1. Budget Deal: Republicans Abandon Fiscal Conservatism
2. President Trump Proposes Record $4.4 Trillion Budget
3. Trump Said He Would Support 25-Cent Gas/Diesel Tax
With Congress’ passage of an additional $368 billion in federal spending over the next two years on February 9, our government budget deficits could approach, and perhaps exceed, $1 trillion annually for the next several years. That’s very scary!
Particularly disappointing for conservatives is the fact that numerous Republicans voted for this huge government spending boondoggle. It is now clear that many Republicans have abandoned their commitment to fiscal restraint and limited government. Surprise, surprise.
President Trump’s latest federal budget proposal for fiscal year 2019 asks for record-large spending of $4.4 trillion, well above President Obama’s previous record of $4.2 trillion. The budget deficit under Trump’s fiscal year 2019 plan is estimated to be over $900 billion, and that’s based on some very optimistic economic assumptions – so it could be even higher.
This is a lot of bad news that has only come to light in the last two weeks. Maybe that helps explain in part why the stock markets fell out of bed earlier this month. At the very least, the thought of trillion-dollar deficits over several years (at least) suggests that market volatility is likely to remain elevated indefinitely.
Last Wednesday, President Trump told Republican and Democratic leaders that he could support a 25-cent per gallon increase in the federal gasoline and diesel tax. Apparently, this is true as it was reported later the same day by Bloomberg, CNBC and elsewhere.
This is a bad idea! As I will discuss below, one credible economic forecast estimates that such a rise in the gas/diesel tax, along with higher fuel prices expected this year, would wipe out 60% of the tax cuts that Americans are now experiencing. Let’s hope this is just another controversial idea the president threw out there before thinking it through.
Budget Deal: Republicans Abandon Fiscal Conservatism
On Monday, February 12, President Donald Trump unveiled the largest federal budget in US history for fiscal year 2019. At a record $4.4 trillion, it easily exceeded President Obama’s previous record budget of $4.2 trillion that he proposed for FY2017.
As I will discuss below, Mr. Trump’s latest eye-popping budget has zero chance of passing in Congress. But before we get to that discussion, we need to look at the unprecedented Mitch McConnell-Chuck Schumer spending deal passed on February 9 which will add at least $368 billion to the federal budget deficit over the next two years.
The most surprising thing about the McConnell-Schumer deal – in addition to the fact that it blew through mandatory federal spending caps – is that a bunch of Republicans voted for it. Otherwise, it would not have passed.
So much for the Republicans being the party of fiscal restraint and smaller government! Plenty of Republicans in the House and Senate had no problem voting for this spending boondoggle in order to avoid another government shutdown.
As you may recall, the Republicans had been desperate to increase US defense spending so that we could upgrade the military, which suffered during the eight years of the Obama administration. Yet the Democrats insisted that any increase in the military budget must be accompanied by at least a dollar-for-dollar increase in non-defense spending.
Even though the GOP controls the House, the Senate and the White House, enough Republicans caved so that the McConnell-Schumer deal passed the Congress on February 9.