US Deficit Soared 26% in 2019

US Deficit Soared 26% in 2019

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Plus, constitutional problems for Pelosi's drug plan?
Friday, October 25, 2019

Budget Deficit Rose 26% in 2019, to Near $1 Trillion: Treasury

The federal government’s budget deficit grew to $984 billion in fiscal year 2019, the U.S. Treasury announced Friday.

The final tally for 2019 is $205 billion larger than in 2018, a 26% increase. As a percentage of GDP, the deficit was 4.6% — 0.8 percentage points higher than the previous year.

Deficits have nearly doubled under President Trump, despite solid economic growth and low unemployment — and despite Trump’s vow to eliminate the federal debt in eight years. The Republican tax cut legislation of 2017 reduced revenues relative to projections, and bipartisan spending deals have raised spending. The Treasury estimates that the deficit will exceed $1 trillion next year, and budget experts expect it to remain above that level for years to come.

For 2019, receipts totaled $3.4 trillion, 3.8% higher than the previous year, while federal spending rose 8.2% to $4.4 trillion. Revenues as a share of GDP fell to 16.3%, down from 16.4% the year before, while outlays rose to 20.9% of GDP, up from 20.2%.

Some of the biggest increases were recorded in the Medicare program, where spending rose 10% to $783 billion; the Defense Department, where spending rose 8% to $654 billion; and net interest on the national debt, which rose almost 16% to $376 billion. Tariff fees, driven by President Trump’s ongoing trade wars, also rose significantly, up 71% to $70.8 billion.

In a statement accompanying the release, Treasury Secretary Steven Mnuchin said, “President Trump’s economic agenda is working. … In order to truly put America on a sustainable financial path, we must enact proposals -- like the president’s 2020 budget plan -- to cut wasteful and irresponsible spending.”

The fiscal hawks at the Committee for a Responsible Federal Budget were less generous. “A deficit of this size following the longest span of economic growth in history shows just how reckless our leaders have become,” said CRFB co-chair Leon Panetta. “This is exactly the time when deficits should be contracting, not expanding. But instead of getting our fiscal house in order and preparing for the next downturn, our leaders continue to binge on debt rather than showing the leadership necessary to set our fiscal path.”

The conversation about the debt is muted at best in Washington. “There is very little discussion among Republicans about the deficit, and virtually no serious outreach to Democrats for any sort of bipartisan deal,” Brian Riedl, a budget expert at the conservative Manhattan Institute, told The Washington Post. “The parties are not talking on this issue.”

Does Impeachment Mean Nothing Else Gets Done in Washington This Year?

Some lawmakers are expressing concerns that the unfolding impeachment process is putting a halt to the legislative agenda for the foreseeable future, The Hill’s Jordain Carney reports.

“The House impeachment inquiry has quickly sucked up the political oxygen in Washington, ramping up tensions between Congress and the White House ahead of next year’s elections,” Carney wrote Friday. “The high-stakes standoff is now raising questions about what, if anything, will get signed into law.”

Sen. John Cornyn (R-TX) said that if Congress focuses all of its attention on impeachment, “then that’s going to come at a cost. And I think the cost will be legislation that we could pass.” Speaking about high-priority bills such as funding to keep the government open, Cornyn said, “hopefully those won’t be casualties, but around here it’s anybody’s guess.”

Some senators say there’s still room to get things done. Sen. Lindsey Graham has urged President Trump to work with Congress even as the impeachment inquiry continues, as President Clinton did. “I think he needs to reach out to Democrats and Republicans and say in the middle of all this mess, ‘Let’s see if we can do something on the USMCA and prescription drugs,’” Graham said.

On the other side of the aisle, Democrats are blaming the Trump administration for failing to define and promote a coherent agenda, and more broadly to work with Congress in a consistent and respectful way. Sen. Dick Durbin (D-IL) said he doesn’t even know who the White House is using as a point person. “Put a gun to my head and ask me to name the Senate congressional liaison, and I’ll tell you just pull the trigger. I don’t even know who it is,” Durbin said.

Durbin also said that he doubted anything would pass, even though it would benefit lawmakers and the White House to show voters that they could be productive. “Infrastructure, remember that one? Blew up in our face,” Durbin said.

The bottom line: There are fewer than 30 legislative days left in 2019, and Congress has a sizeable to-do list, including government funding, defense policy, tax extenders, drug prices and trade agreements. The impeachment process — and Trump’s sometimes volatile reaction to it — sharply increase the odds that any or all of those items could fall by the wayside.

This Shutdown Threat Might Get Real

From Politico’s Playbook: “WE KNOW IT'S NOT AS SEXY AS IMPEACHMENT, but the government is slated to shut down in 27 days -- on Nov. 21. There are just 12 days in session between now and then, so this is becoming a real issue that Washington is going to start focusing on soon. (Please don't give us the ‘They won't shut down the government’ thing. These things are never planned!)”

