Donald Trump never does anything small. As a kid, he was probably asking McDonald’s to “supersize me” long before it was the fashion. Just this week, he took on the biggest, the most intractable foreign policy problem in the world — peace between Arabs and Jews — and typically, offered a grandiose solution.
His rallies aren’t just ordinary political meetings. They are camp meetings of the faithful with supporters coming from far and wide just to get a glimpse of the president. There is near-religious fervor on display — not quite messiah-like in their adoration, but certainly sincere and heartfelt.
His rhetoric is over the top. His persona is larger than life. Even his scandals are epic.
So no one should be surprised that his budget deficits are so magnificent. They are Homeric in scale, historically unprecedented in size. And because Trump never does anything small, they will outlive us all.
The annual congressional report projects that the US budget deficit is likely to blast through the symbolic threshold of $1 trillion this year despite a healthy economy with record low unemployment.
And that number is expected to widen each year over the next decade through 2030. As a result of the rising deficits, US government debt held by the public will soar from nearly $18 trillion at the end of 2020 to $31.4 trillion by the end of 2030.
Over that same period, that debt held by the public as a share of the economy will grow from 81% of GDP this year to 98% by 2030 — the highest percentage since 1946.
The CBO warned that rising federal debt would likely reduce national savings and income, boost the government’s interest payments, limit policymakers’ ability to respond to unforeseen events and increase the likelihood of a fiscal crisis.
“Today’s CBO report shows 10 straight years of trillion-dollar deficits,” said Michael Peterson, CEO of the Peter G. Peterson Foundation. “That’s a sad reflection of our nation’s poor fiscal health, and it adds insult to injury that we’re piling on all this debt in a growing economy.”
Trump’s deficits have finally, and forever, destroyed the myth that we can grow our way out of our deficits. When Arthur Laffer invented the idea that strong economic growth would offset deficit spending, he made a fundamental mistake in his calculations: that Congress and the president were responsible politicians who would never allow a deficit to climb to unmanageable proportions.
Laffer never met the likes of these drunken sailors sitting in Congress today.
And the consequences are staggering.
“That debt path would dampen economic output over time,” Swagel warned, saying interest rates would go up and U.S. household income would be held back.
“Such a significant increase in federal borrowing would also elevate the risk of a fiscal crisis,” he added.
Projections for deficits have risen in recent years, particularly after the 2017 GOP tax cuts and after both parties agreed last year to significant increases to defense and domestic spending. A last-minute deal to scrap three significant ObamaCare taxes in December ramped up deficit projections even more.
The growing deficits will also make it harder to rein in spending down the line, as the government spends more each year on paying interest on the debt.
Right now, the nation is enjoying historically low interest rates, leading to modest increases in our debt service payments. But if interest rates returned to normal levels — 4-5 percent — we’d be paying twice as much in servicing the debt as we are today. By the end of the decade, we’d have more than a trillion-dollars deficit and we’d be paying a trillion dollars a year in debt service.
Something’s got to give. Eventually, market behavior will force Congress to pull its head out of the sand and act. By then, the crisis will have gotten beyond our ability to intelligently manage it, leading to chaos, unrest, cats and dogs living together…you know the rest.
Nope. Our president never does anything small.