- - Tuesday, February 13, 2018

ANALYSIS/OPINION:

The Trump budget looks a lot like the budgets Barack Obama drew up. There’s no way an economist with his head on straight would defend the indefensible maneuvering of Congress and the president over the past several days.

We first got a two-year budget that drove through the Budget Control Act caps like a runaway 18-wheeler, to the tune of $300 billion. The hard-won sequester and budget caps negotiated between the Republicans and Mr. Obama on the edge of a cliff in 2011 are gone with the wind. Everyone has split for the Wild West.

President Trump’s budget, presented Monday, is no kin to his first budget that set out to get rid of fat, gas and bloat, to terminate scores of unneeded programs, introduce overdue reforms in how Congress spends money, and to show a credible path to a balanced budget within 10 years.

This year’s budget celebrates new multi-billion spending priorities, with a little half-hearted lip service to fiscal discipline, all with the faked sincerity of Barack Obama. The executive summary of the Trump budget boasts of additions, not subtractions, promoting more spending for infrastructure, cyber security, opium addiction, strengthening Medicare, veterans’ health care, disaster relief and other things. Where do we get relief from the budget disaster relief?

Sen. Rand Paul of Kentucky warns of a return to $1 trillion deficits, with a reminder that this is “the kind of behavior we as Republicans denounced in the Obama years.” The New York Times exults that “the Tea Party party is over,” and The Wall Street Journal groans that Trumponomics is a return to the belief “that budget deficits don’t matter.”

Liberals, who turn out to be not so progressive after all, mock conservatives that the price of the $1.5 trillion Trump tax cut demonstrates that the Grand Old Party is now the grand old deficit party. The Democrats, of course, just want to do what comes naturally to Democrats, for whom discipline, fiscal and otherwise, is a dirty word. These are the folks who applauded as Mr. Obama doubled the national debt from $11 to $20 trillion. Nancy Pelosi and Charles Schumer would only allow their House and Senate caucuses to approve a budget if it included $100 billion more for social welfare spending. The nation can’t expect restraint there.

Nevertheless, the budget picture is brighter today than a year ago, when Mr. Trump came to town. How can that be possible, given the spending frenzy in Washington? The economy is growing much faster than in the Obama era, when it was becalmed in 1.6 percent growth, and the prognosis was things were not likely to get much better than just 1.8 percent growth. The Congressional Budget Office and most “progressive” economists told us that 2 percent growth of the gross domestic product was the very best America could do.

Mr. Trump, to his credit, challenged that notion, and so far it looks like he was right, and the “secular stagnation” crowd was way wrong.

Over Mr. Trump’s first three quarters in office the economy shows 3 percent growth and the Federal Reserve Bank of Atlanta predicts 5 percent growth in the first quarter of this year. Wall Street interprets this as evidence of an “overheating economy.” We haven’t heard that complaint since the Reagan years. It’s not a bad problem to have: too many jobs, wages rising too fast.

Mr. Trump seems to get something that the tedious bean counters don’t. It all starts and ends with growth: 1 percent more growth means $3 trillion of reduced deficits over the next decade. Nothing brings down debt and deficits more quickly than putting more people to work and keeping fewer people on the dole.

What matters is borrowing relative to the size of the economy, and how much wealth there is. Wealth is up by $6 trillion, thanks to pro-growth policies, and the economy could be shifting into a 3 to 4 percent growth zone, twice the rate of growth Mr. Trump inherited from his predecessor. The tax cut, deregulation and pro-energy policies are liberating the economy.

This developing economic boom won’t solve every problem. But it will help with nearly everything. The good news is that the president and the Republicans in Congress get the growth side of the equation pretty much right. What is disappointing is how much faster the economy could grow, and how much faster the deficit would shrink, if these powers that be would get control of spending and get on with draining the swamp.


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