On Monday, the Treasury Department announced that for the 2018 fiscal year, the federal government ran a $799 billion deficit. That’s $113 billion more than the year before, which is a 17 percent increase in the difference between the Treasury’s revenues and government spending. The 2017 tax cuts can’t be blamed for this, as Democrats are sure to suggest. The problem is entitlements and runaway spending. Medicare, Medicaid, and Social Security combined with the 2018 budget deal to raise discretionary spending caps by $146 billion to make up around three quarters of the current deficit.
As Yuval Levin and James Capretta showed in our pages last month, Republicans and Democrats may disagree on much, but they are happy to get together when it’s time to spend other people’s money. “The Democrats, of course, only propose to spend more,” wrote Levin and Capretta, and Republicans “have given up any pretense of wanting entitlement reform.” What has befallen us isn’t just partisan dysfunction or gridlock—the culprits in years past—but fecklessness.
By late 2019, the deficit will have surpassed $1 trillion. In 10 years, Brian Reidl of the Manhattan Institute projects in a new report using CBO data, entitlements will themselves add $1.7 trillion to the deficit. In 30 years, if left unchecked, Medicare and Social Security will amount to a $100 trillion deficit. The rest of the budget in 2048, Reidl projects, would run at a surplus of $16.2 trillion.
The White House, which could insist on addressing the budget deficit through entitlement reform, is instead mired in trade disputes likely to worsen the deficit over time. With less foreign investment in the United States, tax payments will be lower. And Trump’s pyrrhic trade war has led to a $12 billion farm-aid program, a bill that will be footed by the taxpayer. The federal government has already disbursed about $5 billion of this aid to farmers to make up for its trade protectionism. The rest will follow next year.
Bad policies, executive mismanagement, and Congressional disinterest: That’ll cost you $799 billion this year alone.
