Once upon a time, Republicans said that deficits and a balanced budget were the most important things in the world. But that was when the president was a black man and they had to come up with some justification for trying to block his every move other than racism. So they called it fiscal responsibility. Now that he's gone and one of their own is occupying the oval office, fiscal responsibility is out the window and they're okay with that and the recession it could bring. Because they got their tax cuts.
The U.S. will post a larger budget deficit this year and could see a "spike" in interest rates as a result, but lower deficits are possible over time based on sustained economic growth from Donald Trump's tax cuts, said Budget Director Mick Mulvaney.
Mulvaney spoke on "Fox News Sunday," a day before the White House is expected to release 2019 spending proposals—and after weeks in which financial markets have been spooked by prospects for rising inflation tied to higher deficits and lower taxes.
"This is not a fiscal stimulus; it's not a sugar high," Mulvaney said on of the president's economic program, including the $1.5 trillion tax cut passed in late 2017.
"If we can keep the economy humming and generate more money for you and me and for everybody else, then government takes in more money and that’s how we hope to be able to keep the debt under control," Mulvaney said.
There's not a self-respecting economist out there who sees economic growth coming out of those tax cuts. A Morgan Stanley analysis forecasts that just 13 percent of the tax cuts to corporations will trickle down to employees in the form of bonuses, raises and employee benefits. That's opposed to 43 percent which "will end up in the hands of investors in the form of stock buybacks and dividends."
The administration's updated budget proposals, to be released this week, reinforces the screw-the-99 percent ethos that drove that tax cuts bill. It would balloon the defense budget and spend billions on "border security" and slash the programs that help people, particularly Medicaid and food assistance.
So spiking interest rates, cuts to domestic spending programs, and a ballooning deficit that will give Republicans the excuse to make even deeper domestic spending cuts. That's the Republican dream.