In Fiscal Year 2017, the budget deficit swelled to $666 billion and it could be getting even bigger when you consider the current number of bills being considered by Congress.
Getting to a $1 trillion deficit for Fiscal Year 2018 might not be too far-fetched.
For example, there’s a year-end omnibus budget coming up in December. If Congress does not stick to its usual spending caps, that could increase the deficit by more than $100 billion, sources in the House of Representatives worry.
Texas ($61 billion), Florida ($27 billion) and Puerto Rico ($5 billion) have a total of $93 billion of hurricane funding that is currently proposed from the tumultuous hurricane season.
So, if last year’s deficit number holds true next year, if all the new potential spending were to occur in Fiscal Year 2018, you could already be up to about a $860 billion deficit.
Throw in infrastructure, plus we still don’t know how the tax legislation might be scored by CBO. Both will likely will have an immediate budget impact that so far is unknown but not likely to reduce the deficit.
Therefore it won’t take much to get over the top of $1 trillion for the deficit this fiscal year — which could a political catastrophe for Congressional Republicans in 2018 midterms, as the number will be published right before the November elections.
So, what can be done?
In President Donald Trump’s budget, he proposed $4.5 trillion of spending cuts over 10 years. Those could be front-loaded by Congress to offset some of the new spending being proposed.
On the tax bill, repatriation too could be front-loaded so that more of the funds are brought into the U.S. sooner, having a more immediate impact on those funds being partially taxed.
The skinny Obamacare repeal, if nothing else, would result in fewer subsidies on the Obamacare exchanges, if it could be immediately put into effect.
Right now, there are three vehicles to pass new spending cuts: the tax bill, the hurricane relief bill and the omnibus. It’s obvious that getting as many spending cuts as possible into each of those will provide maximum flexibility to Congress should anything else arise that needs to be addressed.
In the meantime, the bills that are being considered cannot be allowed to become Christmas trees of new spending on top of what is already being considered.
The point is, Congress will not want to already be above a $1 trillion deficit if something unexpected, like another natural disaster or war, occurs. Or if something predictable, like a big spending bill on infrastructure, comes along. The spending cut offsets should be baked into the cake now, or there might not be a Republican Congress in 2019 to enact them later.
Robert Romano is the Vice President of Public Policy for Americans for Limited Government.
