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Odds Suggest US Deficit Will Increase in 2019

Don Aguero

by Don Aguero in Politics News

Updated Apr 12, 2020 · 9:46 PM PDT

Paul Ryan entered politics as a strident fiscal conservative. He leaves with a budget deep in the red.
Paul Ryan entered politics as a strident fiscal conservative. He leaves with a budget deep in the red. By Gage Skidmore (Flickr) [CC License]
  • The Republicans like to market themselves as fiscal conservatives, but their policies suggest otherwise
  • The deficit has ballooned to $779 billion, a 17% increase from 2017
  • Will we go deeper into the red in 2019?

The Republicans have long marketed themselves as the party of economic conservatives and deficit hawks. But it seems public debt is only an issue when they’re in opposition. The deficit rose to $779 billion in 2018, a 17% increase from last year.

Public revenue has flat-lined due to the Ryan tax cuts, which shaved $76 billion from corporate tax collections. Couple that with a $65 billion increase in defense spending and you’ve got a budget deep in the red.

The $779 billion deficit is the largest since 2012, when public spending went into overdrive to stimulate the economy out of recession. Now that the economy is doing well, it’s unusual for the government to be taking on this much debt.

2019 Federal Budget Deficit Odds

Will the Federal Budget Deficit Increase in 2019? Odds
Yes -130
No -110

According to government forecasts, we’re on track for a $1 trillion deficit by 2020.

Federal spending has ballooned under Donald Trump while revenue has remained flat. With baby boomers beginning to retire and the economy potentially due for a recession, there’s a good chance the federal deficits will sink even deeper into the red in the coming years.

Now that he’s President, Trump has developed an appetite for government spending. He still wants funding for a border wall, which will strip another $18 billion from the balance sheets. That is, unless he follows through on his promise of making Mexico pay.

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Then there’s the “Infrastructure Plan” he talked so much about on the campaign trail. That was put on the back-burner when Trump took office, but now may be the time to revisit the idea.

The Democrats now control the House, and an infrastructure bill is one of the few things that could garner bipartisan support. Former economic adviser Gary Cohn predicts the bill could add another trillion dollars to the national debt.

It’s rare for deficits to be this bad in good economic times. A booming economy should lead to higher tax revenues, which should offset public spending. But the tax bill has mostly stripped away any gains.

If the economy takes a turn for the worse, then we’re due for the kind of debt blowout that gives accountants night terrors.

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This is the new normal now. Regardless of the state of the economy, the Republicans will continue to increase spending (especially in defense) with little regard for the swelling deficit.

The tax cuts have not “paid for themselves,” as Donald Trump and Paul Ryan claimed, and the drop in corporate tax revenues will continue to plague future budgets. We’re due for bigger and bigger deficits in the years to come.

Pick: Yes (-130)

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