Governance

The new tax legislation pushed through by Donald Trump and congressional Republicans is virtually certain to raise the budget deficit and, in turn, the current-account deficit. Whatever the resemblance to the Reagan-era tax cuts of 1981-1983, it's not morning in America.

Speaking at an event organized by Robert Greenstein, president of the Center for Budget and Policy Priorities, I argued last week that unless our values have changed profoundly in an anti-government direction, the balance of pressures from economic change will lead to an expansion of the federal budget relative to gross domestic product. This was also the conclusion of a paper released by Paul Van de Water of the center. Excellent summaries were provided by Al Hunt and David Leonhardt.

Given recent controversies, I was interested to read National Economic Council Director Gary Cohn’s answer to a “why are you staying?” question put by Stuart Varney of the Fox Business Network last week. To his credit Cohn did not back away from his reservations about the president’s response to the Charlottesville violence. He said “Look, tax cuts are really important to me. I think it’s a once-in-a-lifetime opportunity. We haven’t done tax cuts in 31 years. So, to be a part of an administration that gets something done that hasn’t been done for 31 years is enormously challenging, enormously interesting to me.

The Republican Party’s leaders in the United States House of Representatives have been hard at work for more than a year designing a major reform of personal and corporate taxes. With an election looming in 2018, the House Republicans are determined to deliver a reform package and send it to the Senate for enactment.

"U.S. President Donald Trump’s administration has now released its budget plans for fiscal year 2018. Among the details provided in the document, entitled America First – A Budget Blueprint to Make America Great Again, are projections for the expected path of gross federal debt as a percentage of GDP, which is shown to decline from its current level of about 106% to about 80% in 2027. Debt held by the public is expected to mirror this path, shrinking from 77% to 60% over this period....Unfortunately, neither projection is credible."

"Apparently, the budget forecasts that U.S. economic growth will rise to 3.0 percent because of the administration’s policies — largely its tax cuts and perhaps also its regulatory policies.  Fair enough if you believe in tooth fairies and ludicrous supply-side economics."

In this installation of Conversations in Diplomacy, Congressman Seth Moulton, Representative of the Sixth District of Massachusetts, military veteran, and graduate of the Harvard Kennedy School, discusses the most serious threats to U.S. national security with Ambassador Nicholas Burns, Faculty Director of the Future of Diplomacy Project.

The bulk of any additional defense investment must focus on maintaining and extending our technological and warfighting edge, including in cyber, electronic and anti-submarine arenas, unmanned systems, automation, long-range striking and protected communications. U.S. military leaders should moderate their appetite for a bigger force today to protect critical investments in cutting-edge capabilities that will determine whether we succeed on the battlefield tomorrow.