The king of debt was of two minds. At least, he was during his first try at election.
Give him eight years, Donald Trump bragged then to Bob Woodward, and he’d pay off the national debt, no problem. The future president was more sober a few weeks later. Sure, he told Fortune, he could pay it off, but the thing about fiscal responsibility is that it requires fiscal sacrifice. “It depends on how aggressive you want to be,” explained the famous self-promoter who had financed a real-estate empire and who was then on his way to wiping away a primary slate of more qualified Republican contenders, not by promising to cut back but by pledging to go big.
“I'd rather not be so aggressive,” he admitted. “Don't forget: We have to rebuild the infrastructure of our country. We have to rebuild our military, which is being decimated by bad decisions. We have to do a lot of things.”
Some of those things happened (defense spending has increased each year). Some did not (“infrastructure week” was only ever a joke). As president, Trump and a compliant Congress were both of the build-now-pay-later mindset. The national debt grew from $19.5 trillion the day he took office to $27.4 trillion now as President-elect Joe Biden prepares to move in and assume the mortgage.
The moment he sits down behind the Resolute Desk, Republicans will greet Biden with rewarmed Tea Party-era talking points about how dangerous it is to carry such a high debt load. Never mind that they ignored or enabled or cheered four years of deficit spending. The GOP is already singing the old deficit song.
Sen. Lindsey Graham, who will helm the Budget Committee if Republicans hold on in Georgia and keep the majority, told reporters that he looks forward to “a dialogue about how can we finally begin to address the debt.” Sen. John Thune of South Dakota, the second-ranking Republican, said that such a focus would mean “getting back to our DNA.”
Of course, a Biden White House will call “malarkey.” Democrats have heard all of this before, including from the same Republicans who criticized Barack Obama, but cheered Trump, for deficit spending. Fiscal responsibility? Please. “Republicans never really cared about the budget deficit. It was always a political tactic,” one of Obama’s economic advisers, Jared Bernstein, told the Atlantic in 2018. “With their own tax cut, they said, ‘Go ahead and finance it with massive deficit spending.” The Grand Old Party talks about fiscal responsibility when in the minority, he said, but the GOP in the majority is about doling out “goodies to their donor base.”
Now a senior fellow at the liberal Center on Budget and Policy Priorities, Bernstein has been tapped to serve as on Biden’s Council of Economic Advisers. His advice to the incoming president? “Seize those opportunities” afforded by the pandemic to spend boldly. The irony is that Trump may have greased the skids for him; the outgoing president spent more than Obama during good times and much more during a crisis.
Trump is the rare Republican who regularly complained when the Federal Reserve contemplated increasing interest rates. He favored an easy money policy to juice the economy, and when he thought a strong dollar was harming U.S. exports, he sniped at Fed Chairman Jerome Powell on Twitter. Repeatedly. Inflation fears be damned.
Before the coronavirus burned a path across the country, on its way to extinguishing 286,000 American lives (and counting), Trump’s Treasury secretary insisted that the debt “was very manageable.” This was on brand for Steven Mnuchin, disgruntled deficit hawks quietly grumbled. They griped that he was Democrats’ favorite Republican, “waving the white flag of surrender” during negotiations with House Speaker Nancy Pelosi. Spending subsequently spiked in 2019 and 2020, just as it did during the two years prior when Republicans controlled both the House and the Senate.
Before Trump took office, the nonpartisan Committee for a Responsible Federal Budget estimated that his proposed agenda would add $4.6 trillion to budget deficits between 2017 and 2026, excluding interest. Counting from the start of the administration to the beginning of the pandemic – the first three years of his presidency -- the committee now figures that deficits increased by $3.9 trillion.
The tax cuts, the marquee achievement of a Republican House and Senate, make up $2.3 trillion of that number. Increased defense spending adds $950 billion, and increased non-defense discretionary spending, another $700 billion. “We estimate that taken together, these $3.9 trillion of tax cuts and spending will lead to about a 15 percent of GDP increase in debt by 2026,” the CRFB reported before noting that “this debt was also approved by Congress, about half on a broad, bipartisan basis.”
Fiscal conservatives remember brief moments where it seemed as though Trump might himself come around and thereby prick the conscience of Republicans who had punched their political ticket by condemning Obama’s tax-and-spend policies.
His first budget director, Mick Mulvaney, was a bare-knuckled fiscal hawk from the House Freedom Caucus who had given then-Speaker Paul Ryan fits over spending during the waning years of the Obama administration. Under Mulvaney, and later Russ Vought, the OMB churned out conservative budget proposals full of cuts and attempts to balance federal ledgers. Predictably, these plans went nowhere in Congress, and Mulvaney would privately complain to colleagues that “in Washington, budgets are either paperweights for the desk or doorjambs for the floor.”
Trump shocked Washington another time when he threatened to veto a $1.3 trillion spending bill out of the blue one morning in March 2018. He eventually signed that omnibus, citing the need to keep the military funded, but he vowed never again to sign “another bill like this.” But he did sign similar legislation, a behemoth $1.4 trillion omnibus, the next year to avert a shutdown just five days before Christmas.
“Trump just doesn’t care about spending,” the leader of a prominent grassroots organization explained on condition of anonymity. “There were moments when it seemed like he might, but he just lacked follow-through.”
