A State Of The Union, Without Specifics

Weekly WastebasketA State Of The Union, Without SpecificsAnd nary a mention of historic debts or deficits.

Budget & Tax,  | Weekly Wastebasket
Feb 8, 2019  | 6 min read | Print Article

On Tuesday night, members of Congress and their guests, cabinet members and Supreme Court justices all lined up to watch the most anticipated piece of political theater of the year: the State of the Union. Every State of the Union is a mix of pomp and policy proposals, examples of heroics and exhortations to be our best selves. President Trump’s delayed State of the Union address was no exception. But despite clocking in at 82 minutes, many important issues were left on the cutting room floor. Say for example, the nation’s virtually unprecedented deficit spending at a time of economic expansion and never before seen debt. Or the looming liabilities and problems caused by climate change.

Not surprisingly, the president focused on the strong economy and talked about crowd pleasing policy proposals – strengthening infrastructure, eliminating HIV in 10 years, and tackling childhood cancer. These are all things for which there is wide public support. And, of course, he also mentioned priorities which do not have appeal across the political spectrum or country – the border wall and the current trade war with China, for example.

But the president did not mention our growing deficits and debt. The CBO recently projected that annual deficits will hit $1 trillion within three years, causing the national debt to spike by more than $10 trillion by the end of the decade. He did not mention the rising costs of interest on our debt, which will exceed even our high projected levels of Pentagon spending by 2025. He did not mention the massive decrease in revenues because of the tax cut, or the fact that it was coupled with a major increase in spending.

Back to the great economy: all of these deficit financed tax cuts and spending bumps are happening during one of longest periods of economic expansion since World War Two (WWII). The result of that combination of policies has led to a debt-to-GDP ratio as high as it was right after WWII. Other than right after the Great Recession, the annual budget deficit-to-GDP ratio hasn’t been this high since – you guessed it – after WWII.

RELATED ARTICLE
Tax Day Thoughts on Budgeting

Likewise, there was no mention of the reports in the last several months documenting the accelerating pace of climate change, or the catastrophic losses – of life, property, and dollars — resulting from recent disasters including hurricanes Florence and Michael, and the California wildfires. The $1.7B it will cost to rebuild Tyndall Air Force Base, which was damaged by hurricane Michael, is just one example. With all the focus on the border wall, you could be forgiven for not knowing that disaster relief is a major component of the spending package.

The demands for government investments are real — the country should wisely and appropriately put money into infrastructure. The government needs to build resiliently in the face of climate change. We need to help communities prepare for disasters and protect themselves from the terrible losses that come with them.

But lawmakers also need to put the country’s financial house in order. That doesn’t mean all investments must stop, or that we should be penny wise and pound foolish, by slow walking investments that might reduce liabilities in the future. It means that investments need to be prioritized. Particularly in a time of economic growth, when demands for investments grow, so too should our revenues. There are many ways to increase revenue that should be relatively low hanging fruit – eliminating wasteful subsidies, charging appropriately for our resources, and ending tax giveaways, for example.  And now that we have a year of the new tax law under our belt, we can identify the most expensive loopholes created by the law or left on the books – and eliminate them.  We can look to new sources of revenue, like a carbon tax.

The State of the Union will always be short on specifics – but as the curtain closed on Tuesday night, we were left with the lingering dissatisfaction–when a play or movie doesn’t resolve the central conflict. Now it is up to Congress to figure out how the story ends.

Like What You’ve Read? Subscribe.