge the threat posed by our spiraling debt – and especially the unsustainability of the spending required to meet entitlements obligations – has massive direct consequences, and even more dramatic unintended ones. We will never be the winner in a trade dispute if we need the nation we are targeting to support us by lending us money,” Gregg wrote.
Trump’s tax cuts mean that at a time when the deficit and debt should, thanks to remarkably low unemployment levels and a strong economy, be going down, they’re growing. Paying the interest on the national debt now eats up $522 billion per year, a sum almost equal to spending on the military or on Medicaid and programs to aid children. Servicing the debt is on track to grow to as much as $900 billion within a decade. That’s money not available to rebuild America’s aged infrastructure or provide more people with health care.
Republicans prefer to attack the problem with spending cuts, largely through reductions in payments for Medicare, Medicaid and Social Security. Democrats would instead reverse many of Trump’s tax cuts and raise the top tax paid by the truly wealthy. We have our druthers about which way to go, but if nothing is done future generations will suffer a lower standard of living than the generations that saddled them with enormous debt.