The deficit is at $3.1 trillion and climbing. For Republicans facing a possible Biden-Democratic sweep, that means it's time to get religion (again) on government spending.

  • Republican lawmakers are calling for Congress to reign in federal spending, a move seen as a preemptive step to slow the work of Democrats' who are poised to win the White House and the Senate.
  • It's an about-turn for Republicans who in 2017 passed a $1.5 trillion tax cut that is projected to add $2 trillion to the federal deficit over a decade.
  • "There's no denying that we've got a real challenge on our hands," GOP Sen. Pat Toomey of Pennsylvania told Insider. 
  • As Republicans call for fiscal discipline, Democrats and President Donald Trump are pushing for another $2 trillion stimulus to fight the coronavirus pandemic. 
  • "Republican concerns regarding the debt and deficit spending appear to wax and wane depending on the party in power," House Democratic Whip James Clyburn told Insider.
  • Visit Business Insider's homepage for more stories.

Republicans are finding religion on spending. Again.

It's an about-turn from much of the last four years when they were mostly silent on the growing federal deficit as they went along with President Donald Trump's often expensive priorities. 

In recent months, GOP lawmakers have cited their concern over a ballooning national debt to explain their objection to a new pricey economic stimulus.

But just three years ago, Republicans joined Trump at the South Portico of the White House to celebrate their passage of a huge tax overhaul that established temporary tax cuts for families but mostly benefited corporations and the richest people in the country. According to the Congressional Budget Office, the law added nearly $2 trillion to the federal deficit over a decade. 

Now, as polls show Trump likely losing to Joe Biden and Democrats gaining control of the Senate, GOP lawmakers have restarted a once familiar refrain: Congress must curb federal spending.

"This is not free money; somebody's gonna pay this money back," Florida Republican Sen. Rick Scott told reporters last week when asked whether he'd back a $2 trillion stimulus bill. 

It's a cry that recent history shows gets louder among Republicans when Democrats are in control and goes nearly mute when the GOP — which has branded itself the party of fiscal responsibility — is in charge. 

"Republicans weren't concerned about increasing the national debt when they passed a $1.9 trillion tax cut for the wealthiest Americans and major corporations," said Sen. Patty Murray of Washington. "But now that students, families, and workers across the country desperately need relief, they have changed their tune."  

Democrats say the GOP's newly gained conscience on spending is hypocritical. Still, they're bracing for Republicans to become even more vocal about fixing the national debt, balancing budgets, and cutting government programs if Trump if loses the White House. 

"Any professed concerns about deficits and debt are not genuine," House Majority Whip Jim Clyburn, a South Carolina Democrat, told Insider. "Republican concerns regarding the debt and deficit spending appear to wax and wane depending on the party in power."

During the Obama years, Republicans frequently accused Democrats of excessive spending and fought passage of his economic recovery bill during the Great Recession. 

Republicans' recent insistence on fiscal responsibility has helped stall any progress on a coronavirus stimulus package even as the pandemic shows no sign of slowing down, millions of people remain jobless, and businesses continue to close.

Their concern over fiscal responsibility could further delay a new trillion-dollar coronavirus relief package, not to mention other big parts of Biden's agenda if Democrats fail to gain control of the Senate or win back majority control in the chamber but decide to keep the filibuster. And while economists and politicians say Congress can ignore this year's $3.1 trillion deficit for now, they also acknowledge it will need to be addressed once the pandemic wanes. 

When that time comes, Republicans and former Democratic leaders worry Washington lawmakers will be too divided to reach any agreements on controlling the nation's spending. 

Deficit climbs under the 'king of debt' 

During his 2016 presidential campaign, Trump dubbed himself the "king of debt." But he also promised to clear the national debt within eight years, an ambitious goal that economists declared — and has proved — impossible.

Republicans who had long eyed Medicare and Social Security for budget cuts quickly set those aspirations aside after Trump said he wouldn't tamper with those popular programs. 

Instead, they went along with Trump, who presided over tax cuts and federal spending increases that led to a 16% increase in the federal debt before the coronavirus pandemic. Then the stimulus packages passed to address the pandemic-induced problems created a record $3.1 trillion shortfall just this year, according to the nonpartisan Congressional Budget Office.

Now as Democrats and Trump demand more than $2.2 trillion in further stimulus spending, GOP lawmakers say there's not enough left in the government coffers. While some Republicans have said they'd go along with a larger dollar figure depending on what's in the bill, others including Senate Majority Leader Mitch McConnell, want to limit the next stimulus to $500 billion. 

Many Senate Republicans disagree with Trump's willingness to sign a stimulus that would exceed what Democrats want. 

In Scott's case, the Florida senator would support cutting federal spending by at least the amount Congress spent during the crisis once the pandemic is over, his office told Insider. 

