The Art of the Budget Deal: White House and Congress Cooperate?

On July 22, President Donald Trump and House Speaker Nancy Pelosi announced a two-year budget deal that suspends the debt ceiling, and will raise federal spending $320 billion over amounts agreed to during the Obama years.

The agreement was unusual compared to recent budget agreements in that it was arrived at quickly and quietly. It was a noteworthy departure from what I have called “the debt-ceiling dance and the annual budget ritual.” There was no partisan squabble, no hyperventilated rhetoric, no drama.

What changed? Has a new era of bipartisanship dawned in Washington? Dream on. Has Nancy Pelosi abandoned her appetite for huge government expenditures? Not a chance. The difference was that President Trump readily agreed to Speaker Pelosi’s domestic spending requests in exchange for relatively modest increases in military spending.

Both fiscal conservatives and pro-military groups have denounced the budget deal. The free-market Independent Institute called it “The Worst Budget Deal in History.” Two scholars for the American Enterprise Institute wrote in The Wall Street Journal that the “Budget Deal Is No Win for the Military.” They acknowledged that the newly approved military spending will help to repair long-neglected maintenance of current operations, but it will not result in a needed expansion of military capabilities such as Ronald Reagan achieved in his first term.

As a long-time critic on debt-inducing excessive federal spending, (see here, and here, and here) I don’t like the new agreement either. I understand, though, why Trump seemingly caved to Pelosi. The explanation lies in two venerable truisms: 1) Politics is the art of the possible and 2) One needs to choose which battles to fight.

Reining in federal spending at this stage is not politically possible for two reasons.

First, look at Congress: while there are significant ideological differences between the two parties, there is no stomach in today’s Congress for fiscal belt-tightening. Republicans are the less radical party in terms of support for Big Government, but they are still big spenders. On the rare occasions during my lifetime when Republicans held the White House and both houses of Congress, (i.e., during four years under George W. Bush and during Donald Trump’s first two years) budget deficits rose.

Second, look around you: Americans are addicted to debt. We can blame politicians all we want for oceans of red ink, but the fact is that American voters – many personally addicted to debt – keep electing big-spending politicians.

As for picking which battles to fight, whatever else you may think of Trump, he is shrewd and has shown that he knows how to get elected. I suspect his thought process went something like this: The old spending ceilings were doomed anyhow. I’ll get what I can for the military. Why waste precious political capital in a losing fight?

Heaven knows next year’s election campaign will be bitterly fought. Trump will run on his record of tax cuts, reduced regulations, appointing solid jurists to the Supreme Court, disentangling the US from the socialistic scheme known as the Paris Climate Agreement, etc. He won’t want to risk having his achievements eclipsed by another noisy budget squabble – especially one that he would eventually have lost anyhow.

None of us should be happy about our national slide toward bankruptcy. But until “we, the people” cease to expect the federal government to “help” us in myriad ways, national debt will increase regardless of who is in the White House. Don’t blame President Trump. Blame the tens of millions of voters who keep electing big spenders.

About Mark W. Hendrickson

Dr. Mark W. Hendrickson is a retired adjunct faculty member, economist, and fellow for economic and social policy with the Institute for Faith and Freedom at Grove City College.

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