An alternate universe
For a few wondrous hours on Friday, Americans were transported to an alternative reality in which the federal deficit is “coming down rapidly,” in part thanks to the massive tax cuts enacted by the Republican Congress and signed into law by President Donald 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 News 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 Post on Friday afternoon that he was stating expectations about future deficits. “The economy is so strong right now it’s going to produce lower deficits. I probably should have said future deficits,” Kudlow said.
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 reports, for the first seven months of fiscal 2018 (October through April), the deficit stood at $385 billion, 12 percent more than for the same period last year. Even if Kudlow’s vaunted supply-side-effect produces enough revenue to make up that gap—a generous assumption—the most he could say is that the deficit remained flat, not that it came down, much less “rapidly.”
Kudlow engaged in this flight of election-year hyperbole in the same week that the Congressional Budget Office was issuing a nonpartisan report on the nation’s long-term fiscal outlook. According to the CBO, 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 to pretend it doesn’t exist.