The Fiscal State Of The Union, 2018 Edition

Weekly WastebasketThe Fiscal State Of The Union, 2018 EditionThe math doesn’t add up, and the bills still have to be paid. At some point rhetoric needs to meet reality.

Budget & Tax,  | Weekly Wastebasket
Feb 2, 2018  | 6 min read | Print Article

The State of the Union is must-see-TV in our neck of the woods. And a president’s first SOTU is particularly noteworthy. Always an occasion to highlight accomplishments – and preview plans for the future, President Trump’s speech this week did exactly that, highlighting the happy stock market, relief taxpayers will get from last month’s tax package, and major investments in infrastructure, border security, and more. Sounds like a strong and optimistic state of the union, right? Not if you scratch below the surface.

Presidents don’t usually step on their own successes, but putting a shine on something doesn’t make it successful. After decades of successive administrations wasting billions of dollars in its pursuit, we know there is no such thing as “beautiful, clean coal.” The amount of money wasted on this modern day alchemy is just plain ugly. We also can’t help but point out that there is no such thing as a defense sequester. Congress set spending limits, but by raising them (over and over and over), Congress avoids across-the-board sequester cut. Taxpayers, however, can’t avoid Pentagon waste and overages.

But at some point rhetoric needs to meet reality. This is especially true of President Trump’s speech, in light of our fiscal fiasco and the reality that governing and budgeting is about making choices. The president expressed some expensive aspirations and we heard nothing about how we’re going to pay the bills.

To be fair, Mr. Trump is not the first president nor is this the first Congress to want to spend more money than we’ve got. In the last 100 years, the government has run a surplus in only 20 years, and only four years out of the last 50. But spending eyed in the speech is far bigger than the budget (and taxpayers) can stomach.

Since the passage of the tax cut package, the country is starting $1 trillion in the hole. Any investments, will be deficit financed. And the estimated numbers for some of the items on the wishlist? A whopping $716 billion for national security, as much as $130 billion in additional disaster relief, and a trillion dollars or more for infrastructure. Some reports hopefully suggest that the infrastructure package will be “only” $200 billion, leveraging far more from the private sector and states. But keep in mind this president promised that Mexico would pay for the unbelievably wasteful border wall – now clocking in at $20 billion – something everyone agrees is not going to happen.

Hangover from 2019 Spending

Timing is everything. Most major increases in deficit spending are spurred by economic challenges, like wars or the recession brought on by the 2008 financial crisis. That’s not the case right now. We’re in our third longest economic expansion in more than 150 years and unemployment is 4.1 percent. Is the struggle over for everyone? No. But the economy doesn’t need an economic stimulus package. What it needs is some adulting, with hard choices, and better outcomes.

Plain old-fashioned unvarnished math skills would also be handy. You can’t spend more than you have and expect to come out ahead without paying a price somewhere. Even before the recent tax cuts, yawning deficits were projected as far as the eye can see. You don’t need a calculator to know that decreasing revenues is going to make it harder, if not impossible, to responsibly afford additional investments no matter how worthy. The national debt stands at more than $20 trillion, annual budget deficits are projected to top $1 trillion possibly as soon as this year. To make matters worse, interest payments on the debt are expected to top $1 trillion in eight years time.

Did we mention that with the exception of harbors, nearly every federal infrastructure trust fund (highwaysaviation, and inland waterways) is stretched thin? Because communities and their members of Congress are all too willing to take from the pot, but don’t want to replenish it. The lack of prioritization systems and fetish for new construction over repair means that too often pet projects move forward that are not the best, most important, or economically beneficial.

Mr. President, thanks for the speech and for offering us the big beautiful visions. But the math doesn’t add up, and the bills still have to be paid. What’s your plan there? How about you Congress? Anyone? Anyone? Bueller? American heart, American hands, American grit …. and American debt? SAD!