Fact Check: Is the Deficit ‘Coming Down Rapidly’ as Larry Kudlow Claimed?

On Fox Business Channel Friday morning director of the United States National Economic Council Larry Kudlow claimed that the deficit “is coming down, and it’s coming down rapidly.”

While job growth continues to show strong numbers and revenues have increased from last year, is it inaccurate to suggest that “the deficit” is “coming down rapidly.”

Despite April’s record-breaking surplus of $214.3 billion, the deficit is still rising because the government is still outspending its revenue. “The budget deficit widened in the first seven months of fiscal 2018,” the Wall Street Journal reported in May. “The deficit . . . stood at $385.4 billion in October through April, which was 12% larger than the deficit during the same period a year earlier.” May fared no better, bringing the total deficit from October through May to 23 percent more than the same time frame a year prior.

“The deficit is up and it’s no great mystery why,” the director of Fiscal Policy at American Action Forum Gordon Gray told TWS Fact Check. “When you increase spending and cut taxes it’s what happens.” Gray also advised against analyzing the deficit from each month. “The temptation to compare month-to-month is tempting but not terribly illuminating,” Gray says, pointing out that government spending can change significantly from May of year X to May of year Y, but this difference is not necessarily reflected in the overall yearly deficit.

“There is really no defending Larry’s statement, I’m afraid,” vice president of the Ethics and Public Policy Center Yuval Levin told TWS Fact Check. “Deficits are rising. I’m sure they would be higher if growth were lower, but they are higher than they have been and are heading higher still.” He added, “I can certainly imagine a plausible defense of the deficit-increasing policies that are being pursued right now, but you can’t argue they’re not increasing the deficit.”

Two hours after Kudlow’s claim was tweeted by Fox Business, Fox News Research tweeted out the federal deficits from 2016 and 2017 alongside projections for the next seven years.

So what if Kudlow was referring to deficit projections?

Comparing the projection of 2017 from the Congressional Budget Office, to the projection the organization released this month, the “deficits are smaller after 2025.”

But the projection shows the deficit still increasing overall, not “coming down rapidly.” (This is a charitable interpretation of Kudlow’s statement because he claimed that the deficit was currently decreasing and made no mention of future projections.)

The June report from the CBO also notes that “the federal budget deficit, relative to the size of the economy, grows substantially over the next several years, stabilizes for a few years, and then grows again over the rest of the 30-year period, leading to federal debt held by the public that would approach 100 percent of gross domestic product (GDP) by the end of the next decade and 152 percent by 2048.” If current policies that are part of the tax overhaul from 2017 are upheld after their sunset periods, the CBO predicts that “the result would be even larger increases in debt.”

Claims that the deficit is “coming down rapidly” do not bear out given the current data. Meanwhile, the debt ticks past $21 trillion.

If you have questions about this fact check, or would like to submit a request for another fact check, email Holmes Lybrand at [email protected] or the Weekly Standard at [email protected]. For details on TWS Fact Check, see our explainer here.