In Only Their 2nd Full Month of Power, Dems Made March One of the Worst Months Ever for the Federal Deficit
There were plenty of pundits who, in the months since Joe Biden was inaugurated as president, have targeted Republicans who’ve suddenly started caring about the budget deficit.
“Republicans are channeling their inner Louis Renault, the corrupt police chief in ‘Casablanca’ who, needing a pretense to close Rick’s Cafe, said he was ‘shocked, shocked’ there was gambling going on, as the waiter slips him his winnings,” Albert Hunt, an opinion contributor to The Hill, wrote in a January piece.
“Republicans are right to be skeptical about the practicality of many of the Democrats’ ideas, but by opposing them they find themselves in an intensely uncomfortable place,” The Wall Street Journal’s Gerard Baker wrote in a March article.
“Conservatives argue fiercely against Democratic spending plans on the grounds of fiscal restraint, but it rings hollow after decades in which Republican presidents and congresses have added as enthusiastically as Democrats to the federal debt burden,” Baker said.
Yes, there’s a convincing tocsin to these arguments; who are the Republicans to complain about fiscal incontinence when they had control of both houses of Congress and the White House from 2017 to 2019 and could barely be bothered to feign making deficit reduction a priority?
However, there’s a point to be made about what “restraint” entails when the Donald Trump years are compared to the Biden months, particularly after the Democrats rammed through a COVID-19 relief package that had little to do with COVID-19 and are now looking to shove through an infrastructure package that has little to do with infrastructure.
The impact of these tax-and-spend policies already could be felt in March — which was one of the three worst months ever for the federal deficit.
As The Washington Post reported Tuesday, the federal government spent more than $660 billion more than it took in during the month, propelled by $927 billion worth of spending. While this had to do primarily with $1,400 stimulus payments under the so-called American Rescue Plan, the only two worse months also featured COVID-related stimulus programs.
“The resulting deficit is the third largest ever in American history, Treasury officials said, eclipsed only by April and June of last year — when the U.S. authorized larger levels of emergency spending to head off the economic crisis caused by the pandemic,” The Post’s Jeff Stein noted.
“The monthly deficit had contracted relative to the summer months as federal spending expired and the U.S. economy began to heal. Many economists and lawmakers clamored for the additional spending as necessary to help the economy recovery from one of the worst shocks in decades, with millions of workers still out of a job.”
By “many economists and lawmakers,” you should probably read liberal economists and Democratic lawmakers. The American Rescue Plan passed on a 50-49 vote along party lines in the Senate; only GOP Sen. Dan Sullivan of Alaska didn’t vote against the plan, and that was because he was back in his home state for a family funeral. (Sullivan had announced his opposition to the plan.)
And, as The Post noted, the $330 billion in American Rescue Fund disbursement wasn’t going to be an anomaly in a year otherwise marked by cautious budgetary policy.
“Still, budget experts say higher-than-usual deficit totals are likely to continue for the rest of the year,” Stein reported. “On a call with reporters, Treasury officials noted that all the funding from last year’s Cares Act and the rescue plan had not yet been allocated.”
And this is with a $1.7 trillion deficit through the first six months of the 2021 fiscal year. The 2020 fiscal year smashed the record set in 2009, with a $3.1 trillion deficit vs. a $1.4 trillion deficit, respectively.
“This is going to be a big deficit year because we were already running substantial deficits and passed a $1.9 trillion bill,” Marc Goldwein of the Committee for a Responsible Federal Budget, a group which advocates for budgetary responsibility, told The Post. “This is not higher than expected. It’s what you’d expect with a $1.9 trillion stimulus on top of a structural deficit.”
The difference is that in 2020, there was no end in sight to the COVID crisis. We didn’t have any idea, especially in April and June, how long it would take to develop a vaccine and whether it would be successful. March 2021, meanwhile, occurred as proven vaccines were going into Americans’ arms.
Furthermore, while a $1.9 trillion COVID relief plan and a $2.3 trillion infrastructure plan might sound good to voters now — the infrastructure plan has still polled well, with 60 percent of voters saying they favored it in a Morning Consult/Politico poll and majorities of American adults favoring every category of spending in the plan in a Yahoo News/YouGov poll — keep in mind a lot of ideas that ended up curdling sounded great to voters at the time.
It’s somewhat amazing that Biden doesn’t remember this concept. After all, he spent much of his ill-starred 2008 presidential campaign explaining his vote in favor of authorizing the Iraq war, something that voters loved when then-President George W. Bush announced “Mission Accomplished” on a banner during a speech on an American aircraft carrier in 2003 and loved a lot less five years later when the mission was decidedly unaccomplished.
In fact, had his career not been saved by the deus ex machina of the vice presidency under Barack Obama — who had the luxury of never having to have voted on authorizing the president to go to war, having only entered the Senate a year and change after the war started — Biden’s professional biography likely would have ended with a whimper, not a bang (or the Oval Office).
Then again, it’s an open question as to what the president remembers these days. Perhaps the Iraq war precedent will tingle a synapse or two once the unpopular aspects of this spending really start coming home.
When we’re running deficits like we ran in March on a routine basis and interest rates aren’t quite as low as they are now, financing this kind of debt is going to become exorbitantly expensive. And this is just with two out of three legs of Biden’s spending spree unveiled; the American Families Plan, which will complete the trilogy, was announced by the president in his remarks unveiling the infrastructure plan. It’s unclear what it’ll include, but it won’t be cheap.
And the sugar rush of government spending eventually runs out, usually without having accomplished anything near what its proponents promised.
Even if interest rates and inflation remain low — there’s reason to doubt on the last one, given The Post reported consumer prices jumped 0.6 percent in February and 3.6 percent in March, more than the 0.5 percent and 2.5 percent forecast — there’s still the boomerang of buyer’s remorse, particularly when American taxpayers find out how little infrastructure the infrastructure plan bought them.
It’ll also have to be accomplished through constantly revising the original COVID plan, which was passed through budget reconciliation. Usually, only one spending bill a year can be passed through reconciliation — though, as Fox News reported, the Senate parliamentarian has signaled she would be amenable to letting Democrats add on to the original spending bill.
While amendments can be proposed under the Congressional Budget Act of 1974, the amendments usually aren’t entirely separate bills that cost more than the original round of spending.
Former Senate Parliamentarian Alan Frumin told Fox News he could “see a very legitimate reading of the language of the Budget Act providing for five more times (after the COVID-19 act) between now and the end of 2022.”
Passing these bills along party lines, sans filibuster, is going to chafe at voters if it persists until the midterms.
So, no, the Republicans weren’t necessarily the model of spending restraint during the Trump years. Ordinarily, they wouldn’t be able to pull a Captain Renault and be “shocked, shocked” at the size of the deficit.
These are no ordinary deficits, however, and the biggest shocks are yet to come.
As for restraint, well, that’s a relative matter. When the light is visible at the end of the tunnel and the administration is occupying itself building a different, much longer tunnel ahead — one that does little to speed our passage through the tunnel we’re currently in, no matter how much they assure us it will — the Trump years will likely look like the picture of measured fiscal policy in comparison.
After all, we’re $660 billion in the hole and we’re only two months into the Biden years.
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