Presidential Candidates And Red Ink In Federal Budget
During one of the Republican presidential debates Fox News did something I approved of. After Donald Trump made a statement about balancing the federal budget with the removal of waste in government the anchors for the debate pulled up a graphic to underscore the folly of his statement. It was an attempt to bring focus and reality to the numbers that need to be considered when talking about our national debt.
Too little tough questioning and genuine probing has been done to make the candidates speak forthrightly about the cost of government. While I am a strong advocate of an energetic and broad type of federal government I also have never shied away from stating how bills need to be paid.
Gerald Seib writing in the Wall Street Journal has attempted to nail the candidates to their positions and then frame the larger argument as to why there is not enough discussion on this matter.
In a nutshell, here is the disconnect: Mr. Trump has said he can eliminate the $19 trillion federal debt in eight years. At the same time, he has proposed a giant tax-cut plan that the conservative Tax Foundation says would, even after accounting for the economic growth it would create, reduce government revenues by $10 trillion over the next decade.
Taken together, that’s a hole of some $30 trillion to fill—and actually more, considering the debt would continue to climb in the interim. Add in promises not to touch Social Security and Medicare benefits and to build up the military, and the task is nearly impossible.
For perspective, the entire federal budget for nondefense discretionary spending—programs outside of entitlement programs and interest on the debt—now runs about $600 billion annually. You would have to eliminate every penny of that spending—on roads, education, law enforcement and scientific research—for 25 years to fill that hole.
Or, alternately, as the bipartisan Committee for a Responsible Federal Budget estimated, you would have to cut all government spending outside of Social Security by 93%.
Mr. Trump’s main Republican rival, Sen. Ted Cruz, brings some of the same disconnects to this issue, simply on a smaller scale. While Mr. Cruz proposes passing a constitutional amendment requiring a balanced budget, the Committee for a Responsible Federal Budget estimates that his economic proposals—which combine a big tax cut with increased military spending, the end of Affordable Care Act taxes and much smaller domestic spending cuts—would increase the national debt by $12.5 trillion over the next decade. To put that in perspective, the debt has risen about $9 trillion during the course of the Obama presidency.
On the Democratic side, Sen. Bernie Sanders outbids everybody on both spending and tax increases—and would add to the debt. He proposes raising the rates across personal tax brackets, establishing a top federal tax rate of 54.2% and boosting taxes on capital gains.
While all that would pay for some of his expanded social spending, which would drive up federal spending by an estimated 33%, the Committee for a Responsible Federal Budget still estimates that his plan would add somewhere between $2 trillion and $15 trillion to the federal debt, depending on how much his plan for national health insurance would end up costing.
In terms of debt management, Ohio Gov. John Kasich and Hillary Clinton are the most responsible. Her programs would increase federal spending by an estimated 2%, and she proposes tax increases to pay for them. The Tax Foundation estimates that her proposals for tax increases would raise $498 billion in federal revenue over a decade—though it also estimates those tax increases would decrease the gross domestic product by 1% in the long run by suppressing economic activity.