Last week Donald Trump, in his first political contest, was elected the 45th president of the United States. Thus ended the ugliest political campaign in recent history.
However, the nastiness may well continue as Democrats spread the blame for their loss to:
FBI Director Jim Comey
Debbie Wasserman Schultz
And they’ll start getting ready to win back congressional seats in 2018 and laying plans for making Trump a one-term president.
Trump will also feel the nasties if he attempts to follow up on some of the promises he made. Such as:
Throw Hillary Clinton in jail
Build a Mexican-financed wall along our southern border
Term limits for Congress
How about those who threatened to leave the U.S. if Trump won? Have Justice Ginsburg, Miley Cyrus, Cher and Whoopi Goldberg packed their bags yet?
Where it will all lead is anyone’s guess.
There is one thing that’s certain, though.
A real nightmare lies ahead …
Our current administration and the 114th Congress failed to address the key drivers of federal debt: automatic increases in federal health entitlements with Medicare and Medicaid; and Social Security.
They found it politically painful to vote to raise taxes. And slowing the growth of entitlement spending is often spun by their rivals as “cutting” the program.
Last year — and for the first time — spending on federal healthcare programs outpaced spending on Social Security.
In fact, the government spent $936 billion on health programs, including Medicare, Medicaid and subsidies related to the Affordable Care Act (Obamacare).
That’s a massive 13% jump from 2014, according to the Congressional Budget Office (CBO).
In contrast, spending on Social Security totaled $882 billion.
And in the latest fiscal year ending on Sept. 30, our elected officials ran up a deficit of $587 billion — a 34% jump from the previous year.
The reason …
A slowdown in the growth of federal revenues, as well as rising government spending. That pushed the U.S. deficit up for the first time since 2011, reversing the trend of falling deficits as the economy recovered in recent years.
Do Trump and the 115th Congress have the courage to follow a different path?
By March 16, 2017, the president and Congress must reach an agreement on our country’s debt limit caps, which could top $20 TRILLION … nearly double from when President Barack Obama took the helm.
That amount is difficult for most of us outside of Washington to comprehend. To put it in perspective, if you stacked up $20-trillion worth of thousand-dollar bills, the pile would reach 1,200 miles high.
|Imagine 1,200 miles’ worth of $1,000 bills spanning Interstate 95 from Miami to Manhattan.|
Or in Wall Street terms, the total value of all 500 corporations in the S&P 500 was $19.1 trillion as of this summer. This includes companies such as Apple Inc. (AAPL), ExxonMobil Corp. (XOM) and Facebook (FB).
Put yet another way …
Our nation’s debt is more than all of the world’s physical currency, gold, silver and bitcoin.
The only way to slow the rate of debt’s growth is with a budget surplus, which hardly seems possible.
Will autopilot spending make Trump a lame duck?
The automatic swelling of entitlement spending, combined with not enough money coming in, limits Congress’ ability to act on new priorities each year. Plus, it makes it virtually impossible to reduce debt or pass a budget on time.
Trump and the incoming Congress will be saddled with budgets that were drawn up by past presidents and Congresses. Their hands are tied when it comes to addressing changing demographics and rising health expenses.
The Tax Policy Center estimates that inflation-adjusted spending will grow $1.28 trillion annually over the next 10 years because of soaring health, retirement and interest expenses. But revenue is expected to rise only $850 billion.
In other words, 150% of new revenue in 2026 is committed to paying for growth spending increases, which will add more red ink to our nation’s balance sheet.
And with no letup in sight, that debt will exceed $28 trillion by 2026 according to the CBO.
On top of that …
Trump’s plans come at an additional price
“ … the American people’s understanding of what they’re hiring you to do is based on what comes out of your mouth during the campaign.” — William Galston, former adviser to President Bill Clinton
The Committee for a Responsible Federal Budget estimates that with the new president’s plans, we’d lose about $5.8 trillion of revenue — including:
$1.45 trillion from individual tax reform
$2.85 trillion from business tax reform
$1.2 trillion from repealing Obamacare taxes
Spending would get slashed by $1.2 trillion, which is the net result of:
A $3.2 trillion cut from Obamacare, Medicaid, and non-defense discretionary spending; with a $2 trillion increase for defense, veterans, childcare and Medicare.
At the same time debt would grow to 105% of GDP, and interest costs rise by $700 billion.
If Trump hopes to accomplish what he said while campaigning, he cannot afford to accept the long-term financial consequences of commitments made by prior administrations and legislatures. Nor can he hope to fix our nation’s debt with economic growth alone.
William Galston, deputy assistant for domestic policy to Bill Clinton when he served as president, said
“Very simply, elections have consequences. You are being hired to do a job and the American people’s understanding of what they’re hiring you to do is based on what comes out of your mouth during the campaign.”
Without changes to our nation’s tax and spending policies, it will be business as usual. And four years from now we’ll be wondering why we have increasing interest cost, skyrocketing national debt, and no sign of prosperity.
The Sound Dollar Campaign