It was Ronald Reagan who once quipped that the deficit was big enough to take care of itself. We can rightly criticize Trump for spending too much, we can encourage and cajole him into cutting more, but we cannot hold him accountable for a problem for which there is no politically viable fix.
Last week, an updated 10-year projection of the deficit and the debt from the Congressional Budget Office provided fodder for President Donald Trump’s detractors, who believe he has done more than any Chief Executive in history to damage our fiscal situation. As Reuters summarized the CBO’s new projection, “The U.S. budget deficit will grow slightly in fiscal 2026 to $1.853 trillion, the Congressional Budget Office forecast on Wednesday, showing that on balance, President Donald Trump’s economic policies are worsening the country’s fiscal picture amid low economic growth. The CBO said the deficit for fiscal 2026 – Trump’s first full fiscal year in office – will be about 5.8% of GDP, about where it was in fiscal 2025, when the deficit was $1.775 trillion. But the U.S. deficit-to-GDP ratio will average 6.1% over the next decade, reaching 6.7% in fiscal 2036 – far above U.S. Treasury Secretary Scott Bessent’s goal to shrink it to around 3% of economic output…The fiscal 2026 deficit is about $100 billion or 8% more in CBO’s current projections than it was in the agency’s January 2025 projections, and the cumulative deficit over the 2026–2035 period is $1.4 trillion, or 6% greater. Trump’s ‘One Big Beautiful Bill’, which extended 2017 tax cuts and slashed outlays on social programs such as Medicaid, will boost consumer spending and private investment this year, CBO said. That legislation will add $4.7 trillion to U.S. deficits over the 10-year budget window, while reduced immigration will add another $500 billion, according to the forecasts.” Despite that the CBO doesn’t have an exactly stellar track record in making these sorts of long term predictions – they once claimed President Joe Biden’s Inflation Reduction Act would be revenue neutral – and there is reason to be suspicious this time when the projection itself specifically refers to low economic growth, more on that in a moment, John A. Daly, a writer for National Review and a member of the Reagan Caucus Act, declared that President Trump was the worst ever in this regard. In responding to a post that noted “Trump is worse on debt…than Biden was,” he insisted “And it’s not even close.” In responding to another post that noted “Holy Crap – We’re headed to $3 trillion deficits,” Mr. Daly claimed satirically, “Yeah, but Bad Bunny or something” in reference to President Trump and general Republican criticism of the Super Bowl halftime show.
While there is certainly some truth to the notion that President Trump has been a profligate spender who has not adequately addressed an increasingly dire financial situation, I’m chiefly reminded of Rodney Dangerfield in Back to School, when the bookish economics professor tells the class how to budget for the construction of a new factory and Thornton Mellon responds, “Oh, you left out a bunch of stuff.” For starters, we know already that the CBO hasn’t correctly predicted the beginning of this fiscal year, much less what might happen ten years from now. Though they have increased their prediction for the current deficit, it has in fact been shrinking so far, four months in. Ironically, Reuters itself covered this on the same day, noting “US January budget deficit falls to $95 billion as revenue gains outpace spending growth.” “January receipts totaled $560 billion, up $47 billion or 9% from a year earlier, while outlays totaled $655 billion, up $13 billion or 2%. Through the first four months of the 2026 fiscal year that started October 1, the deficit fell to $697 billion, down $143 billion or 17% from the same period of fiscal 2025. Year-to-date receipts totaled $1.785 trillion, up $188 billion or 12% from the prior year period, while outlays reached $2.482 trillion, up $46 billion or 2%.” Though the year is far from over, the general trend, revenues up far more than outlays, is clear and if it continues, the deficit will likely be measurably lower than the year before, suggesting that at least a start has been made. In the meantime, the difference between the CBO’s projection and the current actuals is likely because the CBO has a notoriously bad habit of underestimating economic growth due to lower tax rates and regulations as mentioned earlier. When Secretary Bessent referred to a 3% deficit ratio, he was basing it on the belief that economic growth will be strong, but the CBO doesn’t agree – even with the current reality. According to their projections, Gross Domestic Product will grow at a relatively meager 2.2% this year, then fall to 1.8% for the rest of the decade, but as of right now at least, growth is significantly higher than that, about double. Following a faster than expected third quarter growth rate of 4.4%, the Atlanta Fed is currently forecasting 3.7% for the fourth quarter (the first of the 2026 fiscal year) and as late as last month, their prediction hit over 5%. If the actuals come in anywhere close to those numbers, the CBO will be off by a substantial amount, especially if the significantly higher growth continues over an extended period, making Mr. Bessent’s goal far more plausible than the current projections.
