Trump Trumped By… Trump? Fiscal Reality Looms.

On March 15th, the present government is going to hit a brick wall: the expiration of the current budget deal. The debt ceiling holiday agreed upon two years ago is going to end, and the $20 trillion hard debt limit is going to smack the government in the face.

That means no more debt unless Congress raises the ceiling. The US Treasury will be running off of reserve cash, of which they have approximately $200 billion. Currently, the US Government spends about $75 billion every month. That means the Treasury will be able to fuel spending until June, at which time they will run out of spare dough.

So if the government runs out of money and the debt ceiling is at it’s limit, what does that mean? Shutdown. That glorious, one-word phrase that brings a smile to my face at the mere thought: A government shutdown.

Of course, nothing causes the sort of scramble in Washington DC comparable to a debt crisis scramble. Nothing else but a debt crisis can cause DC politicians to put off weekend affairs with their secretaries. Money talks.

Ultimately, this ceiling will be increased. It always is. It shouldn’t be increased, but whatever.

TRUMP’S FISCAL PLAN

Trump has said that he plans to drastically increase domestic spending. He has made claims regarding defense spending in the realm of a 10% increase. He has vowed to put billions of dollars toward infrastructure and welfare programs. And need I even mention the famous Wall, projected to cost something in the range of $20 billion at the very least?  In case anyone didn’t already realize this, Trump is a very rich man and is used to being a big spender. Why should he be any different in office?

In addition to all this, Trump has promised tax cuts. In true Trump fashion, nothing specific has yet been nailed down. He has only said that his middle-class tax cuts will be “massive”. Yuge, no doubt.

The problem here should be obvious: How can Trump propose spending increases with massive tax cuts? Politicians, especially Republicans, love to play this game: promising tax cuts while proposing increased spending for infrastructure and military. But these are mutually exclusive concepts. It’s like if I decide I want to get a job that makes less money while spending even more annually than I do now. It is not likely to work well.

Normally, the answer to this would be the ol’ government standby: deficit spending. The extra spending would be added to the national debt. But as we already discussed, the debt ceiling is going to hit the government in the face come March 15th. The only way that Trump can deal with this is to have a budget plan agreed upon by Congress which increased the debt ceiling.

Therein lies the next issue: Trump is currently proposing to cut federal spending in other areas by approximately $55 billion. The only area in which Trump has made any firm propositions to cut spending is in foreign aid. Otherwise, no specifics have been laid out. Wherever these cuts are proposed, there will be massive blowback from some segment of Congress. I think he will have a hell of a time getting Congress to agree to a budget plan in which he makes these cuts and adds the funds to the Pentagon’s budget in addition to large tax cuts.

Bottom line: Trump’s fiscal plans sound fundamentally out of touch. He cannot cut taxes while increasing spending without adding a massive amount to the federal deficit. The only way he can get past the debt ceiling is for Congress to agree with him on a budget plan. If he submits a budget reflecting massive cuts, there is going to be a riproaring battle in Congress over what gets cut. In the end, no Congressmen will want to cut anything and the whole plan will probably go out the window. I sincerely doubt Trump’s proposed budget cuts will look anything similar to how they looked when they began.

CONCLUSION

I don’t think Trump can possibly keep his promises in regards to tax cuts and spending. The money simply ain’t there, and Congress is totally divided on how to proceed. I don’t think his budget plans have much of a chance of getting through unscathed.

I would like to believe that Congressional Republicans, ever willing to pay lip service to fiscal conservatism, would actually be willing to go to the brink on this one and refuse to increase spending or the deficit one iota. Unfortunately, Congressional Republicans are useless. They have almost always been useless. This probably will not change, at least not soon. When push comes to shove, Congressional Democrats will become hysterical over spending and tax cuts. Republicans will give in and fold. The debt ceiling will go up and business will carry on as usual.

Voters? They don’t care. Voters, conservative and liberal alike, stopped paying attention to the deficit years ago. Out of sight, out of mind, as long as the government checks keep rolling in. Free goodies have a calming effect on people.

Ah, well. We can enjoy the show. Debt ceiling crises tend to bring out the biggest showboating antics that Congressmen have to offer. I look forward to the grandstanding.

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