The federal government collects plenty of money. The problem is that the government spends too much of it. The government wouldn’t have this headache if it had heeded the advice of Thomas Jefferson: “Never spend your money before you have earned it.”
President Trump has promised to respect such counsel, saying, “Our moral duty to the taxpayer requires us to make our government leaner and more accountable.” He’s about ready to introduce his fiscal 2018 budget, so we’ll soon see whether he means it.
The U.S. Treasury he inherited from President Obama is almost out of cash. Treasury Secretary Steven Mnuchin says the United States is once more bumping against the debt ceiling and he has asked Congress to lift the ceiling so the United States can continue to pay its bills. Despite collecting a record $611 billion in taxes from individual filers during the first five months of fiscal 2017, the Treasury ran up a deficit of $349 billion. Inevitably, lawmakers respond with sour looks and threats to allow the government to go broke. Occasionally they even let the government shut down, only to agree to a higher debt ceiling and resume spending like drunken congressmen on a junket to Rome or Rio.
Mr. Trump campaigned on a promise to carve out $10.5 trillion in savings over the next 10 years. Trial balloons floated in advance of his budget have included cutting $6 billion from the Department of Housing and Urban Development, $1 billion from the U.S. Coast Guard, and trimming undisclosed appropriations from the Environmental Protection Agency, the Transportation Security Administration and the State Department’s foreign aid programs. The president hints that money would be “repurposed” to boost the Pentagon’s budget by $54 billion. “A penny saved is a penny earned,” Ben Franklin famously said, but that’s only true if the penny isn’t spent on something else first.
Before the November election, the Committee for a Responsible Federal Budget calculated that the Trump agenda would cost the Treasury an additional $5.3 trillion over 10 years. Office of Management and Budget Director Mick Mulvaney says he wants to do better than that. “I’m hoping to put together something for the president to look at on the other pieces of entitlement spending, or mandatory spending,” he says. The president has not yet dealt with containing entitlement costs, which consumed $2.56 trillion in fiscal 2017, or 70 percent of the federal budget.
Much of the Trump economic blueprint rests on the assumption that his business-friendly policies will create strong and steady growth unseen for a generation. Maybe they will. There are early signs that such a boom may be getting started. The Bureau of Labor Statistics reported last week a jump in new jobs during February that blew past expectations to 235,000 jobs. Taken with January’s figures of 261,000 added to payrolls, it was the best two-month stretch for job creation since 2015. As a result, the unemployment rate has fallen to 4.7 percent.
More Americans working mean more dollars pouring into the Treasury and that will reduce the deficit, currently estimated at $443 billion. With cumulative debt a shade under $20 trillion, the United States is in a deep hole. Mr. Trump may be serious about starting to climb out of that hole — or, like the president he replaced, just dig the hole a little deeper.
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