A rare bird thought to be headed toward extinction has been spotted in Washington: the deficit hawk.
Fiscal conservatives are balking at the price tag of the latest coronavirus economic rescue package, likely to exceed $1 trillion even if they get their way. Though only one of the sticking points that has held up the legislation, it exposes a debate within the Republican Party about how to help the lockdown-battered economy ahead of the election and raises the likelihood that conservatives will return to that old-time religion on government spending and debt if Joe Biden wins in November.
A new spending package could push the annual federal budget deficit past $4 trillion. It was already projected at $2.7 trillion before the latest talks. Last month, the federal government spent $1.1 trillion. That’s more than it has spent in some years. The previous highest monthly total was less than $440 billion.
“Members are anxious because they know, at some point, we are going to have to raise taxes to pay for all this spending,” said Republican strategist John Feehery. “And many members simply believe that more spending leads to more government, which is bad for America and for the American way of life.”
Conservatives are already targeting the presumptive Democratic nominee for what they describe as a big-government agenda that will increase federal taxes, spending, and borrowing. “When it comes to Joe Biden claiming to be the most progressive presidential candidate in history, we should take him at his word,” said Chris Martin, communications director for America Rising, a top political action committee that does opposition research on Democrats. “His policies would suffocate American families with higher taxes during an ongoing pandemic and greatly diminish any hope of an economic rebound.”
But congressional Republicans had appeared to make peace with big deficits and spending. President Trump, who did not run as a government-cutter in 2016, was already projecting a $1 trillion deficit for the fiscal year even before all the coronavirus spending was necessary — when the economy was still growing and unemployment was low. The economy contracted at a record 32.9% rate in the second quarter as businesses were forced to close to slow the spread of the virus and 1.43 million filed for jobless benefits just last week.
This is not a new development under Republican presidents, either. The national debt tripled in nominal terms under Ronald Reagan, who presided over the first $1 trillion federal budget. It also tripled under George W. Bush, who was president during the first $2 trillion and $3 trillion federal budgets. Unlike Reagan, Bush did not face a Democratic-controlled House of Representatives until the final two years of his administration, and he actively sought increases in domestic spending while also boosting the defense budget. Reagan did propose cuts to federal nondefense discretionary spending.
Trump-era populists have urged the GOP to abandon certain libertarian assumptions about the economy and exercise political power to maintain their hold on Washington and deliver material benefits to the party’s constituents like the Democrats do. This was highlighted in a reported Republican conference exchange earlier this month between Sen. Ted Cruz of Texas and Sen. Tom Cotton of Arkansas. “What the hell are we doing?” Cruz asked colleagues about spending levels being proposed while Cotton urged that they spend what it takes to protect the majority, lest Democrats come in and outspend them in the long run.
Sen. Josh Hawley, a Missouri Republican aligned with the populist faction, this spring proposed a refundable payroll tax rebate covering 80% of employer payroll costs. “Because the government has taken the step of closing the economy to protect public health, Congress should in turn protect every single job in this country for the duration of this crisis,” he wrote in the Washington Post at the time.
If Trump loses reelection, this could put Republicans in an awkward position as they pivot to opposing Biden’s $8 trillion in proposed new spending, including expansions of entitlement programs that already have trillions of dollars in unfunded liabilities. “Serious question, folks: Is there a Democratic equivalent of this?” asked Kevin Drum, a liberal blogger for Mother Jones. “That is, something where Democrats literally turn on a dime whenever Republicans occupy the White House?”
“Doing anything about the deficit and debt is always a heavy lift, and it gets even heavier when it is perceived as a partisan agenda,” said Robert Bixby, executive director of the Concord Coalition, an advocacy group that supports budgetary discipline. “That could be where we’re heading. I expect that Republicans will increasingly balk at the rising bill for COVID-19 relief and that they will become even more dug in if they lose the Senate.”