The Scariest Words in Washington, D.C.
President Ronald Reagan often joked that “the nine most terrifying words in the English language are, ‘I’m from the government and I’m here to help.'”
But for Americans troubled by the ongoing lack of fiscal discipline on Capitol Hill, nine other words are perhaps even scarier: “We have actually now agreed on the spending numbers”.
Here’s the full quote of what U.S. Treasury Secretary Steven Mnuchin said in announcing the deal struck between the Trump administration and political leaders in both the House and Senate:
We have actually now agreed on the spending numbers for both years, we’re now working on offsets and certain structural issues and as part of this, we’ve agreed that there would be a long-term debt ceiling extension.
With political control of the Congress split between Democrats in the House and Republicans in the Senate, these words mean that there is a bipartisan agreement on how much the U.S. government will be authorized to spend during the next two years. Which in turn can only mean one thing: a bipartisan coalition of politicians have agreed to increase federal spending even higher than they have over the last two years.
As part of the deal, the statutory ceiling on how much the government can borrow would be suspended for the next two and a half years, allowing the federal government to borrow as much as it needs to cover the cost of its planned spending.
The remaining negotiations between the Trump administration and the Congress are now focused on what is a relatively small package of spending cuts compared to the full amount of the government’s projected spending over the next two years:
The Trump administration is seeking roughly $150 billion in offsets to any agreement, according to a senior administration official. To achieve those savings, the Trump administration is proposing to Mrs. Pelosi nearly $1.1 trillion in potential offsets, including cutting $574 billion from specific programs and extending the 2011 spending limits by two additional fiscal years to save $516 billion, according to the official. The last budget agreement, passed when the GOP controlled both chambers of Congress, raised spending $300 billion above 2011 levels and included $38 billion in cuts and small revenue increases to partially offset the cost.
The main obstacle to the deal going forward is in the House of Representatives, where Speaker Nancy Pelosi is opposing these reductions in spending, making it unlikely that whatever spending deal emerges from the Washington D.C. swamp will offer few, if any cuts to spending growth.
Without a deal being struck before the U.S. Congress begins its annual August recess, the U.S. government could default on debt payments due before Congress returns to Washington D.C. on September 9, 2019.
For a government already spending money at record rates, the bipartisan two-year budget deal promises even less fiscal restraint at a time when greater fiscal discipline is needed to promote prosperity both now and for the future.