Federal revenues are booming, yet deficits are rising again because spending is booming even more. President Trump, unhappy about growing deficits, says he will ask all cabinet officers to find five percent in spending cuts for next year.
Sounds like a good proposal, but the linked USA Today story is devoted entirely to ridiculing it. You can’t cut federal spending, the reporters say: Congress spends money, not the president (true); Congress ignored Trump’s proposed budget, which would have eliminated 62 agencies, last year; tax cuts are partly responsible for increased deficits; even if all federal spending were cut five percent, it would amount to only $200 to $300 billion, a fraction of next year’s projected $1.1 trillion deficit; the real drivers of federal spending are Medicare and Medicaid; and so on.
So we may as well give up, apparently. Federal spending will continue to skyrocket until the whole unsustainable edifice crashes to the ground. That’s USA Today’s position, anyway, and it may well be right. Then again, maybe Trump will surprise us all by vetoing future bloated spending bills to try to get a grip on the deficit. He did say, after all, that he would “never sign another bill like this [the $1.3 trillion spending bill Congress sent him in March] again.” Who knows: often, Trump means what he says.
Meanwhile, regulatory costs imposed by government are every bit as real, and often more damaging, than costs imposed by taxes, borrowing and spending. Here the administration has made real progress. President Trump promised to get rid of two regulations for every new one his administration implemented. In fact, the administration has done much better than that, eliminating 12 regulations for every new one.
The administration has released data indicating that cutting regulation has saved, on net, $33 billion, compared with the $245 billion in regulatory costs that were added during the Obama administration. The Trump administration has delayed or withdrawn 2,253 new regulations that the Obama administration tried to implement during its last months. These included many of the most damaging initiatives that the Democrats tried to defer, in order to avoid paying a political price.
So the Trump administration has shown that regulatory overreach can be successfully addressed. As to whether it is possible to cut federal spending before a fiscal cataclysm strikes, the jury is still out.