Perhaps it’s a waste of time and pixels to remind people of President Trump’s campaign promises. I also have a problem, which I’ve mentioned before, that I can’t understand the explanation that Trump’s supporters took his campaign statements “seriously but not literally.” To me, it’s hard to make those two words align in a coherent way. And the problem is exacerbated when so many of the campaign statements were phantasmagorical.
So now we have Trump’s tax reform plan. Well, not really. We have a one-page summary in which every statement prompts about 1,000 questions. Basically, everyone’s tax rate goes down, but almost all deductions go away, which makes up for some – but certainly not all – of the cost of the lower rates.
Rich people and corporations get the biggest benefits, by far. But almost every taxpayer pays less. Details to come. Personally, I think I’ll wait to assess this until a full plan has been released and analyzed and scored non-phantasmagorically by neutral experts, most especially by the Congressional Budget Office.
Trump used to say that the revenue gain from doing away with deductions will offset the revenue loss from the lower rates. Some of that offset is certainly possible. But, here’s a small prediction. The honest scorekeepers will decide that the plan will add massively to the federal deficit and debt. Massively plus.
Spending cuts will be proposed to offset some of the lost revenue. Many of the spending cuts will be compromised down. The net effect will be to add massively, massively, massively-plus to the national debt.
I don’t claim to know whether such a plan or anything resembling such a plan will be adopted. But I do know that Trump will not keep one of his many phantasmagorical campaign promises. He often railed against and promised to do something about the deficit and debt picture, and implied he had ludicrous or unspecified ideas about how to make it better. But on some occasions he went further.
Last April, in an interview with the Washington Post, Trump pledged to pay off the national debt over the next eight years. He didn’t just promise to balance the budget in the final year of his second term. (He won’t do that either, but it’s a less insane promise). He said he would pay off the debt. Here’s the story.
OK, maybe he didn’t use the words “pay off” to describe what he would do to the debt. He said he would “get rid” of the debt, which may suggest that because of his famed deal-making ability he would negotiate some of it away. Color me skeptical.
Because of the ludicrous nature of so many things he said as a candidate this one got lost in the mix, although he came back many times to the idea that he had a secret plan to get rid of the deficit (or the debt, he seems to use the terms interchangeably, leading one to wonder whether he knows the difference). But if you read that Post story linked above, it appears that Trump really meant he had a plan to “pay off” the debt over eight years, a statement that might be delusional or just a lie.
As an example, he was asked by Miss America’s Outstanding Teen what he would do about the $18 trillion dollar “deficit.” (That figure actually must refer to the debt, not the deficit, but Trump repeated the mistake in his reply, thus):
TRUMP: All right. Well, what we’re going to do, I mean we do, and by the way it’s not $18 trillion, it’s now $19 trillion. So we have now $19 trillion in deficits (sic). $19 trillion, you know if you look, we owe! When I say that, we owe, this is what you’re talking about, we owe $19 trillion as a country. And we’re gonna knock it down and we’re gonna bring it down big league and quickly, we’re gonna bring jobs back, we’re gonna bring business back, we’re gonna stop our deficits, we’re gonna stop our deficits, we’re gonna do it very quickly.”
MANY IN AUDIENCE shouted: “HOW?”
TRUMP: “Oh, how! Are you ready? Number 1, we have tremendous cutting to do. You have a Department of Education that is totally out of control, massive costs. And, you know, most of the, and some of the Republican candidates like Common Core. I’m totally against Common Core. I want local education. When I’m in New Hampshire and Iowa and South Carolina, I want – so important. So we’re gonna have that.
We’re gonna save on Department of Environmental Protection, because they’re not doing it. They’re not doing their job, and they’re making it impossible for our country to compete. And many, many other things. Hundreds of billions of dollars is going to be saved, just in terms of running government.
In addition to that, I’m gonna bring millions of jobs back into this country. OK, darling? Thank you.
Maybe, when he told the Post he would get rid of the debt, he meant the deficit. Should we be bothered by a president who hasn’t mastered that distinction?
Anyway, the last time the U.S. government had a period when it wasn’t running a deficit (meaning a balanced budget or a small surplus) was during the Bill Clinton years. The last time the U.S. government ended a year with no debt was 1835.
I once described myself as a moderate deficit hawk, which caused some mockery of the term in the discussion thread. I don’t have any illusion that the U.S. government will “get rid” of the debt in my lifetime, and I don’t think that’s an important goal. I also think that in times of historically low interest rates, it makes sense for the nation to borrow money to make long-term investments, like infrastructure and educating the future workforce, that will contribute to economic growth and in a long-term sense pay for itself. But on a year-to-year basis, I think a moderate goal would be to have the total debt grow more slowly than the GDP. It’s our big, strong economy that makes it possible to carry our massive multitrillion-dollar debt.
Although the current incumbent is not going to balance the budget and not going to “get rid of” the debt, and both measures are likely to get worse during his tenure, especially judging by tax his proposal, if he asked me I would tell him that a rational goal would be to try to get the GDP growing faster than the debt is growing.