Democrats see the Republican call for more frugal spending as a preemptive strike against them ahead of a likely change in control of a new Congress and White House.

Former Democratic Sen. Max Baucus, who represented Montana for 36 years and chaired the chamber's critical tax-writing committee, said he suspected Republicans were getting more vocal about spending now because they think Trump will lose the election next month. 

"Frankly, I was kind of wondering when that might happen — when might middle-of-the-road, traditional Republicans in the Senate begin to say, 'Wait, enough's enough here?'" Baucus, who served as the US ambassador to China during the Obama administration, told Insider. 

'They have just been quiet'

GOP allies push back on any assertion that the party didn't try to be fiscally responsible under Trump. 

Grover Norquist, founder and president of the conservative group Americans for Tax Reform, said Congress would have saved a lot of money if Republicans hadn't failed to repeal the Affordable Care Act, former President Barack Obama's signature healthcare law.  

Over time, Norquist said, Republicans were constrained by their congressional makeup, especially after losing control of the House in 2018. 

In retrospect, he added, Republicans should have tackled Obamacare and trimmed welfare programs as part of the tax law. 

Douglas Holtz-Eakin, president of the conservative American Action Forum and a former top John McCain advisor during the 2008 presidential campaign, said Republicans never quit worrying about spending during the Trump era, even if they didn't mention it that much.

"I'm sure they passed some of those appropriations bills thinking, 'Geez, this is an awful lot of spending,' but they didn't say anything about it. And now you're starting to hear it again," said Holtz-Eakin, who during the George W. Bush years was director of the CBO, the government's nonpartisan scorekeeping agency that makes projections about how policies will affect the economy, taxes, and the budget. 

"I think you will hear more about it because they haven't really changed. They just have been quiet," he added.

Some conservatives argue that concerns about the debt are weaponized by both sides to score political points when their priorities don't get enough funding. 

"Democrats are also more worried about spending when it's Republican priority areas than when it's not," said Stan Veuger, resident scholar in economic policy studies at the right-leaning American Enterprise Institute. "It's reasonable to have preferences over what the spending consists of, in addition to how much spending there should be," he added. 

If elected, Biden has promised new spending not just on an economic stimulus, but also on infrastructure, manufacturing, and on caregiving for older adults and people with disabilities. 

His economic plan includes raising taxes on people making more than $400,000 a year and increasing the corporate tax rate from 21% to 28%. Republicans oppose tax increases.

Both sides know Congress will have to pay for the stimulus 

Politicians and economic experts who talked to Insider agreed that now isn't the time to worry about the deficit, especially with the current low interest rates. They say more spending is needed to help the US get control of the coronavirus and to stave off further job losses. 

Dealing with the budget deficit ranks low on voters' list of priorities when compared to the economy and the coronavirus pandemic, according to a recent Gallup poll. 

But federal budget experts say the debt needs to be addressed, especially since Medicare and Social Security, which drive the overwhelming share of mandatory government spending, were already in financial trouble before the stimulus measures. 

It will take some politically difficult moves to address the mounting national debt once the pandemic is under control, said Holtz-Eakin, including through spending cuts, controlling entitlement spending, and raising taxes, all of which are politically difficult.  

Sen. Pat Toomey, a Republican of Pennsylvania, told Insider in an interview that if Trump won a second term Republicans could persuade him to back reforms to Medicare and Social Security that would slow the rate of growth of the programs. 

Still, Toomey who sits on the Senate Finance Committee, said any changes would need to be bipartisan to last. 

"It's hard to see how we get there because the energy in the Democratic Party is all about expanding all of these programs, despite the fact that they're insolvent," Toomey said. "There's no denying that we've got a real challenge on our hands."   

Toomey knows how hard it is to reach a consensus on the deficit from his time working on the 12-member Joint Select Committee on Deficit Reduction in 2011. The so-called "super committee" failed to come to a bipartisan deal to reduce the deficit, triggering $1.26 billion in across-the-board spending cuts including in the military, the FBI, environmental cleanups, and education programs. 

He said he learned how hard it was to get Democrats to agree to slowing the growth of entitlement programs. But Baucus, who was also on the committee, said that Republicans simply gave up.

Asked whether a similar committee could be created to address the current debt problems, Baucus said, "I think it's going to be more difficult today." 

Democrat Tom Daschle, who represented South Dakota in the Senate from 1987 to 2005, including as majority and minority leader, agreed. 

He said it would be "very hard" to deal with spending and shortfall issues on a bipartisan basis like he did during his time in the Senate. 

"There's an attitude now that compromise is capitulation," Daschle said. "And I think that's really sad because compromise is really the oxygen of democracy. But there is so little willingness to compromise today, and I think that's having a devastating effect." 

Source: Read Full Article