That year, when the debt was already on an unsustainable path and growing faster than the economy, we estimated that Trump’s agenda would increase deficits by $4.6 trillion over the next decade. We also warned that, under his proposals, the debt would eclipse the size of the economy by 2025 and reach an all-time high soon after.
We came reasonably close on the policy projections. And now, because of all that borrowing, along with the additional debt-financing needed to fight the pandemic and recession, the debt numbers are alarming.
In his first three years in office, before the coronavirus pandemic, President Trump approved a whopping $3.9 trillion in borrowing for new tax cuts and spending between 2017 and 2026. This substantially expanded the national debt during a period of strong, sustained economic growth. As far as we could ascertain, the deficit had never been as high while paired with an economy as strong as it was in 2019.
As a result, we entered this year’s health and economic crisis with a debt, expressed as a share of gross domestic product, higher than any time in U.S. history, other than just after World War II. Adding in covid-19 relief measures, the president has enacted a total of $6.6 trillion in new borrowing in his first term. The debt is now likely to exceed the size of the economy as soon as next year.
Setting the crisis spending aside, the president largely followed through on his campaign proposals — though with some differences.
Most significantly, he signed into law about $2.3 trillion of individual, business and corporate tax cuts. That’s a huge number but, as a result of smaller rate reductions than initially proposed, the cost of the tax cuts was only about half of the $4.5 trillion his 2016 campaign’s tax plan would have cost. During the campaign and leading up to the tax law’s passage, there was much hand-waving about how the tax cuts would pay for themselves. Still, revenue proved to be lower than they would have otherwise been by any meaningful metric.
Trump more or less matched his proposal to increase defense and veterans spending by $950 billion; he signed into law two massive increases for the defense budget, along with new funding for veterans.
The president’s biggest departure from his 2016 agenda related to his campaign plan to reduce domestic discretionary spending, which would have saved $750 billion over 10 years. Instead, he increased that part of the budget between 2017 and 2021, at a 10-year cost of $700 billion. All told, every major area of the government has grown significantly under the Trump administration.
Finally, Trump has largely kept his promise not to touch Social Security and Medicare — an unfortunate commitment because both programs face huge funding shortfalls and critical solvency challenges. According to the Congressional Budget Office, Medicare’s Hospital Insurance Trust Fund is projected to run out of reserves by 2024. Social Security’s old-age fund is projected to be insolvent by 2031, when today’s youngest retirees turn 73. Ignoring these programs is not the same as protecting them; it dooms beneficiaries to large, abrupt across-the-board benefit cuts. It is time to stop the demagoguery on this issue and acknowledge that, while we can disagree on how to shore these programs up, we cannot ignore that changes need to be made.
So here we are. Our debt is headed to a new record in just a couple of years and is projected to grow faster than the economy indefinitely. All major trust funds are headed toward insolvency. We are slated to spend $3.7 trillion on interest over the next decade, enough to send every American household $2,900 per year.
Yes, we need to borrow to address the current crisis. But we didn’t have to enter this crisis with trillion-dollar deficits; and we don’t need to continue with massive deficits afterward either.
Whoever assumes office in January will need to put in place a credible long-term plan to reduce the debt once the economy is strong enough, and save Social Security and Medicare. But if the last election is any indication, the problem isn’t that politicians are failing to keep their promises; it’s the promises they’re keeping that we simply cannot afford.