A venting, nothing to see here:
For evidence of the ongoing failure of GOP predictions and the Laffer Curve, it’s harder to get more graphic than Steve Benen’s graph of budget deficits:
Yep, the 2019 Federal Budget Deficit grew again, by 26%, in grievous defiance of GOP orders predictions that it shrink because they cut taxes.
It’s also worth savoring those Golden Clinton Years when the budget was in the black and the economy was roaring, before the spendthrift Republicans[1] took over in 2001 and forced it back into the red, followed by the Great Recession, caused by Republican deregulation.
Now, as we near a chronic and, so far, unforced[2] annual deficit of $1 trillion, we’ll be either exploring the new territory of how monstrous deficits and possible looming government defaults on the loans financing the deficit play out.
But what about inflation? Here’s a chart which should remove the influence of inflation, I think:
As we can see, the deficit as a percentage of GDP jumps under the Trump Administration. Interestingly, though, is this:
The drop in percentage would appear, to this non-economist, to be a combination of the growth in GDP and a some change in the Federal budget. Trading Economics has a handy chart on GDP growth, which is no where near it needs to be for the Laffer Curve to work:
It would probably need to be closer to 6% or even better for the deficits to shrink, rather than rapidly expanding. The Federal Budget isn’t shrinking either, as the St. Louis Fed makes clear:
The above lacks the 2019 data; Wikipedia suggests it will come in at $4.407 trillion, while the 2018 data show at $4.1 trillion.
So why the deficits? The failed 2017 tax reform. From Trading Economics comes this rather brutal chart:
Once we let go of the fairy tale that the Laffer Curve will always kick in and save your ass, the twin events of the 2017 tax bill becoming law and the elevation of the annual Federal deficit comes as no surprise. Anyone who has struggled with a budget will understsand it. And with the Republicans in control during the critical period, all responsibility is dumped on them.
Party of financial responsibility, indeed.
1 I should start a petition on change.org advocating the Republican Party change its name to the Spendthrift Republican Party.
2 Certainly, Bush and Obama ran larger deficits for a couple of years, but it’s worth noting they were fighting the Great Recession using the time honored tool of pumping money into the economy. Trump was handed a great economy and pumped up the deficit for no good reason. To ignore these facts is to mark yourself an idiot. Yeah, I’m crabby today.
