The federal budget deal worked out in the Senate on Wednesday is wildly irresponsible. The House ought to reject it, overwhelmingly – and if it doesn’t, then President Trump should veto it the minute it hits his desk.
The agreement would bust existing budget caps not just for desperately needed military spending, but for a massive explosion in domestic discretionary spending that is neither necessary nor affordable. The new social spending is advertised as some $130 billion for the next two years – but, by raising the “baseline” for future budgets, this really means a likely $700+ billion hike in spending and new debt over a 10-year span.
A nation already reeling from years of massive deficit spending, including a demonic $666 billion deficit in the most recently completed fiscal year, cannot afford this new profligacy. The new spending will either crowd out private investment, catalyze the first major spike in inflation in more than three decades, or put unbearable pressure on interest rates – or all three. The end result could well be an economic evil not experienced in the United States since about 1981 — namely, “stagflation.”
This combination of inflation and stagnation could begin to hit as early as this autumn, torpedoing whatever remaining chances the Trump administration and the Republican Congress have of holding off a Democratic election wave.
And it’s not needed. With the economy already humming, with the unemployment rate at 50-year lows, the demand for social services ought to be far lower than usual, not higher. With a massive tax cut having just been enacted, the further need for any sort of economic “stimulus” should be nonexistent – but the deficit concerns, which argue against the spending, should be more insistent than ever.
In fact, if ever there is a time to retrench from domestic discretionary spending, it is precisely at moments like these when an already full-employment economy is getting a further boost from a major tax cut, especially after nine straight years of a loose monetary policy. These are the days when government should be banking the revenues that usually come from a strong economy, so as to better afford efforts to ameliorate future downturns.
Even after seven years of budget caps, federal domestic discretionary spending, even adjusted for inflation and population growth, already was still slightly higher than it was during the reasonable norms of Bill Clinton’s last full year in office. A reasonably generous spending plan would allow for appropriations to remain at that level (other than for adjustments for inflation).
Remember, too, that less than 10 months ago Trump was proposing to reduce such spending by $45 billion in 2018. Instead, the Senate proposes adding $63 billion. That difference, from $471 billion to $579, amounts to a nearly 23 percent shift – again, this is in less than a year. Even if one assumes that Trump’s proposal last year was mostly for show, the $63 billion hike above existing spending amounts to a 12.2 percent boost. That’s nearly six times as large as the 2017 inflation rate of 2.1 percent.
This is fiscal incontinence of malarial proportions.
Worse, the new spending hasn’t been remotely justified by careful analysis, much less hearings by the Appropriations subcommittees that are supposed to use their expertise to closely vet all such expenditures. Indeed, the deal just throws out the huge spending number, and leaves it to the House and Senate Appropriations Committees to use the next six weeks inventing reasons to justify the largesse.
As political science professor Peter Hanson wisely warned Monday in a column at The Hill, “The weakening of [the committee’s] oversight capacity will lead to more poorly drafted legislation … [and serve as] an invitation to sloppy work and bad decision-making.”
In sum, the Senate agreement amounts to reckless lawmaking and profoundly dangerous fiscal mismanagement. It looks like a product to be expected from an Obama or Hillary Clinton presidency, combined with a Nancy Pelosi-led House.
It’s not even remotely the “best deal” for taxpayers; it’s a raw deal. And it’s entirely shameful.
Quin Hillyer (@QuinHillyer) is a former associate editorial page editor for the Washington Examiner and a former press secretary (1995-96) for the U.S. House Appropriations Committee.
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