Politics

Trump on collision course with GOP deficit hawks

President Trump paused as he spoke before police associations Wednesday in Washington.

Evan Vucci/Associated Press

President Trump paused as he spoke before police associations Wednesday in Washington.

WASHINGTON — President Trump is proposing a $1 trillion infusion to upgrade American infrastructure, a new wall along the Mexican border, more military spending, and a series of sweeping new tax cuts — all while pledging to keep large entitlement programs intact.

The math doesn’t add up, if you worry at all about the national debt.

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His big-ticket spending plans put the new president, who boasted as a businessman that he was the “king of debt,” on a collision course with fiscal conservatives in Congress who for years have railed against the ballooning debt, which is approaching $20 trillion.

It is one of the most glaring ways in which Trump is attempting to remake the Republican Party, shaking ideological bedrock for some conservatives who have spent careers arguing for less government spending. The new Republican in the White House is talking down fiscal austerity and behaving more like a populist big spender, looking to prime the pump of the economy to benefit workers across the country.

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“A balanced budget is fine,” Trump told Fox News’ Sean Hannity recently. “But sometimes you have to fuel the well in order to really get the economy going.”

During his first weeks in the White House, he not only touted new spending plans but also floated the idea of a 20 percent import tax on Mexican goods that could hit American consumers at car dealerships, retail counters, and supermarkets.

Even with an improving economy, his rhetoric seems to reflect the philosophy Democrats used to justify the federal stimulus in the wake of the 2008 financial crisis — spending that, though widely credited with spurring the economic recovery, helped spark Tea Party backlash and sweep Republicans back to power.

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Trump’s fellow Republicans so far appear muted in their concerns about his fiscal approach. Their reticence could open them up to charges of abandoning core principles or even of hypocrisy — that they only really mobilize against spending when a Democrat is proposing it.

“This is a huge test for the Republican Congress,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget. “Now they own the policy choices. If they suddenly walk away from their goals of fiscal responsibility they will be hugely hypocritical.”

The president announced a plan in his first week in office to build a wall along the border with Mexico, a key plank of his campaign and his most frequent rallying cry. But with Mexico refusing to foot the bill, as Trump promised it would, US taxpayers may now absorb the cost of a wall expected to total up to $15 billion.

Congressional leaders have said they plan to take up legislation to pay for the wall. And while those same leaders fought just about any new Obama administration spending that was not accompanied by cuts, even a $1.1 billion request to combat the Zika virus, they are now preparing to avoid a similar pledge under Trump.

House Speaker Paul Ryan, asked at least three times recently whether the costs of the wall would be offset with other budget cuts, said, “We’ll see.”

“We are fiscal conservatives,” he said. “If we’re going to be spending on things like say, infrastructure, we’re going to find the fiscal space to pay for that in our spring budget. And so those are the things we’re planning on doing.”

To be sure, Republicans haven’t always kept such a tight grip on spending when they’ve held the purse strings. Many congressional Republicans jumped aboard with President George W. Bush’s tax cuts and his push to expand Medicare to cover prescription drugs, both of which helped turn budget surpluses of the 1990s into deficits.

But the rise of the Tea Party since 2009 has bolstered the ranks of hard-core deficit hawks, and many of them point to those decisions of the Bush years as mistakes made by “the establishment” that the party best not repeat.

Numerous Republicans have expressed skepticism over the need for major new infrastructure spending, but that hasn’t stopped Trump from continuing to talk about a $1 trillion plan to build, as he said in his inauguration address, “new roads and highways and bridges and airports and tunnels and railways all across our wonderful nation.”

When Trump called for more infrastructure funding during a GOP retreat in Philadelphia last month, the room fell silent.

“I don’t think we ought to borrow almost a trillion dollars . . . incur additional debt and don’t build any projects to speak of,” Senate majority leader Mitch McConnell said in late January, following the release of the Democratic plan. “What I’m against is a replication of the Obama stimulus package of 2009.”

Another area for conflict is whether Trump’s team will somehow offset the cost of sweeping tax cuts that he proposed during the campaign. His plan — collapsing the number of tax brackets; lowering tax rates, including for the wealthy; and slicing the corporate tax rate from 35 percent to 15 percent — would cost the federal treasury $10 trillion in lost revenue over a decade, according to the Tax Foundation, a conservative think tank.