Pelosi’s Drug Pricing Plan Could Face Constitutional Challenges, Congressional Report Suggests

House Speaker Nancy Pelosi’s plan to lower drug prices might violate three parts of the Constitution, according to an October 21 Congressional Research Service report obtained by STAT. The report does not say that the bill — which would let the government negotiate prices with drug manufacturers and impose steep fines on companies that don’t comply — is unconstitutional, only that it could face challenges based on the Fifth and Eighth Amendments as well as the congressional power of taxation. “The bad news for Democrats is that the potential constitutional issues with the bill can’t be fixed with a few tweaks — they relate to the central crux of the bill,” STAT’s Nicholas Florko writes. Congressional committee spokespeople expressed confidence to STAT that the bill is constitutional.

Reality Check: Trump’s ‘Great’ Health-Care Plan Still Doesn’t Exist

President Trump on Friday claimed Republicans have a “great” health-care plan. “You'll have health care the likes of which you've never seen,” he told reporters. “Much less expensive. Deductibles will be much lower."

It’s not clear what Trump was talking about.

Trump’s Medicare chief this week repeatedly brushed aside questions from a House panel on what the administration’s plan is in case a court invalidates the Affordable Care Act, potentially leaving some 20 million Americans without coverage. And while the conservative Republican Study Committee, a group of 145 House GOP representatives, this week put out a new “framework” for replacing Obamacare, that blueprint was far from comprehensive and lacked the formal backing of the White House, which reportedly is still developing its own set of health reform principles.

“Not only is there no plan, there's no effort among congressional Republican leaders to craft a plan,” Bloomberg political reporter Sahil Kapur tweeted. “They don't want to touch this issue again after the repeal-and-replace debacle.”

And a Bloomberg editorial published before Trump’s comments laid out plainly how the health care system could become a chaotic mess if a court strikes down the Affordable Care Act and urged the Trump administration to “wake up to what’s at stake for millions of Americans and start speaking up on their behalf.”

More from the editorial:

“The administration keeps promising a comprehensive replacement for Obamacare, but there’s no sign yet of anything plausible. Until the administration has such a plan, and can explain how it will make things better for most Americans, its aim should be to stabilize and improve Obamacare, not see it undermined haphazardly and without regard to the consequences. Until its officials have something better to suggest, it ought to stop equivocating on this legal challenge, explain to the courts what’s at stake, and argue for the ACA to be put on a firm legal footing.”

Poll of the Day: Warren's Health-Care Gap

As Elizabeth Warren prepares to release her plan to pay for Medicare for All, a new Morning Consult poll finds that she trails Bernie Sanders by 13 percentage points among Democratic voters asked to rate how honest the candidates have been on health costs.

Sanders has said that Medicare for All proposal would require higher taxes on the middle class but he insists that overall health spending would fall for the overwhelming majority of Americans as premiums, deductibles and co-payments are eliminated. Warren has refused to directly answer repeated questions about whether middle-class taxes would rise. Instead, she, like Sanders, has emphasized that overall costs would go down.

Democratic voters may not find that argument compelling, though. While a large majority of Democratic voters support a system where all Americans get their health insurance from the government, only 48% said they’d support a plan that would require the middle class to pay higher taxes, even if those taxes are offset by overall savings on health care costs.

“Whether Elizabeth Warren wins this debate or not hinges solely on how good of a teacher she is,” Jonathan Gruber, an economist at MIT and an architect of the Affordable Care Act, told Morning Consult. “Can she teach people that replacing a hidden tax by a non-hidden tax doesn’t really cost you money? No one has ever been able to do that in my lifetime. If anyone can fix it, it’s Elizabeth Warren, but it’s a challenge she faces.”

The poll also found that Joe Biden (25%) leads both Sanders (20%) and Warren (18%) among Democrats asked which candidate is most qualified to handle health care.

The survey of 1,996 registered voters, including 771 Democrats, was conducted October 16 to 21 and has a margin of error of 2 percentage points (or 3 points for the Democratic subsample).

Number of the Day: $1,052,395.78

President Trump’s campaign reportedly has yet to pay a number of cities more than $1 million in outstanding bills related to hosting his rallies, according to The Washington Post’s Philip Bump. Factoring in a late fee of about $99,000 tacked on by El Paso and more than $500,000 sought by Minneapolis brings the total to nearly $1.7 million. The latest city to join the list is Albuquerque, New Mexico, which reportedly has invoiced the campaign to recoup more than $211,000 in expenses from a September rally, including $71,000 in police overtime.

“The campaign generally doesn’t sign contracts for additional police officers, so the cities don’t have binding agreements to recoup the costs,” Bump explains, adding that “it’s more of a norm that the bills would be paid — and Trump has certainly earned a reputation for sidestepping norms since entering the world of politics.”

Your Prize for Making It Through the Week

Sour Patch Kids? M&M's? Candy Corn? The Halloween candy arguments might be as heated as Democrats' health-care debate, but here's one purportedly definitive analysis of the 10 best and worst holiday choices. For an even more comprehensive ranking of 45 candy options, visit The Cut. And if you've got the guts for some grislier Halloween fare, check out The Washington Post's story about feetloaf.


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