As top officials in the Trump Administration put the finishing touches on a 2018 budget plan that’s due to be sent to Congress later this month, early reports indicate that while there will be calls for cuts in both domestic spending and entitlement programs, the plan is only expected to promise a balanced budget within 10 years.
Just how difficult would it be to balance the budget?
1. It’s been 16 years since Uncle Sam was in the black. The last time the U.S. ran a yearly budget surplus was from 1998-2001, mainly because of unexpected economic growth during the last years of the Clinton Administration – and unless there is a gigantic change in approach, the U.S. Government is not going to get out of the red any time soon. The budget deficit in 2016 was $587 billion. Estimates are that the 2017 deficit will be less than that, as it stands at $344 billion so far in Fiscal Year 2017. Coming up with a half trillion dollars in savings is not like pulling a rabbit out of a hat.
2. 10 years to a balanced budget. If the Trump Administration offers up a plan that takes ten years to balance the budget, that would follow along with other Republican plans in recent years. Compared to Democrats – who have not offered a plan in many years that envisioned a budget in balance at all – the GOP is certainly more for budget discipline; but some might point out that 10 years means many more billions will be added to the national debt along the way. Ten years is still the stated goal for Office of Management and Budget Director Mick Mulvaney.
3. Both parties like to spend money – just on different things. I learned this a long time ago, and it’s a line that aggravates the living daylights out of many of my listeners. But it’s true. Lots of Republicans like to talk about the best way to cut the deficit, is to emulate the tax cuts of the Reagan Administration. It’s true – tax rates went down, and more money rolled in, especially after the end of the recession in 1982. But the deficits kept going up in the Reagan years because spending kept going up as well. Jimmy Carter’s final deficit was $74 billion in 1980. Reagan’s lowest yearly deficit was $128 billion in his first year in office.
4. When it comes to a balanced budget, there are 3 options. When you boil down a budget – whether it is for the government, or your own household, there are only three things you can do: 1) cut spending, 2) bring in more money, or 3) a combination of 1) and 2). Theoretically, you could cut over $500 billion in spending at the federal level to balance the budget – but the votes wouldn’t be there to do that, because of the outcry. Republicans in Congress will be tested this summer. Will they really vote for deep budget cuts? Or will the budget look pretty much the same later this year?
5. Tightening the purse strings at FEMA. One way the Trump Administration will be tested in terms of the budget is what they do in areas where money can be held back. Two examples of that cropped up in the last week on disaster relief money, as North Carolina asked the feds for $929 million in aid to deal with damage from Hurricane Matthew in 2016 – but received just $6.1 million. And in Pennsylvania, the Governor grumbled there after FEMA rejected a plan for money to help deal with a big winter snowstorm. Yes, when you are saving money, you always need to start somewhere. But getting to $500 billion in cuts – to fix the deficit for one year – won’t be easy.
Republicans have long talked about turning the budget around, and getting it in balance.
We’ll see how much progress they make in the months ahead in Congress.