As a member of the House of Representatives, Mick Mulvaney was a stalwart voice for deficit reduction and spending reform. He recognized that entitlement reform was the keystone to preserving American prosperity for future generations.
These days? Not so much.
In fact, these days as the White House chief of staff Mulvaney happily guzzles the deficit Kool-Aid. He endorses the facile delusion that America can grow its way out of debt. As the Washington Examiner’s Colin Wilhelm reports, Mulvaney on Tuesday told the Peter G. Peterson Foundation’s Fiscal Summit that “There is no center of gravity to reduce spending in this town, period, end of story … We are not going to cut our way to balance.” Apparently unconcerned with how pathetic those words sound from someone who is supposed to be galvanizing the nation from his position in the White House, Mulvaney continued with the proposition of an easier choice. Namely, a call to bury our heads in the sand. As he put it, “we’re trying to figure out a way to grow our revenues to be bigger than expenses.”
This is a very silly and very sad joke.
The structural deficit and the existing national debt are driven by one defining factor: an aging population matched to overly generous entitlement spending growth. It’s an immoral mortgage on the heads of American children and young adults. But it’s also an obvious mathematical reality.
As the CBO observes, “Debt held by the public is projected to rise by 83 percent (in nominal terms) over the next 11 years, increasing from $15.7 trillion at the end of 2018 to $28.7 trillion in 2028.” Even judging the CBO’s specific findings skeptically, the basic facts are clear: we cannot grow our way out of the deficit-debt spiral.
My colleague Philip Klein has previously illuminated Mulvaney’s happy delusions here, but the chief of staff’s latest comments deserve another riposte. Because to make Mulvaney’s words at all realistic we would have to achieve sustainable real annual growth rates in excess of at least 3.5% (and more likely closer to 4%). Trump deserves much credit for the current economy, but even the most optimistic economists know that a sustainable real growth rate of 3.5% is ludicrous. Only Trump’s most devoutly supplicant MAGA economists sell that snake oil Kool-Aid of deficit delusion.
That might seem harsh, but it’s deserved. After all, our current spending-revenue trajectory means we are soon going to be borrowing so much on interest payments that critical spending (the military, for example) will be crowded out just to pay down the interest on the debt. Combined with the almost certain increase in interest borrowing rates, this also means we’re going to have ever-declining funds for investment (which is the key to productivity growth, which is the key to economic growth). See the stupidity?
What happened to Mulvaney? What happened to the man who once led his party in calling for action to address the defining domestic challenge of our time? Why did he fall in love with the deficit Kool-Aid crew?
The answer seems sadly simple. As with his approach to tax reform, it appears that Mulvaney chose to sit at the center of executive power rather than in service of the nation’s better future. Let us hope he one day enters mathematical rehab.