Meanwhile, budget analysts predict that repealing the Affordable Care Act would add $350 billion to the debt over the next decade, as taxes imposed to defray the cost of extending access to care are erased. The actual figure could vary enormously.

Growing pains among Republicans were evident as the White House struggled to explain how Trump would pay for his Mexican border wall, since there is no realistic plan on the horizon to force Mexico to pay for it (as Trump repeatedly promised on the campaign trail).

A White House pronouncement that it might be paid for with a 20 percent tax on Mexican imports sounded to many like a new tax, or a punitive tariff that would hit American consumers. It immediately sparked widespread confusion. Was Trump making up a new tax proposal on the fly? No, it turned out. Trump’s spokesman later clarified that Trump was signing on — perhaps — to a House GOP plan to exempt all American exports from taxes while levying a 20 percent tax on all imports into the country.

Republican supporters tout it as a way to encourage companies to keep jobs and operations in the United States, while generating about $1 trillion over 10 years in new tax revenue that could go to slashing corporate tax rates from 35 to 20 percent.

Trump initially appeared to oppose such a measure, saying it was “too complicated.” But facing pressure to explain how he will make his Mexican wall numbers add up, he is now a potential supporter.

The Washington whiplash showcased how sensitive some Republicans are to charges that they might be seen as raising taxes.

“Simply put, any policy proposal which drives up costs of Corona, tequila, or margaritas is a big-time bad idea. Mucho Sad,” Senator Lindsey Graham, Republican of South Carolina, wrote on Twitter.

Trump almost never brought up cutting the debt during his campaign. Instead, he touted his business acumen as the key to dealing with it.

“I’m the king of debt. I’m great with debt. Nobody knows debt better than me,” Trump told CBS News in June 2016 as he outlined how he would handle the national debt. “I’ve made a fortune by using debt, and if things don’t work out I renegotiate the debt. I mean, that’s a smart thing, not a stupid thing.”

But it’s also a thing that doesn’t translate to running the federal government. Attempting to renegotiate US debt — telling investors, as he sometimes did in his private business, that they will get just cents on their dollar in returns — would wreak havoc on markets.

Think tanks, lobbyists, and congressional aides, meanwhile, have been scratching their heads over Trump’s bare-bones policy proposals, trying to at least estimate their long-term fiscal impact.

The Committee for a Responsible Federal Budget estimated during the campaign that his plans would cost the Treasury about $5 trillion, though the figure doesn’t include his infrastructure proposal because there wasn’t enough detail in it to calculate a price tag.

“His promises will add to the debt tremendously unless he starts talking about how to pay for things,” MacGuineas said. “You can’t fix this without some hard choices. That’s never been something he’s talked about.”

Trickle-down tax policy will continue to underlie Republican hopes of budget discipline, it appears.

The GOP has long argued that tax cuts will boost the economy and ultimately increase tax revenue through new jobs and income. Corporate tax cuts, they say, would allow businesses to hire more workers, which would lift the economy overall. This sort of budget math is central to the House GOP tax plan. But Democrats and others say this is wishful thinking.

Washington’s premiere antitax crusader, Grover Norquist, is cheering the direction of House Republicans’ tax reform package, and says that the cumulative impact of all its elements will dramatically boost economic growth.

On its own, the 20 percent “border adjustment tax’’ would raise taxes to the tune of $100 billion a year, which he would oppose, Norquist said. But that would be offset by the corresponding cut in the corporate tax rate to 20 percent and “a whole bunch of good stuff,” he said.

“The whole package . . . it will take us to 4 percent [GDP] growth instead of 2 percent growth,” he said. “It’s just huge, big, powerful.”

“We’re really within spitting distance of agreement on taxes,” he said. “And now we have to have the discussions, ‘Okay, you want more money on defense. Where are you going to get the money?’ ”

Some Republicans who want to cut spending suggest overhauling Medicaid and Medicare, and maybe even Social Security.

But Trump repeatedly promised on the campaign trail that he would not cut these bedrock entitlements.

Still, some adamant voices on the right say there is no excuse now not to act.

“We have to look at the entirety of the budget, including what we are spending on entitlements,” said Jason Pye, director of public policy and legislative affairs at FreedomWorks, a conservative advocacy group associated with the Tea Party movement. “We have a Republican House, we have a Republican Senate, we have a Republican in the White House. Now is the time to start getting our fiscal house in order.”

Matt Viser can be reached at matt.viser@globe.com. Victoria McGrane can be reached at victoria.mcgrane@globe.com.
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