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Commentary By Brian Riedl

Republicans Begin a Spending Spree

Economics, Economics Tax & Budget, Tax & Budget

If they can’t shrink the government, they will soon find themselves having to raise taxes.

In Washington, empty rhetoric about fiscal responsibility is about to be swept aside by the reality of trillion-dollar deficits.

Republican congressional leaders have announced a deal with Democrats to bust discretionary spending caps by nearly $300 billion over the next two years. Appropriations will rise by 13 percent this year.

This is precisely the kind of inside-the-Beltway, big-government deal-making that Republicans won the congressional majority with a mandate to end.

GOP lawmakers claim to be merely reversing recent defense cuts that would otherwise push the Pentagon budget below 2.9 percent of GDP for the first time since the 1930s. The other $131 billion of the spending-cap increase is meant to bribe Senate Democrats not to filibuster the new defense spending.

Past deals to raise the spending caps were offset with (roughly) equal entitlement-spending savings. But this budget buster — by far the largest since the 2011 spending caps were enacted to prevent such deals — is not even close to being fully offset. It will go on the nation’s credit card.

Even worse, leading Republicans such as Senator John McCain and House Armed Services Committee chairman Mac Thornberry have called on colleagues to repeal the Budget Control Act, the most successful spending-cut legislation in decades. Repealing the BCA spending caps would return Congress to the pre-2011 era — in which, on average, discretionary appropriations grew by 7 percent annually.

Republican lawmakers have spent years promising deficit reduction, spending restraint, and entitlement reform. Despite winning full control of Congress and the White House, the cuts have not come.

First, lawmakers closed out the 2017 appropriations by circumventing budget caps by more than $15 billion, and by failing to enact even token cuts to lower-priority programs. They even renewed Obama-era stimulus programs.

Next, President Trump’s budget proposal for 2018 suggested aggressive reforms to smaller agencies but allowed the unsustainable Social Security and Medicare budgets to nearly double over the next decade.

In writing the subsequent budget resolution, House conservatives proposed reconciliation instructions that would have trimmed the annual growth of entitlement spending to 5.6 percent from 5.7 percent. House Republican moderates and the Republican Senate rejected even this. Instead, congressional Republicans enacted a budget that mandated no spending cuts — and abandoned the GOP’s longstanding goal of achieving balance within a decade.

More recently, the Trump White House reasonably suggested some partial offsets for the $100 billion in much-needed hurricane disaster assistance. Thus far, Congress has refused.

And who can forget the debt-limit debacle?

In 2011, Republican lawmakers were so concerned about the $15 trillion national debt that they demanded President Obama sign one of the largest spending cuts in American history — that would be the $2.1 trillion Budget Control Act that they’re now gutting — as the price for raising the debt limit.

“President Trump’s campaign exposed that voters do not prioritize spending restraint, and lawmakers have adjusted accordingly.”

Today the national debt exceeds $20 trillion, and yet a unified Republican government casually raises the debt limit with no spending cuts at all, both last year and again in this bill. President Trump has reportedly floated the idea of completely eliminating the debt limit, even though the eight largestbudget deals since 1985 were all tied to debt-limit votes. Not even the Democrats dared to repeal the debt limit when they had unified control of government in 2009 and 2010.

Yes, Republicans admirably spent much of 2017 trying to replace Obamacare and pare back Medicaid’s unsustainable growth. However, they failed, in part because many Republican governors seemed to consider Medicaid’s rapid cost growth (53 percent since 2012) as a floor rather than a ceiling and rallied public opposition to the GOP bills.

What to make of this collapse in spending restraint?

First, President Trump’s campaign exposed that voters do not prioritize spending restraint, and lawmakers have adjusted accordingly.

Additionally, Republicans regularly bluff on spending reform. The Republican Congress that aggressively pushed President Clinton on spending then turned around and rubber-stamped President Bush’s domestic spending spree. Now the GOP Congress that admirably fought President Obama’s spending agenda is set to bust the budget caps under President Trump.

Most notably, Republicans passed legislation repealing Obamacare when they knew President Obama would veto it, and then later rejected the same bill when President Trump’s endorsement meant that lawmakers were now firing with real bullets. Whether it’s repealing Obamacare or restraining spending, Republican lawmakers seem to want the talking point without the responsibility of implementation.

Cutting taxes by $200 billion per year was easy. But without spending restraint, no tax cuts can be sustained. Even before tax reform, the Congressional Budget Office projected that annual budget deficits would surpass $1 trillion within five years and reach $2 trillion a decade after that (double those levels if interest rates rise). Over the next 30 years, the CBO projects the national debt will grow from $20 trillion to $92 trillion, reaching 150 percent of GDP.

Republicans were put on Earth to shrink government. If they cannot do that, those who remain will soon find themselves having to raise taxes.

This piece originally appeared at National Review Online


Brian M. Riedl is a senior fellow at the Manhattan Institute. Previously, he worked for six years as chief economist to Senator Rob Portman (R-OH) and as staff director of the Senate Finance Subcommittee on Fiscal Responsibility and Economic Growth. Follow him on Twitter here

This piece originally appeared in National Review Online