Glow of upbeat presidential address fades quickly

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We suggested last week that the president’s address to Congress might represent an ideal opportunity for an adult message to Congress about the fiscal problem. Enough with the chronic deficits and soaring debt, let’s balance the budget by X date and thereafter keep it that way. Fixing fiscal problem won’t be easy, 2/27/17.

Perhaps such a pitch was too much to expect. The president might have been attacked as a Grinch for daring to say the government should stop spending over half a trillion dollars per year more than the taxes being collected and passing the burden on to future generations. As a SAFE member in Maryland put it:

Sad to say, Trump is riding the tiger.  Nothing is impossible but balancing the budget is close to impossible. It will take severe actions to stop the bleeding.  The big question is can Republicans take this type of action and survive politically?

The president did acknowledge the fiscal problem in his speech, but only as though viewing it through the rearview mirror - “In the last 8 years, the past Administration has put on more new debt than nearly all other Presidents combined” – and without offering any convincing solutions. Transcript,
2/28/17.

True, the federal debt has plateaued since the inauguration, as the president noted in a 2/25/17 tweet. “The media has not reported that the National Debt in my first month went down by $12 billion vs a $200 billion increase in Obama first mo.”

This is not a fair comparison, however, because the Treasury Department has been drawing down excess cash balances. Deficit spending continues apace, and federal debt will soon start rising again. Treasury Department burning through cash as debt ceiling approaches [it will be reactivated at the current level on March 16], Pete Kasperowicz, Washington Examiner, 3/3/17.

On Jan. 20, the day Trump took office, the federal government had $382 billion in cash on hand. As of Thursday, that was down to about $109 billion.

In general, the president’s address to Congress was better received than other speeches he had given. More upbeat – conciliatory in tone – even “presidential.” OK, but this reaction may reflect low expectations before the speech. Also, the president didn’t explain how the glowing picture he painted would be paid for. National sigh of relief, Mona Charen, townhall.com,
3/3/17.

•Whoa. When you frighten people into thinking you may not have the mental stability or emotional maturity to sit behind the Resolute desk, the first sign of normality can send them into raptures. Let's see how long this lasts.

•Republicans were once the party of fiscal responsibility -- or they tried to be, at least. The Democrats were the party that promised the moon -- free college, free child care, paid family leave -- all subsidized by taxes on the rich. The Trumpublicans are now overtaking the Democrats in the race to bankrupt the country.


Goodwill inspired by the president’s address to Congress was soon overshadowed by other controversies, and it remains unclear whether anything meaningful will be done about the fiscal problem. Discussion follows: The speech – the budget – political climate.

A. The speech - There were several proposals that could affect the fiscal problem, starting with suggestions for spending money more carefully, etc.

We've saved taxpayers hundreds of millions of dollars by bringing down the price of the fantastic new F-35 jet fighter, and will be saving billions more dollars on contracts all across our Government. We have placed a hiring freeze on non-military and non-essential Federal workers.

•By finally enforcing our immigration laws, we will ** save billions of dollars, and make our communities safer for everyone. [There will be some added outlays too, including the cost of a wall along the southern border and more enforcement personnel.]

•We expect our partners, whether in NATO, in the Middle East, or the Pacific –- to take a direct and meaningful role in both strategic and military operations, and pay their fair share of the cost.


Also, the president proposed some new initiatives that are likely to offset the envisioned savings and then some:

•I am sending the Congress a budget that *** calls for one of the largest increases in national defense spending in American history. My budget will also increase funding for our veterans.

• [We] should help Americans purchase their own [healthcare insurance] coverage, through the use of tax credits and expanded Health Savings Accounts –- but it must be the plan they want, not the plan forced on them by the Government.

•My administration wants to work with members in both parties to make childcare accessible and affordable, to help ensure new parents have paid family leave, to invest in women's health, and to promote clean air and clear water, and to rebuild our military and our infrastructure.

•To launch our national rebuilding, I will be asking the Congress to approve legislation that produces a $1 trillion investment in the infrastructure of the United States — financed through both public and private capital –- creating millions of new jobs.

