- The Washington Times - Sunday, October 28, 2018

From the budget deals in the 1990s to the “sequester” spending caps passed in 2011, divided government has been relatively good for Washington’s bottom line.

That’s unlikely to be the case next year. With deficits again soaring, neither Republicans nor Democrats have made a convincing case during this year’s campaign for how they’ll get the budget back on track.

“If anyone’s going to make a push on this, they’re keeping it awfully quiet,” said Robert Bixby, who heads the Concord Coalition, a fiscal watchdog group.

The fiscal austerity Republicans preached after their 2010 wave election, which led to major budget cuts, has evaporated.

First, the GOP muscled through a $1.5 trillion tax-cut package, and then Republicans and Democrats managed to come together on a major two-year budget deal in February — to spend more money.

Combined, the lower taxes and higher spending sent the deficit surging to $779 billion in fiscal year 2018, and it’s on track to hit $1 trillion by the end of this decade.

“We have opened the fiscal dam, and the red ink is flowing,” said Maya MacGuineas, who heads the Committee for a Responsible Federal Budget.

Ms. MacGuineas said she generally believes that divided government fosters more “responsible” government, but said the country is in an era of “fiscal free lunch-ism.” That’s where the big compromises end up digging deeper holes.

“There are deals to be had where one side trades deficit-financed X for the other side’s preference for deficit-financed Y, and I worry we’ll keep seeing that,” she said.

That’s what happened earlier this year on the bipartisan spending deal, when Republicans insisted on more Pentagon spending and Democrats demanded more domestic spending. They compromised by both getting their way — adding $300 billion in total new spending in 2017 and 2018.

Democrats, though, say the GOP deserves extra blame for the tax cuts.

House Minority Leader Nancy Pelosi said recently that history proves Democrats are better fiscal stewards.

She said President Barack Obama inherited a $1.4 trillion deficit after President George W. Bush helped pass a separate round of tax cuts and a prescription drug program for seniors, and that Mr. Obama helped bring it down to $500 billion by the time he left office.

“President Trump comes in, and there they go with their big tax cuts,” she said.

President Bill Clinton, meanwhile, oversaw the first balanced budgets in decades in the 1990s.

Yet in each case the better fiscal picture came only after voters gave the GOP control of some portion of Congress.

Mr. Clinton had to work with a GOP House and Senate after 1994, and the budget reached balance in 1998, holding there until the early George W. Bush years, when a combination of tax cuts, a souring post-tech bubble economy and the Sept. 11, 2001, attacks and subsequent wars created big deficits.

They began to decline again in 2005, and dipped all the way to $161 billion by 2007, just as Democrats retook control of both the House and Senate.

Then came the Wall Street troubles: Mr. Bush and then Mr. Obama went on spending- and tax-cut binges, hoping to stimulate the economy and stave off a complete collapse.

Republicans took control of the House in 2010 and struck a deal with Mr. Obama to impose tea party-inspired spending restraints, including the sequester cuts that, while much maligned, produced two straight years of actual reductions in federal spending for the first time since the 1950s.

Mr. Trump’s election in 2016 seems to have spelled doom for the sequesters.

Now, Mr. Trump is pushing for a new round of tax cuts, while liberal Democrats say they’ll push for even higher entitlement spending if they take control of the House in next month’s elections.

“The deficit is going to rise in the next Congress regardless of who wins the election, because the political system is in gridlock and there’s no budget discipline to speak of,” said Brian Riedl, a senior fellow at the Manhattan Institute.

Mr. Riedl recently unveiled his own comprehensive proposal to try to improve the country’s fiscal picture that tried for a more balanced approach and included trims in spending on entitlements and some tax increases.

He said the response he’s gotten has been surprisingly positive from both sides — at least for now, when the ideas are still in the conceptual stages.

“I think if my plan ever got momentum on the Hill, it would probably be picked apart a lot more,” Mr. Riedl said.


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