U.S. President Donald Trump listens while meeting with women small business owners in the Roosevelt Room of the White House on March 27, 2017.
I’m so old I can remember when Republicans squawked that 1) deficits and the debt were bad and 2) that tariffs were harmful to the economy.
Yet we now have a president who is making the first problem much worse than it already is and seems to think that the second is some kind of magic elixir. Guess who’s already paying for these boneheaded moves—and will pay even more in the years to come? You.
President Trump inherited a monstrous problem: $20 trillion in debt. Sidebar: Before you go blaming one side or the other for this, I’ll irritate you by saying that your side, whatever it is, shares the blame. Yes, Barack Obama was president from 2009-17, but Congress, which controls the pursestrings, has been run by Republicans—both the House and Senate—since 2010. Shared responsibility, shared blame.
One way to win elections is by telling voters that someone else is to blame for their problems—and foreigners are the easiest piñata of all to bash. That’s why Trump said in 2016, and continues to say now, that trade deficits are the reason for the hole we’re in. His base, gullible and eager to believe, swallowed it hook, line and sinker.
As a candidate, and now as president, Trump has never met a problem that didn’t have a simple solution. His idea for eliminating all that debt? Tariffs and better trade deals.
Just four problems: 1) The math doesn’t work, 2) Budget deficits—which year by year get tacked on to the debt—are caused by the federal government spending more than it takes in from taxes, 3) the biggest drivers of all that spending are entitlements: yours, or your parent’s or grandparent’s Medicare and Medicaid, for example. Finally—and this reflects Trump’s moving of the goal posts—he says tariffs will solve the problem. Here’s what he tweeted on Tuesday:
Let’s dig deeper here, starting with Trump’s tweet. The president is correct that tariffs bring in money for the Treasury. But enough to “start paying down large amounts of the $21 trillion in debt?” Judge for yourself whether this is so: During the first two weeks of June, the Treasury raked in some $110 million in steel and aluminum tariffs, according to the Customs and Border Patrol. That’s $55 million a week. If collected at that rate for a year, that would be $2.86 billion, or 0.0001% of the national debt. Wow, 0.0001%! The president is correct on the “start” part, just not the “large” part. You could probably drain the Atlantic Ocean with a bucket faster than that. And this doesn’t take into account the economic damage done to companies, workers and consumers, when the cost of those tariffs is passed on. Remember: Tariffs are nothing more than tax hikes—that come right out of your pocket.
Trade-war tracker: Here are the new levies, imposed and threatened
Meantime, Maya MacGuineas of the Committee for a Responsible Budget, a nonpartisan, nonprofit organization here in Washington, sums up the reality, in a recent blog post, why eliminating the trade deficit has nothing to do with cutting the national debt:
“In a thought experiment, let’s pretend that every good and service purchased in the United States this year was produced here. There would be no trade deficit. But most federal spending would be unchanged—the size of government agencies and the military, the amount of Social Security and Medicare benefits, the amount of veterans’ and retirement benefits, etc. Federal revenues, which are driven mainly by the structure of income and payroll taxes and the total amount of income in the economy, would also be similar. If spending and revenue don’t significantly change, neither will budget deficits.”
Speaking of math, the administration now acknowledges that the deficit will hit $1 trillion next year, and the nonpartisan Congressional Budget Office says that as those deficits accelerate, the national debt could soar to a once-unthinkable $33 trillion by 2028—just nine years from now. We’re spending way more than we’re taking in, the tax cuts signed into law last Christmas are making it worse. Trump can blame foreigners all he wants for our fiscal woes, but until we start living within our means as a nation, this problem’s only going to get worse.
Related: U.S. debt set to be twice economy if Congress extends current policies
Meantime, if the president is really serious about paying down the debt (as if a guy who bragged about being the “King of Debt” as a private citizen really could be), here are a few things he could tackle: In fiscal year 2017, which ends Sept 30, we flushed some $263 billion down the toilet in interest alone on the debt—a figure that is now going higher as interest rates rise—and as deficits shoot up, thanks to the tax cut Trump signed into law last Christmas. And what about all this “waste, fraud and abuse” he keeps babbling about? In 2016, before Trump took over, the Pentagon identified $125 billion in waste, but buried the report out of fear that Congress could use it as an excuse to slash the defense budget. Trump always wants to do better than Obama? Then prove it by doing something about these sorts of problems.
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