WASHINGTON – ‘Trumpanomics’ doesn’t compute. The media keep piling on Donald Trump, because he keeps saying things that are controversial, impractical, undesirable and — in some cases — simply impossible. Into this last category has now tumbled something new: Trump told Washington Post reporters Robert Costa and Bob Woodward that he could eliminate the $19 trillion federal debt over “a period of eight years.” He won’t, even if he wins in a landslide.
To explain: You can’t increase military spending (which Trump has promised), preserve Social Security benefits (also a Trump promise), enact a huge tax cut (another proposal) and simultaneously pay off the debt. Trump’s budget is awash in glaring contradictions. The math doesn’t work. It’s virtually impossible to retire all the debt.
A quick look at the budget shows why.
In fiscal 2016, the national government will spend $3.9 trillion, estimates the Congressional Budget Office (CBO). The largest programs are Social Security ($911 billion), Medicare ($695 billion), defense ($548 billion) and Medicaid ($371 billion). Spending exceeds tax collections, resulting in a deficit estimated at $534 billion. To cover the shortfall, the government borrows; the borrowings then add to the federal debt.
How can Trump eliminate the publicly held debt of about $14 trillion? (The $19 trillion figure also includes Treasury securities held by government trust funds, such as Social Security. In theory, these debts could be canceled if Congress refused to spend from the trust funds.)
Just balancing the budget would require $534 billion of spending cuts or tax increases in 2016. If applied only to defense, the cut would virtually eliminate the Pentagon. If applied only to Social Security, the benefit cut would be 59 percent. If the four large programs listed above were all exempted (plus interest on the debt, $253 billion), all the remaining programs would need to be cut by nearly half.
Given an aging population and high health costs — health spending is nearly 30 percent of the budget — this exercise would have to be repeated annually. From 2017 to 2026, present policies produce deficits estimated at $9 trillion by the CBO. That would be added to the debt.
And remember: These hypothetical changes merely balance the budget; they don’t repay the existing debt. This would require additional spending cuts or tax increases. How much? Back-of-the-envelope calculations suggest another $1 trillion to $1.5 trillion annually.
There’s no consensus for this policy. If undertaken, it would surely provoke doubt whether the economy could handle such a dramatic shift, from large budget deficits to large surpluses, without plunging into a deep recession. But even without these problems, Trump would need to repudiate some of his other promises. His proposed tax cut, for example, would lose about $9.5 trillion in revenues over a decade, estimates the nonpartisan Tax Policy Center.
The contradictions are so obvious that they raise questions about Trump’s understanding or motives. Did he mean to say that he could end annual deficits as opposed to repaying the entire debt? If so, why was he confused? If not, does he cynically assume that most people won’t notice the inconsistencies? Either way, fantasies trump facts.
Robert J. Samuelson writes a column about business and economics issues for The Washington Post. He is the author of “The Great Inflation and Its Aftermath: The Past and Future of American Affluence” (2008) and “The Good Life and Its Discontents” (1995). © 2016, The Washington Post Writers Group
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