While it may seem that balanced budgets are a thing of the past, in a fit of pure optimism on Tuesday, Newt Gingrich predicted at a Heritage Foundation event that, “Trumpism produces a balanced budget largely as the consequence of its policies rather than by focusing on the budget itself.” In other words, the balance can be achieved through creating jobs, cutting bureaucracy, promoting economic growth and lowering spending, Gingrich argued.
The former Speaker of the House is hardly naïve on the issue of balanced budgets. He was, after all, a key contributor to balancing the budget during the Clinton Administration, with the US running a surplus for the last two years of his term as Speaker. Lately things are hardly as fiscally restrained. The national debt has grown steadily over the last eight years along with spending, and the first major action the new Congress took was to pass a budget resolution last week that adds $9 trillion to the debt over the next ten years. While allies of the resolution argue that it was just a vehicle to repeal the Affordable Care Act, and these are not the final numbers, fiscal conservatives may find it hard to give any benefit of the doubt — especially as the incoming administration continues to signal they are serious about a major infrastructure package in the near future.
Reasons for pessimism aside, there have been some signs that Gingrich is right and that a Trump administration will prioritize getting runaway spending under control. For instance, President-elect Trump has made a target of wasteful programs, and he did recently advise his transition team to develop a plan to pursue spending cuts by up to 10% and staffing cuts to 20%, potentially saving up to $10 trillion over the next decade.
A blueprint has also surfaced with President-elect Trump’s specifics on reducing federal bureaucracy. Major cuts would be made to agencies within the Departments of Commerce, Energy, Justice, State and Transportation. These cuts mirror other recommendations put forward by both the Heritage Foundation and the Republican Study Committee (RSC).
As encouraging as these reports are, fiscal hawks cannot afford to relax just yet. If spending is hiked in other areas of the budget such as infrastructure or the Pentagon, these proposed cuts will not push us toward a balanced budget, and if spending is not cut further along with potential tax cuts, deficits will continue or even grow. The Congressional Budget Office and others consistently point out that high deficits and debt can damage economic growth, which would put a damper on any potential supply-side balance.
An even bigger concern is major spending on the mandatory side, which continues to crowd out the rest of the budget. Breaking ranks with many in his own party, though, President-elect Trump has pledged not to cut these programs. Proposed discretionary cuts can only go so far without serious reforms to the two-thirds of the budget currently on autopilot.
Whether Speaker Gingrich was overly optimistic remains to be seen, but as we head into the new administration and the new Congress, we hope that things turn in the right direction and meaningful reforms are achieved. With our future at stake, fiscal conservatives should encourage real solutions, not just more of the same political promises.