The most important thing to understand about the U.S. budget, Donald Trump or no, is illustrated by the nearby chart. Even with Mr. Trump’s modest increases, defense barely rises as a share of federal outlays. In 1989 when the Berlin Wall fell, defense was 26.5% of outlays. In 2019 it will be 15.6%.
Meantime, look at “payments for individuals,” which encompass such income transfers as Medicare, Medicaid, Social Security and food stamps, among other things. This category was 47.7% of outlays in 1989 and has steadily climbed to reach an estimated 69.2% in 2019.
.. Net interest on the federal debt soaks up another 7.4% of outlays for 2018, and that will rise with interest rates.
I’m having a hard time figuring out exactly how big a stimulus we’re looking at, but it seems to be around 2 percent of GDP for fiscal 2019. With a multiplier of 0.5, that would add 1 percent to growth.
That said, I’d suggest that this is a bit high. For one thing, it’s not clear how much impact corporate tax cuts, which are the biggest item, will really have on spending. Meanwhile, unemployment is only 4 percent; given Okun’s Law, the usual relationship between growth and changes in unemployment, an extra 1 percent growth would bring unemployment down to 3.5%, which is really low by historical standards, so that the Fed would probably lean especially hard against this stimulus.
the Pentagon, which has spent years complaining about spending restraints that were introduced in 2011, will get an eighty-billion-dollar increase in its budget for this year, and an extra eighty-five billion dollars for next year.
.. All told, the deal authorizes about three hundred billion dollars in new spending over the next two years.
.. Gross domestic product .. is currently about twenty trillion dollars
.. the G.O.P. tax bill will reduce tax payments by about a hundred and thirty-five billion dollars in the 2018 fiscal year, and by two hundred and eighty billion dollars in the 2019 fiscal year.
.. If you add it to the additional spending in the budget deal, you’ve got a pretty big “Trump stimulus.”
.. the over-all effect of the tax bill and the spending deal would be about 1.25 per cent of G.D.P. for this calendar year, and two per cent for the next.
.. the Obama stimulus of 2009 through 2011 .. totalled about two per cent of G.D.P. each year
.. Many economics textbooks say this is the sort of environment in which the government should be balancing its books, and perhaps even paying down deb
.. in 2011 prompted members of the Party to refuse to raise the debt ceiling, is purely cynical.
.. The Reagan Administration and the George W. Bush Administration both raided the public purse to finance big tax cuts, and left the deficit much higher than they found it. The Trump Administration is merely following suit.
.. “As long as there is still slack in corners of the labor market, then this kind of fiscal stimulus of the economy near full employment is a kind of test I support.”
he has shown himself to be swayed with remarkable ease: He said he was rethinking his position on Obamacare after a post-election talk with President Obama, revised his views on NATO after speaking with Europeans, softened his views on China after a chin-wag with the Chinese, shifted on NAFTA after talking with the Mexicans and switched his budget views after hearing from Chuck and Nancy.
.. This raises the tantalizing prospect that Trump could be a better president if he were not surrounded by the likes of Stephen Miller, as well as the alarming possibility that he could be even worse if the last voice he heard before making a decision were that of, say, Vladimir Putin, or Alex Jones
.. But this all depends on what is going on in Trump’s head when he repeats the last words he hears: Is he actually internalizing the views, or is he merely echoing? Is he a chameleon or a parrot?
.. Clearly, Trump is merely echoing, not embracing, the words he hears. No mind could possibly assimilate as many diametrically opposed ideas as Trump’s appeared to in those 55 minutes.
.. Sen. Dick Durbin (D-Ill.) told Trump that DACA legislation to protect immigrant “dreamers” had to be done “in a matter of days — literally of days,” referring to a Jan. 19 budget deadline.
Replied Trump: “I agree with that, Dick. I very much agree with that.”
A few minutes later, Rep. Martha McSally (R-Ariz.) took exactly the opposite view, suggesting that DACA action could wait until March and that instead there had to be an immediate Pentagon budget increase: “Those who need us right now before the January 19 deadline is our military.”
House Minority Whip Steny Hoyer (D-Md.), paddled Trump back the other way, saying more military spending would have to be accompanied by similar hikes for domestic programs such as infrastructure.