The deficit is climbing again.
Given that we’re in a Republican administration, though, that shouldn’t be a surprise. Republicans really love to flap their jaws about fiscal responsibility, but they hate to cut spending when they finally get the chance. Of course, Democrats are even worse. They don’t even pretend to care about pesky little details, like whether we can actually afford a gigantic nanny state or not.
Politicians. All talk, no walk.
Anyway, the government has a $147 billion budget deficit in May. That’s an increase of 66% from May of last year. Declining revenue, thanks to the Trump tax cuts, has clashed with higher spending. The result, as always, is deficit spending.
Last May, the treasury overspent by a mere (hah!) $88 billion. And economists had predicted that this May’s deficit would only hit the $144 billion mark. But what’s a few billion dollars here or there, anyway? The government overspent estimates by an amount almost equal to the entire GDP of Belize, but hey.
At least unemployment is way down.
In fact, unemployment is at an 18-year low right now. Whether that’s down to the Trump tax cuts or not (and they probably did contribute at least a bit), the economy is humming along pretty nicely right now. The coming tariffs on steel and aluminum may put a dent in further growth, though.
And given how much the government is spending lately, any speedbump in economic growth is going to be bad for the deficit. Revenue shortfalls will balloon into massive deficits very quickly if spending isn’t cut. And who knows whether we’ll be able to borrow any more from the Chinese in the coming years? If our relations with China continue to deteriorate they may decide to stop buying up our debt.
On the other hand, canceling those wargames in Korea will probably save us some money. Although, if we do normalize relations with Korea, the Chinese won’t be happy about it. They’ve loved having North Korea as an unpredictable buffer zone between our bases in South Korea and the Chinese mainland.
Better relations between North Korea and the US could mean that buffer gets significantly less buff. Xi Jinping probably hoped to keep North Korea on a Chinese leash. He may want to drum up trouble for us at home in order to distract President Trump’s attention from foreign policy issues. Calling in some (or, God forbid, all) of our Chinese-backed debt would certainly cause turmoil in the American economy.
But for now, things seem all quiet on the western front. Even though we’re spending more and bringing in less, the US is finally addressing some major global political problems. After all, the only thing stupider that a 25% tariff on Canadian steel is getting into a land war in Asia. Trump is doing a decent job avoiding the latter, so far.
Hopefully, he’ll think better of his tariff idea soon as well. Then maybe the economy will keep chugging along and our deficit growth problem won’t balloon hugely out of control. At least, not any more than it already has, of course.