Regardless of what the future may bring, many of President Trump’s detractors including Mr. Daly himself bemoan the ever increasing debt while complaining about any attempt to deal with it. For example, they remain steadfastly opposed to the additional revenue that President Trump’s tariffs are generating, which the CBO predicts will total about $3 trillion over the ten year period. They do so even though additional revenue on this scale has been called for since President Barack Obama’s National Commission on Fiscal Responsibility and Reform. On December 1, 2010, Alan Simpson and Erskine Bowles released a plan to reduce the deficit by between $4 and 4.6 trillion over ten years via a combination of spending decreases and tax increases on a roughly two to one basis, where every dollar saved was offset with an additional dollar in revenue. As part of their proposal, spending would be addressed by both cuts to the discretionary budget and reforms to entitlement programs including both Social Security and Medicare, such as raising the retirement age and limiting cost of living increases in benefits. Taxes would correspondingly be increased by almost $1 trillion through a combination of reducing rates while eliminating deductions, meaning the average American would pay more, and by new procedures to gradually increase gas and other taxes, meaning everyone would pay more. While reaction to the plan was mixed, Maya McGuiness of the centrist Committee for a Responsible Budget described it this way, “the Commission released not only a credible plan, but an excellent plan. Of course it is filled with things people don’t like—that is the nature of deficit reduction. And yet the plan received bipartisan support from a majority of the Commission at a time where, up until now, fiscal leadership has been in short supply.” Though tariffs were not recommended by what came to be known as the Simpson-Bowles plan and they are far from a perfect tax, they serve the need of generating more revenue – about two thirds of that proposed by the plan – and there is no perfect tax. Otherwise, to my knowledge at least, neither Mr. Daly nor any of his fellow right-leaning Trump-detractors are recommending tax increases of any kind, meaning they somehow want to reduce the deficit and debt without increasing revenue.
While this something most do not seriously believe is possible, they make the no-tax approach seem feasible by insisting that President Trump is ignoring the real drivers of both the deficit and the debt, entitlement spending for retirement and healthcare, Social Security and Medicare respectively. In their view, no one can be serious about either without tackling these two behemoth programs and in principle, I agree with them. The problem is the “in practice” part. If they say politics is the art of the possible, cutting entitlements is currently impossible. There is no conceivable scenario where Republicans will muster the 60 votes necessary to do so in the Senate, or even the 50 votes if they were to pursue some as of yet unclear reconciliation based policy. Even should there be such a scenario, the outcome would be political suicide. Despite the drain on our finances and the fact that costs for both are only expected to grow, both Social Security and Medicare are extremely popular with the public, pulling numbers that would make extremely cute puppies and kittens blush. According to recent information from the Cato Institute, the Bipartisan Policy Center, AARP, and Pew Research, somewhere between 83% and 93% of Americans view Social Security favorably including around 98% of Democrats, 95% of Republicans, and 93% of Democrats with about 79% of all members of all political spectrums opposing cuts of any kind. While specific polling on approval for Medicare is harder to find, 91% of recipients said the program was essential to their healthcare affordability and 81% of Americans opposed cuts. Clearly, there is a reason entitlement programs were once referred to as the “third rail” of politics. We might wish we lived in a world where everyone could dispassionately consider the numbers and understand that reform is essential to keeping both programs fiscally sound in the future given there’s not enough tax money in the world to fund them as they are now forever, but we don’t. No sane politician would seriously attempt to swim against that tide and while President Trump’s sanity might seem questionable at times, he rightly in my opinion recognizes the impossibility of major reform before we are in free fall after crossing the fiscal cliff.