And the president’s remarks about proposed tax “reforms” suggest that the net effect would be to reduce the amount of taxes collected. Tax rate cuts should boost economic growth, thereby at least partially offsetting revenue loss, but they aren’t likely to boost overall tax revenues.

My economic team is developing historic tax reform that will reduce the tax rate on our companies so they can compete and thrive anywhere and with anyone. At the same time, we will provide massive tax relief for the middle class.

In sum, we doubt the foregoing proposals will prove effective in reducing budget deficits, and others agree. President dreams big in first joint address to Congress, but leaves out budget realities, National Taxpayer’s Union Foundation, 3/1/17.

In his first address to a joint session Congress, President Donald Trump urged the nation to dream big while laying out spending proposals that would make the budget bigger. The net impact of the proposals Trump presented with specificity would boost outlays by $894 million per year. However, the cost could be significantly higher due to a dozen policy proposals whose costs could not be determined due to lack of information.

B. Budget – The president’s budget proposal for fiscal year 2018 is due to Congress in April. After considering his proposal, Congress will finalize a budget as the basis for detailed appropriation bills.

Under congressional budget rules, appropriation bills are to be developed and approved before the fiscal year starts on October 1. Otherwise a continuing resolution(s) is (are) required to provide ongoing spending authority and avert a government shutdown. The appropriation bill deadline hasn't been fully complied with for over 20 years. Appropriation bills, no return to 1994, Government Affairs Institute, accessed
3/4/17.

When asked what they remember as the most significant event of 1994, people tend to be divided between the massive 6.7 magnitude Northridge earthquake that devastated Los Angeles and the arrest of O.J. Simpson on murder charges following the infamous slow motion car chase in the white Bronco.  Some of us, however, also remember 1994 as the last time that Congress passed all the appropriations bills before the start of the fiscal year.

Given the administration’s plans, there is no chance of a balanced budget for the coming fiscal year, but what about the 10-year projection period? It wouldn’t look good for the supposedly fiscal conservative Republicans to project deficits continuing indefinitely. Absent changes to the major entitlement programs (Social Security, Medicare, Medicaid & GovCare) designed to significantly reduce projected outlays, however, such an outlook would be hard to avoid.

Changes to GovCare and Medicaid are currently being developed, although the resultant savings remain to be seen. And while the president hasn’t proposed any changes to Social Security or Medicare, his choice to head the Office of Management and Budget (Mick Mulvaney) has forthrightly stated that there is no responsible alternative. Trump’s OMB pick shares vision on Social Security, regulation, Rachel del Guidice, dailysignal.com,
1/24/17.

House Speaker Paul Ryan also seems to think that outlay-reducing changes are inevitable for entitlement programs and should be reflected in the budget projection. Ryan not bothered by lack of entitlement reform in Trump’s budget, Washington Examiner, 2/28/17.

Speaker Paul Ryan isn't bothered that President Trump's budget outline doesn't include any changes to entitlement spending because there is still time to make those reforms for future retirees. "We've never proposed to change benefits for current seniors and people who are about to retire," he said on NBC. "In the 10-year budget window ... we have never proposed that." "These programs will be bankrupt by the time we get there, we need to reform them by the time we get there," he added.

The new head of the House Budget Committee, Representative Diane Black (R-TN), likewise envisions a balanced budget outlook in the future and will try to make it happen. The budget committee game plan for 2017, Diane Black, Washington Examiner,
3/2/17.

Already, I have ruffled a few feathers in Washington by stating that we will work towards a balanced budget as we have in past years. In my view, the daunting fiscal challenges we face today aren't an excuse to move the goalposts, they are exactly why responsible budgeting is so important.

Bottom line, the Republican-approved budget will show the deficit reduced and then eliminated over the next 10 years. But most of the hard decisions will be deferred, and time will tell whether they eventually get made. The outlook would be brighter if Democrats were inclined to join with fiscally conservative Republicans in pushing for a balanced budget, but at this point that seems unlikely.

C. Political climate - Politics is about power, and the rivalries between factions can get intense. That’s been true since the early days of the Republic, and recollections of “the good old days” when all the politicians in DC got along shouldn’t be taken too seriously. Acrimony and gridlock in DC does seem to have reached a new low, however, which could make cooperation on big issues like the fiscal problem very difficult.

