Until now, President-elect Donald Trump has been dealing with play money in outlining his vision for government spending and tax policy.
Throughout his campaign, the billionaire businessman blithely tossed out proposals for bolstering the military and border security, building a wall along the U.S.-Mexico border, launching a massive new round of infrastructure construction, providing paid family leave for women and slashing taxes on the wealthy.
Much of this was political gamesmanship, as Trump sought to one-up his Democratic rival, Hillary Clinton, on spending and tax breaks for key constituencies. When the Committee for a Responsible Federal Budget calculated that Trump’s proposals, taken together, would add $5.3 trillion to the national debt over the coming decade, Trump and his advisers dismissed the startling figures as hyperbole that didn’t take into account economic expansion under his policies.
As he prepares to take the reins of the country on January 20 and press for passage of his legislative agenda on Capitol Hill, Trump will have to drop the bluster and level with Americans about the implication of his spending and tax measures as he encounters the often harsh realities of budget politics. No longer able to use seat-of-the-pants calculations, Trump will be obliged to operate within the confines of budget resolutions, statutory spending caps, debt ceilings and Congressional Budget Office audits as he promotes his agenda.
Trump spent Thursday meeting at the White House with President Obama and then conferring with GOP congressional leaders in the afternoon. “We can't get started fast enough, whether it's healthcare or immigration, so many different things, we'll be working on them very rapidly, and I think we'll be putting things up very quickly," Trump said in a statement after dining with House Speaker Paul Ryan (R-WI) and Vice President-elect Mike Pence.
"We had a very good meeting, a very detailed meeting,” he added. “We're going to lower taxes as you know, we're going to fix healthcare [read: dismantle Obamacare] and make it more affordable and better, we're going to do a real job for the public."
But Trump and his new advisers already are headed for budgetary headaches and tough political calculations almost as soon as the last bottle of champagne is uncorked at his Inauguration celebration in late January.
As is its wont, Congress punted on a series of tough spending decisions until after the election and will return to work early next week staring down a December 9 deadline for completing work on fiscal 2017 spending measures or risking another government shutdown.
The government is running on a stop-gap continuing resolution that provides funding at last fiscal year’s levels until December 9th. It is far from clear whether Congress will rush to pass the 11 remaining appropriations bills in an omnibus package – as Senate Majority Leader Mitch McConnell (R-KY) and Obama would much prefer, or postpone final action until early next year when Trump succeeds Obama in the Oval Office.
Obama reportedly wants to resolve all differences before he leaves office to give him one last chance to shape spending policy in the Democratic direction before the Republicans totally take over. And McConnell is a big fan of regular order on Capitol Hill and would like to clear the decks of left-over spending controversies before the new Congress is sworn in.
But Ryan is more hemmed in by arch conservatives in the House who despise Obama and don’t want him to have the final say on spending levels for the remainder of the fiscal year that runs to next September 30. They are clamoring for another temporary extension of government spending authority to give Trump and his team time to settle in.
“It would be inappropriate to negotiate a lame-duck spending deal with President Obama and [Senate Minority Leader] Harry Reid, which would further jeopardize the nation’s fiscal health,” Rep. Bill Flores (R-TX), chair of the conservative Republican Study Committee, said in a statement.
Politico reported that the leadership is now leaning towards another continuing resolution through March or April, well after Trump takes office. “We can’t pass anything longer, and that gives Trump time to set up his administration,” a Republican congressional aide told Politico.
Richard Kogan, a senior fellow and budget expert at the Center on Budget and Policy Priorities, said on Thursday that the decision will come down to “whether they want to close the deal at spending levels they already have agreed upon or do they want to try to improve their levels of the deal by threatening to wait until the spring to do it.”
If they do decide to drag out the process with another continuing resolution, Kogan noted, it would work a hardship on government agencies that already are struggling to operate with added responsibilities under last year’s appropriations levels.
Regardless of what the Republicans ultimately decide, “There will be one elephant in the room,” according to Taxpayers for Common Senate, a government watchdog. And that is the persistent tight spending caps mandated by the Budget Control Act of 2011. Congress approved those caps in a bid to get a better handle on the rising debt. The BCA caps on defense and non-defense spending will last until 2021 unless Congress and the new president decide to change them.
Trump may have big plans for raising defense spending to make the United States the most feared military power in the world. But for now, at least, he will run up against those caps – including a $609.9 billion fiscal 2017 defense spending cap that includes money for ongoing action in the Middle East. He and his GOP allies on the Hill also will have to contend with a $533.4 billion limit on non-defense discretionary programs next year, which could put a crimp in his infrastructure and border security efforts.
The Congressional Research Service estimates that together, the spending caps will achieve nearly $1 trillion in savings between fiscal 2017 and fiscal 2021 if left intact. Many conservative defense hawks are eager to raise the cap to allow for more defense spending and military weaponry, while Obama and the Democrats would much prefer to see the ceiling lifted on domestic programs for education, health care, job training and other initiatives.
The national debt is currently nearing $19.8 trillion and is likely to exceed $20 trillion in less than a year. Moreover, the budget deficit – the annual gap between spending and tax revenues – grew to $587 billion in fiscal 2016, the first increase in the deficit in five years.
“If they scrap it, Congress and the new President have to explain to taxpayers what made them decide to be so extravagant,” Taxpayers for Common Sense said in its analysis.
“Like most candidates, Trump promised new spending on virtually every sector of the economy,” it added. “More for investments in infrastructure, more on defense, more for veterans, also no change to Social Security, Medicare, and Medicaid. That’s a lot of cash and would most certainly balloon the deficit and debt.”
For the first time since 2007, Republicans will control both chambers of Congress and the executive branch. With the Democrats largely consigned to the sidelines, Trump and the Republicans will either take the credit or the blame for their fiscal actions.