Election Day has come and gone and we now know that come January, Donald Trump will take the oath of office and Republican majorities in the House and Senate will be greeting him.
In their separate post-election remarks, President Obama, President-elect Trump, and Secretary Clinton called on Americans to work together for a successful functioning government. That’s a good thing, because there is much to be done before and even more after the swearing in.
Government is running on a stop-gap continuing resolution that provides funding at last fiscal year’s levels until December 9th. It is not clear whether Congress will go ahead and pass the remaining 11 spending bills (the one that funds military construction and the Department of Veterans Affairs passed in September) in some sort of omnibus package or kick the can into next year. Obama still has the veto pen until January 20, so some of the congressional spending dreams may be tempered if they want to get it done this year. Or they can force the new President to have dealing with leftover spending bills be one of the first things on his plate. No matter the decision, there will be one elephant in the room – the spending limits from the Bipartisan Budget Act of 2015 (BBA) and the underlying Budget Control Act of 2011 (BCA).
The BCA caps defense and non-defense discretionary spending until 2021. It’s the law. That is unless Congress and the President agree to scrap it, by changing the law. Obama wanted to repeal it entirely. Republicans in Congress wanted to keep a lid on non-defense spending, but get rid of the limit for defense spending. One problem with both: the Congressional Research Service estimates the BBA/BCA yields nearly $1 trillion in savings from FY17-FY21. If they scrap it, Congress and the new President have to explain to taxpayers what made them decide to be so extravagant. For the first time in several years, the budget deficit grew to $587 billion in fiscal year 2016. The debt is currently nearly $19.8 trillion and grew by $110 billion over just the past month. At this rate the debt will exceed $20 trillion in less than a year’s time.
Like most candidates, Trump promised new spending on virtually every sector of the economy. More for investments in infrastructure, more on defense, more for veterans, also no change to Social Security, Medicare, and Medicaid. That’s a lot of cash and would most certainly balloon the deficit and debt. We’ve heard the story about increased tax revenue coming from greater economic growth. But there are also tax reform proposals that are predicted to be revenue drains as well. And economic growth is not a panacea for the debt. As the economy grows so too will interest rates. The Congressional Budget Office estimates that in ten years, interest payments to service the debt alone will be more than $700 billion per year. That’s more than the country is spending on the Pentagon this year.
This doesn’t mean that the country shouldn’t invest in infrastructure or take care of our veterans or reform the tax code. But it does mean that the nation must set priorities and figure out how to pay for those priorities. Take defense for example. The BBA set defense spending at $551 billion this year. Congress wants to pile $18 billion in off-budget (uncapped) Overseas Contingency Operations account spending on top of that. But for some lawmakers this isn’t enough. Defense Secretary Robert Gates said in 2009 “If [we] can’t figure out a way to defend the United States on a budget of more than half a trillion dollars a year, then our problems are much bigger than anything that can be cured by buying a few more ships and planes.” Inflating his estimate to today’s dollars only gets you to $562 billion, so the Pentagon is doing fine.
Republicans will control both the legislative and executive branches. They will get the credit or blame for their actions. Taxpayers deserve to know Trump and lawmakers’ plans and priorities, the costs and how they will pay for them. The country cannot afford any less.
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