Asked about the fiscal situation during a meeting with congressional conservatives last year, the president told lawmakers, “We’re going to handle that in ‘year five.’” A source present for the conversation recounted how Trump had predicted that in a second term he would “cut so much spending that you are going to call me and say, ‘Please stop cutting, Mr. President, please stop the cutting.”
But there will be no year five, at least not sequentially, and disillusioned fiscal conservatives are left wondering what could have been. They have another, more-real, worry as Biden prepares to take office with his own plans to spend big: Will anyone listen to them this time?
It was news when Sen. Ted Cruz previewed the inevitable Republican rediscovery of fiscal conservatism if his party is again left in the minority on Capitol Hill. Cruz told Axios that while the tax cuts had added to the debt, a pro-growth posture is necessary to reducing deficits.
“Do I wish that it was a higher priority for the president to rein in spending and the debt? Yes. He didn't run, principally, on reining in spending and deficit and debt. That's not what he promised to do,” added the runner-up to Trump in the 2016 GOP primary season. “We had real differences between us — and you know what, the voters made a decision.”
The difference isn’t between Trump and Cruz anymore. It’s between an out-of-power GOP and an ascending Democratic Party led by Joe Biden in the White House. “Democrats are the party of higher taxes, more regulations, and socialist spending sprees — which is why it’s crucial Republicans maintain a majority in the Senate,” Cruz told RCP. “I’ll continue working to rein in our out-of-control spending, while fighting for economic opportunity and fiscal sanity.”
This battle will follow a familiar script, and Republicans will find comfort in their old pre-Trump roles. The Republican Study Committee, the largest, most organized group of conservatives in the House, will likely be the vanguard of that effort, and its new chairman admits that “Republicans have definitely lost their way, we’ve lost the moral high ground when it comes to fiscal responsibility.” At the same time, Rep. Jim Banks adds, “it’s not like Democrats have picked it up. ... They're going to expose themselves over the next four years as the party of reckless spending, and it'll be an easy opportunity for Republicans.”
Sen. Rand Paul, who eulogized the Tea Party on the Senate floor in 2019, offered the same self-diagnosis on behalf of his party. “Republicans are always more fiscally responsible in the minority,” the Kentucky Republican said. “Problem is, Democrats are, if anything, more fiscally irresponsible in the majority.”
This pithy analysis is an open secret. Mulvaney, upon becoming White House chief of staff, made the same point during an address at Oxford University. “The worst thing in the whole world is deficits when Barack Obama was the president,” he explained in audio obtained by the Washington Post. “Then Donald Trump became president, and we’re a lot less interested as a party.”
And that is exactly the problem with any renewed Republican debt rhetoric, says former South Carolina Rep. Mark Sanford: “It will be lip service.” He launched a symbolic but short-lived primary challenge against Trump last year to try to force a discussion on what he saw as Republican fiscal hypocrisy. He doesn’t give his former colleagues a pass for running up deficits because Trump didn’t run on that particular issue. “What matters is what you do when you have power,” he said of the last four years, “and Republicans did not exercise their ability to have an effect on that front.”
Maybe all the deficit hawks really are dead and Republicans are only saying the things they said under Obama to survive under Biden. Rush Limbaugh certainly thinks so. “Nobody is a fiscal conservative anymore,” the radio host admitted in 2019 after years of railing against Obama spending. “All this talk about concern for the deficit and the budget has been bogus for as long as it's been around.”
Then again, maybe the conversation about top-line spending numbers is too simplistic. Perhaps what will emerge is a more nuanced deficit hawk. “You can't divorce debt and deficit from the policy priority that it is being used to fund,” said one introspective senior Senate Republican who admitted that the GOP was “too focused on deficit” during the Obama era and had “overlearned the lessons” of 1970s inflation. Military spending under Trump was not profligate, viewed this way, while spending on Green New Deal under Biden wouldn’t be either – at least to liberals. “If you explained that decision to our grandkids,” the Republican said of the spending dichotomy, “they would probably think it makes sense.”
Why even return to an old spending orthodoxy that Republicans preached but never really practiced? The spending programs and priorities are obviously relevant, said Oren Cass, the executive director of American Compass, a right-of-center think tank trying to make sense of the successes and failures of the Trump presidency. But, he added, the principles about what constitutes acceptable levels of spending or debt should not fluctuate based on the party of the administration.
“As Republicans think about the different policy levers at their disposal, they have to grapple with the success that things like low interest rates and lots of spending seem to generate rather than just trying to claim that tax cuts and deregulation are what got the job done,” Cass argued before name-checking and then rejecting the views of Trump adviser Stephen Moore, who opposes deficit spending as counterproductive redistribution.
“It’s pretty clear that tax cuts were an enormous success by any measure,” Moore said of the budget policies he helped design. “My own view on this right now is that growth is the answer to almost all of these problems.” Moore would not defend Republicans who defaulted on their debt promises though he did say that federal borrowing at low interest rates isn’t necessarily a bad thing. But as Republicans prepare for the next four years, the conservative economist encouraged them to fight Biden “on every single penny that he wants to spend.”
They ought to reject as erroneous, he continued, “this total mythology that government spending stimulates the economy. It just doesn't. All it does is rob Peter to pay Paul — there is no positive return to almost any government spending.”
“I mean, if you believe that then you're not a Republican,” he added. “You’re a Democrat.”