Here are some reasons for the current situation as seen by an ex-politician and DC lawyer. Trump’s unscripted, often blunt rhetoric – coarsening of our society and growing cultural permissiveness – shock of moving from a president at one end of the political spectrum (progressive) to a new president at the other (populist). A downward spiral, [former MD Governor] Robert Ehrlich, Washington Examiner,
3/2/17.

Have you students of history heard of the 1000 Days War [conservatives vs. liberals conflict that racked Colombia from 1899-1902 and resulted in the loss of some 130,000 lives as well as the break-off of Panama]? Well, welcome to the "Four Years War"! And slurs and melodrama have replaced truth as the first casualty.

Some members of the opposition seem obsessed with finding ways to obstruct or attack the president and his supporters, as though they could thereby change the outcome of the election. And while many Democrats are more moderate, they tend to stick with their side even if dubious tactics are being used such as boycotting scheduled committee meetings to delay the confirmation of administration appointees.
Trump won, get over it,
2/20/17.

In fairness, some of Trump’s supporters have been very aggressive in firing back – against both Democrats and the supposedly hostile media. Steve Bannon: Trump is “maniacally focused” on executing promises, David Smith & Sabrina Siddiqui, the guardian.com, 2/23/17.

Steve Bannon, the man seen as the power behind Donald Trump’s throne, has declared that the president will take the US back from a “corporatist, globalist media” that opposes his brand of economic nationalism. Trump is “maniacally focused” on fulfilling his campaign pledges, Bannon warned, predicting a daily fight against the media he has branded as the opposition party. 

Trump himself seems to periodically launch attacks (e.g., via Twitter) that aren’t likely to help his cause. One of the latest examples, as we go to press, is his thus far unsubstantiated claim that the previous administration wiretapped his New York headquarters last October – ostensibly for nefarious purposes. Trump accuses Obama of wiretapping Trump Tower during the election, Daniel Chaitin, Washington Examiner,
3/4/17.

Most likely this claim was in reaction to claims that the Trump campaign was improperly communicating with the Russians during this timeframe, which claims also seem overblown. And the denial didn’t say there had been no wiretapping, only that the White House hadn’t gotten involved in Department of Justice investigations. Obama fires back at Trump’s “simply false” wiretap accusations, Daniel Chaitin, Washington Examiner,
3/4/17.

No matter, it’s hard to see how this kind of communication could help Trump build a broader support base, and it may well encourage similar communications by partisans on the other side. Here are two current examples:

•Former Attorney General Loretta Lynch produced a video in which she seemed to be condoning violent demonstrations, which others then posted on Facebook for purportedly inspirational purposes. Loretta Lynch, Need more marching, blood, death in streets, wnd.com, 3/4/17.

•Senator Chris Coons from Delaware speculated about the existence of previously undisclosed and possibly damning transcripts of intercepted calls, albeit stating that he had not seen them. Sen. Coons: FBI may have transcripts showing "collusion" between Trump campaign, Russia, Rowan Scarborough, Washington Times,
3/4/17.

Even right after the president’s address to Congress, it didn’t seem many Democrats had been won over by the president’s conciliatory tone. And if there were any potential converts they have probably been scared away by now. Democrats remain skeptical after Trump’s bipartisan overture, Al Weaver, Washington Examiner, 3/1/17.

"When the euphoria dies down — what's the saying? It doesn't matter how high you jump in church, it matters when your feet hit the ground," said Sen. Tom Carper, D-Del. "Our feet will hit the ground in a week or two, we'll get his budget, l see what the budget numbers look like, and we'll see how he wants to pay for this."

Hmm, a desire to see the budget numbers seems reasonable – but the issue isn’t paying for initiatives of the administration, e.g., beefed-up military spending and infrastructure programs. What both parties should be focused on is balancing the overall budget.

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#Re the 1000 Days War, I notice that Colombia called the conservatives of today Liberals, and the Liberals were today's conservatives.  Words and semantics are fascinating. Sooner or later this simmering pot is going to boil over in America. - SAFE member (DE)

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