THE FEDERAL budget deficit reached $310 billion in the first four months of fiscal 2019, which began in October. That’s a 40 percent increase over the same period a year earlier (adjusting for technicalities that distorted the previous figures). The United States is on course for a $900 billion deficit this year, just as the Congressional Budget Office forecast — and the causes are plain to see. President Trump and a Republican Congress enacted massive tax cuts in December 2017 while imposing essentially zero restraint on federal spending. Barring policy change, the CBO projects deficits will begin exceeding $1 trillion per year in 2022 and will average 4.4 percent of national output for a decade thereafter, in contrast to an average of 2.9 percent over the past half-century .
Not to worry, the Trump administration responds. “Growth solves the problem,” White House economic adviser Larry Kudlow said, true to supply-side doctrine that holds that tax cuts pay for themselves by stimulating more output. In this respect, Mr. Kudlow is being bipartisan, sort of. Insouciance about deficits is in fashion among Democrats, too, including some who have embraced a dubious new concept known as “modern monetary theory,” a sort of left-wing analog to supply-side that holds, essentially, that the United States can engage in unlimited deficit spending financed by the Federal Reserve. With both political parties sending such blasé messages, and no signs — yet — of harm to the broader economy, it’s little wonder that only 48 percent of the public considers deficit reduction “a top priority,” according to a Pew Research Center poll taken in January.
