For a few wondrous hours last Friday morning, Americans were transported to an alternative reality in which the deficit is “coming down rapidly,” in part thanks to the massive tax cuts enacted by Congress and signed into law by President Trump last December.
Our guide on this magical mystery tour was Larry Kudlow, President Trump’s director of the National Economic Council, who claimed on Fox Business Network that the tax cuts were generating huge new economic growth and “throwing off enormous amount of new tax revenues,” with the result that “the deficit … is coming down. And it’s coming down rapidly.” Alas, the dream ended when Kudlow clarified to The Washington Post on Friday afternoon that he was stating expectations about future deficits.
We’re glad to learn that Kudlow’s claim was a fantasy too far even for the Trump White House. But his new version isn’t much of an improvement reality-wise. The fact is that the estimated $1.2 trillion reduction in federal revenues over the next 10 years that the Republican-majority Congress enacted six months ago has widened what was already a large hole in federal finances. The cash hemorrhage has already begun. As The Post’s Aaron Blake reported, for the first seven months of fiscal 2018 (October through April) the deficit stood at $385 billion, 12 percent more than the same period last year. Even if Kudlow’s vaunted supply-side effect produces enough revenue to make up that gap, the most he could say is that the deficit remained flat, not that it came down.
Kudlow engaged in this flight of election-year hyperbole in the same week that the Congressional Budget Office, in a nonpartisan report on the nation’s long-term fiscal outlook, said the federal deficit at the end of fiscal 2018 will be 78 percent of gross domestic product, roughly double its postwar average.
Astronomical as that number is, it will only get bigger the longer our elected officials dither. If Kudlow’s comments are any indication, this White House intends not only to put off action on the nation’s fiscal predicament, but also to pretend it doesn’t exist.
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