America's national debt will never, ever go down
Everyone loves to complain about the debt. No one likes doing anything about it.
Democrats think they have the GOP's big plan all figured out. First, Republicans pass a big, fat tax cut that worsens budget deficits. Then, expressing alarm about worsening budget deficits, Republicans try to slash entitlements. Fiendishly clever, yes?
"This is a nasty two-step strategy that has long been the Holy Grail for hard-right Republicans," Senate Minority Leader Chuck Schumer (D-N.Y.) told The New York Times.
It isn't crazy conjecture. If made law, the new Senate Republican tax bill could boost the national debt to nearly the size of the entire U.S. economy by 2027, with levels heading even higher if expiring individual tax cuts get made permanent. And top Republicans such as House Speaker Paul Ryan and House Ways and Means Chairman Kevin Brady are already saying entitlement reform is next. As an influential GOP economist recently wrote in The Wall Street Journal, "The challenge for the Congress after the next election will be to start reversing the rise in the debt."
But they are not going to reverse the rise in America's national debt. No one is.
If Republicans really cared about deficits and debt — during the Obama years they claimed the big federal budget gap could spark another financial crisis — they could have flatly rejected any tax plan that reduced government revenue. To now count on entitlement reform to make up the difference is hardly a second-best solution. Messing with Medicare and Social Security is even more politically treacherous than the failed attempt to repeal ObamaCare, given the GOP's dependence on older voters.
Moreover, President Trump has repeatedly put those programs off limits. Sure, White House economic adviser Gary Cohn recently said that reforming "welfare" could be on the agenda — but only after fixing regulation, taxes, and infrastructure. So more of a tomorrow thing, if ever, because nothing will likely happen without strong presidential leadership. And Donald "I'm the king of debt, I love debt" Trump has given little indication that he has evolved into a budget hawk. Finally, it is hardly likely that congressional Republicans will have more political power after the 2018 midterm elections than they do right now.
Now consider this: It's a realistic possibility that after eight years of Trump — more often than not, presidents win re-election — a Democrat takes office in 2025 at a time of trillion-dollar budget deficits and a historically high national debt. What would that Democratic president do? Show the fiscal rectitude Republicans didn't and reduce the debt? Of course not. Unless financial markets force them, Democrats will likely make up for lost time and spend big on their priorities, whether free college tuition or a universal basic income or high speed rail. They might tax the rich a lot more, but that probably won't be enough to reverse that rising tide of red ink. What's more, a growing number of progressive wonks really don't think high debt levels are much of a problem as long as that borrowed money is being spent on programs they think effective. So don't fixate on debt-GDP ratios.
In other words, Washington simply doesn't care about cutting the debt burden. Did it ever? Sure. Back in the 1990s, both parties saw slashing debt as a fiscal imperative. Today, though, both parties are preparing to run an economic experiment on the world's largest and most advanced economy. Most economists, however, would say this is an unnecessary gamble that will likely end in tears — and much higher taxes.