This doesn’t mean there is nothing that can be done, however. Medicare (and Medicaid for low income people) in particular funds healthcare on behalf of people by paying providers and pharmaceutical companies for services and products. If costs can be lowered without reducing the volume or the quality, there are significant amounts of money to be saved without actually making any cuts in care. In that regard, it might come as something of a surprise that President Trump is attempting precisely this by implementing a Most Favored Nation Policy for drug pricing which would ensure that the United States pays no more than anyone else for pharmaceutical products and by building upon President Joe Biden’s initial push to leverage the negotiating power of the federal government to reduce purchasing costs. While the full impact of these policies is not yet known, Americans currently pay two to three times as much for the same product sold overseas, and the potential savings is expected to be significant. In a survey conducted by Cornell University’s Health Policy Center, 50% of respondents agreed that MFN pricing would “would substantially reduce average net prices for branded prescription drugs in the US” and 38.4% agreed it would “substantially improve access to branded prescription drugs for” the uninsured, 33.8% for those on Medicare, and 29.2% for those on Medicaid. Incredibly, I could find no study that actually estimates the cost savings, bizarre considering the potential stakes, but ironically, many self-proclaimed conservatives are against MFN however much money could be saved.
While I am not certain of Mr. Daly’s stance on the issue, a “coalition of more than 50 leaders of conservative and free-market organizations signed onto a letter to members of Congress on Thursday, opposing codifying President Donald Trump’s ‘most favored nation’ (MFN) drug pricing policy model into law” to use The Hill’s framing of the matter. In their view, the policy amounts to “import[ing] socialist price controls and values into our country” and “would reduce access to new cures and reduce U.S. global competitiveness, ceding ground to China.” “While supporters of this proposal correctly identify the unique problems facing the American health care system — namely, wealthy countries paying artificially lower prices for prescription drugs than the U.S. and the fact that this depresses innovation and inflates our costs — MFN would not solve these problems,” the letter continues. “In fact, it would exacerbate them.” Somehow, they believe the entire notion of MFN is “based on the flawed assumption that American manufacturers are not already fighting as hard as they can against foreign price controls” despite that Americans have been paying more for the same product for years and it is not clear what this fighting even looks like, beyond assuring the gullible they are really, really doing something about it. “If the U.S. implements the same price controls utilized by foreign countries, companies cannot expect to recuperate the [research and development] costs for the medicines they create,” they wrote. “This will depress innovation and reduce cures available to patients while causing an unacceptable degree of drug shortages.” Though this is something of a reasonable concern in practice, they pretend there are no other reforms possible to reduce research and development costs, fear monger about shortages the same as was done for tariffs, and studiously have to ignore the fact that President Trump is well aware of all this. In fact, he has already been negotiating with drug companies to ensure research dollars remain flowing in the United States. Pfizer, for example, committed to $70 billion in US manufacturing and research and development in exchange for a three year exemption from certain tariffs; so far, fifteen other major companies including behemoths like AstraZeneca and Eli Lilly have secured similar arrangements.
Of course, these conservative leaders also expect all of us to studiously ignore that they have no solution of their own. Implicit in their promulgation of a free market fantasy, is the notion that Americans simply have to continue paying more, forever, because the rest of the world refuses to do so, leaving us with their ideal of a free market while everyone else free loads. Thus, they carp incessantly about the deficit and the debt while actively opposing the measures the President is pursuing to help alleviate the issue. In the meantime, the only solution they propose – reforming Social Security and Medicare – assuming you consider their vague plans to do so are actual solutions rather than more pipe dreams – is straight up political suicide, the sort of cataclysmic event that would put the Republican Party out of power for a decade and bizarrely, they probably know this. In my opinion at least, at least some of them want to do it anyway to punish the party for supporting a man they detest. While this is not to suggest that President Trump can reduce the deficit to zero, much less begin paying down the debt, with either tariffs or by reducing drug prices alone, both are practical starts to a perennial problem that has plagued the country since World War II. Despite the claims of Mr. Daly and others, the budget has only been balanced a relative handful of times in the last hundred years, a mere four times in more than the last fifty, meaning this problem is not unique to President Donald Trump. It was Ronald Reagan who once quipped that the deficit was big enough to take care of itself. We can rightly criticize President Trump for spending too much – he has – we can rightly encourage and cajole him to cutting more – he has already started with 300,000 government workers – but we cannot hold him accountable exclusively for a problem that almost every other President has had and for which there is no politically viable fix. If there was, perhaps President George W. Bush would’ve succeeded with his own Social Security reform plan, which perhaps needless to say went down in political flames, never to be seen again. At some point, a future President will be forced to confront this issue, but that point is not now and in the meantime, one would think conservatives would support at least some of the ways we can chip away at the problem. The fact that they don’t, suggests more about how they feel about President Trump than their desire to reduce the deficit, even by an admittedly too small amount.
Confessions of a Conservative Atheist 