President Donald Trump on Monday released a $4.8 trillion fiscal 2021 federal budget proposal that would cut food stamps, tighten Medicaid and other safety-net programs and reduce environmental protection spending, while extending tax cuts that have already added $1 trillion to the deficit. The GOP, which spent the entire Obama era harping that deficit spending was irresponsible even in those dire economic times, is now proposing far deeper deficit spending in a strong economy.
Trump and the GOP are sending a clear message with this budget: They think they can ride to reelection on the growing economy that they inherited. Meanwhile, they’re banking on voters not recognizing that the overwhelming beneficiaries of that growth are the already-rich. That’s why voters should be wary of their propaganda and soundly reject those who promote it in November.
When Barack Obama was sworn in as president, the economy was in its worst free fall since the Great Depression. Most congressional Republicans opposed Obama’s roughly $800 billion package of stimulus spending, with much theatrical hand-wringing about deficits. But standard economic theory holds that deficit spending is useful to spur growth during downturns, and that theory was borne out. The stimulus and related efforts stopped the bleeding and launched the longest-lasting economic expansion in U.S. history.
That expansion was in full, healthy progress when Republicans passed their 2017 tax cuts — which, economically speaking, made no sense except to the corporations and wealthy individuals the cuts mostly served. The deficit is forecast to exceed $1 trillion for the first time in years. And what do the GOP’s deficit hand-wringers say now? Nothing, of course.
The administration argued that explosive growth rates would make up for the revenue losses. While the economy has continued to grow since the cuts, it hasn’t come close to meeting the administration’s forecasts. So the cuts have dramatically failed to pay for themselves. Yet Trump’s budget plan would extend them for a decade beyond their current scheduled sunset of 2025.
In hindsight, the only accurate predictions about the tax cuts were from critics who warned they would explode the deficit and give Republicans an excuse to cut safety-net programs to cover the losses. This reverse Robin Hood scheme is exactly what Trump’s budget does.
Thankfully, the budget proposal as written has no chance of getting past the Democrat-controlled House. But it’s relevant as a blueprint to Republican economic thinking going into the November elections. The GOP has clearly learned nothing from the latest expensive failure of trickle-down economics, and is determined to continue playing that losing hand.