Republicans rediscover fiscal austerity with Biden in the White House

Representative Mike Kelly, Republican of Pennsylvania, used an iceberg to illustrate his warning to the House Ways and Means Committee of the danger of increasing the debt limit.J. Scott Applewhite/Associated Press

WASHINGTON — There’s one sure way to know there’s a Democrat in the White House: Republicans are complaining about the national debt again.

After remaining largely silent while the debt swelled by $8 trillion under former president Donald Trump, Republicans have rediscovered their sense of fiscal responsibility just in time to oppose much of President Biden’s domestic agenda and risk the country’s credit rating.

They cite the debt, now at $28.5 trillion, as one reason for opposing the Democrats’ $3.5 trillion legislation to expand the social safety net and address climate change — even though, unlike with the 2017 Republican tax cuts, Democrats are aiming to offset most, if not all, of the cost with tax increases on the wealthy and other revenue raisers.

And Republicans in Congress are adamant they won’t vote to increase the national debt limit, which must be raised this fall or risk a first-ever default on federal bonds, despite many of them joining with Democrats to raise or suspend it three times during the Trump administration.

“Republicans will not facilitate another reckless, partisan taxing and spending spree,” Senate minority leader Mitch McConnell tweeted Wednesday, rejecting a personal appeal by Treasury Secretary Janet Yellen to help raise the debt limit.

It continues a four-decade pattern of Republican presidents racking up large budget deficits and leaving an economic and fiscal mess that a Democratic president has to try to clean up. Think Bill Clinton after deficits soared under Ronald Reagan and George H.W. Bush because of tax cuts and a defense buildup; Barack Obama after more tax cuts, a Medicaid expansion, two wars, and a financial crisis on George W. Bush’s watch; and now Biden, after even more tax cuts and a pandemic under Trump.

“Republicans are absolutely guilty of hypocrisy in that they focus on the debt during Democratic presidents and then run up spending during Republican presidents,” said Brian Riedl, a former top economic aide to Republican Senator Rob Portman of Ohio and now a senior fellow at the Manhattan Institute, a free-market think tank.

But he blamed Democrats, as well, for claiming responsibility for deficit reductions that come when an economic downturn reverses on their watch through factors outside of their control. Clinton was the only president in the past 40 years to preside over a decline in the national debt as a percentage of total economic output. The debt rose about $9 trillion under Obama, who inherited a deep recession.

“Yes, Democrats enter office with a bad hand but they also are quick to take credit for a lot of the natural growth of the business cycle that happens with or without their policies,” Riedl said. “Both parties run up deficits and then blame the other.”

The national debt has tripled since the 2008 financial crisis and continues to climb rapidly because of the pandemic, which sparked trillions of dollars in federal rescue spending and has lowered tax revenues. The nonpartisan Congressional Budget Office forecasts a $3 trillion budget deficit this fiscal year, which ends Sept. 30. That would push the debt by the end of this year to 103 percent of total economic output, or gross domestic product, second only to the record 106 percent just after World War II ended. The average debt-to-GDP ratio over the past 50 years has been 44 percent.

The fiscal situation should improve over the next several years as the economy recovers from the pandemic and interest rates remain low, the CBO said. But then deficits will start climbing again, fueled largely by increased spending on Social Security and Medicare benefits for the growing number of aging Americans. By 2031 the debt-to-GDP ratio would hit 107 percent on its way to a stunning 200 percent by 2051, the CBO projected.

The prospects for seriously addressing the debt appear bleak, said G. William Hoagland, a former top Senate Republican aide on the Budget Committee.

“Sometimes we create these expectations in the public’s mind, particularly during campaign seasons, that we can do all of this without a cost and somehow it’s a free lunch,” said Hoagland, vice president of the Bipartisan Policy Center think tank. “Trump was terrible about this. He was going to balance the budget in four or five years. I don’t know where he went to school for his arithmetic, but what he was promising was just absolutely impossible and yet somehow people bought it.”

Despite Trump’s promises, the debt rose during his presidency — even before the pandemic cratered the economy — in part because of the 2017 tax cuts, which the CBO estimated would cost $1.9 trillion over 10 years even after accounting for additional economic growth.

As Republicans were preparing the tax cut legislation in September 2017, 33 GOP senators voted to increase the debt limit. But this week, one of those senators, Ted Cruz of Texas, said Republicans had no responsibility to help raise the debt limit this fall, even though most of the debt racked up since the last hike in 2019 took place under Trump.

“I certainly agree that Republicans spend too much also,” said Cruz, who voted against the 2019 debt limit increase. “That being said, what we are seeing from Democrats right now is an order of magnitude different.”

Senator Thom Tillis, a Republican from North Carolina, also voted for the 2017 debt limit increase. But he was among 46 senators who signed a letter last month vowing to oppose one now. They argued Democrats have the votes to do it on their own as part of the $3.5 trillion budget reconciliation bill, which requires only a simple majority to pass the Senate.

“I think everybody cares about the debt, even . . . many Democrats,” Tillis said. “The problems you’re running into now is a vast difference in spending priorities.”

Congressional Democratic leaders have not included a debt limit increase in the reconciliation bill, arguing there’s a bipartisan obligation to raise it.

“Senators from both parties overwhelmingly voted in support of the many laws that contributed to this obligation,” Senate majority leader Chuck Schumer said on Tuesday. “So neither party can wash its hands of responsibility to pay the bills.”

But Republicans have returned to the confrontational debt limit stance they took during the Obama administration, when they twice brought the federal government to the brink of default, including a 2011 showdown that triggered the first-ever downgrade of the nation’s AAA bond rating.

Harvard economist Jason Furman, who chaired Obama’s Council of Economic Advisers, argues that the size of the national debt is not so dire because interest rates are historically low. That gives Democrats flexibility to borrow for parts of the reconciliation bill that are long-term investments, like spending for free preschool for 3- and 4-year-old children and tuition-free community college.

“Some of the concern about debt and debt trajectory is overblown given where interest rates are now and likely to be down the line,” he said. He estimated the Democrats could justify borrowing between $1 trillion and $2 trillion of the bill’s total cost as long as the money is used for investments like education.

Still, Furman is worried about the rising national debt and thinks the Republicans’ renewed focus on it is less about hypocrisy than a fundamental disagreement about priorities.

“I don’t think it’s pure hypocrisy to say debt is OK for something good and it’s not OK for something bad,” he said. “I’m in favor of borrowing for good things and against borrowing for bad things. I just have a very different view of what’s good and bad than they have.”