Donald Trump and Ted Cruz’s Magical Budget Math
The GOP frontrunners wave ‘growth’ and ‘waste, fraud and abuse’ wands. Don’t get distracted.
The GOP prides itself on being the party that cares about smaller government and reducing debt and deficits. But the policies we have seen so far from the Republican presidential candidates, for the most part, have been utterly out of touch with the fiscal realities our country faces.
All the major candidates have said they want to balance the budget. And yet, they have proposed massive tax cuts that would cost trillions of dollars, very few spending cuts and barely any specifics on entitlements. In fact, the Republican frontrunner doesn’t even think we should touch Social Security at all despite the program’s looming insolvency.
During the last Republican debate, CNN’s Dana Bash asked Donald Trump how he would address Social Security—the largest government program and one of the fastest-growing parts of the budget. There are plenty of options: raise the retirement age, change the benefit formula, fix how we calculate inflation, bring in more revenues.
Yet Trump first explained how Democrats don’t want to do anything to Social Security. Then he explained how he… doesn’t want to do anything to Social Security. That is both a pander, and a recipe for large, abrupt, across-the-board cuts when the trust funds run out of money in about 15 years.
“You’re talking about waste, fraud and abuse,” Bash followed up, “but an independent bipartisan organization, the Committee for a Responsible Federal Budget, says improper payments like you’re talking about—that would only save about $3 billion, but it would take $150 billion to make Social Security solvent. So how would you find that other $147 billion?”
Trump went with a confusing answer about increasing our military spending, not policing the world and negotiating better deals. Sorry, but that is not a Social Security reform plan. The numbers just don’t add up.
The same can be said for the candidates’ proposed tax plans and spending initiatives.
The Republican candidates have proposed tax cuts costing from roughly $1 trillion to $12 trillion. To get to balance as things stand now would require $8 trillion in savings over the next decade, and tax cuts would make it all the more expensive. But the spending cuts to offset these new costs are nowhere to be found.
Our analysis of the proposals on Sen. Ted Cruz’s campaign website, including his tax proposal and plan to “Rebuild America’s Military,” would add $12.5 trillion to the debt over 10 years, bringing the debt to 131 percent of GDP over 10 years—higher than any point in American history.
Similarly, our analysis of all Trump’s non-health policy proposals, including his huge tax plan, would cost $12 trillion to $15 trillion, making our debt rise to as high as 140 percent of GDP over 10 years.
Both Cruz and Trump claim to be strong advocates of fiscal responsibility and balancing the budget. But their policies would make that goal even more challenging. Since Trump has pledged not to touch Social Security or Medicare benefits, balancing the budget under his proposals would require cuts to the rest of the budget of 75 to 87 percent. Achieving the same goal under Cruz’s campaign proposals would require federal spending to be cut by half, because he doesn’t take quite as much off the table.
Gov. John Kasich talks more forcefully about a balanced budget and the need for entitlement reform, but his proposal lacks specifics.
When challenged about the cost of their proposals, the candidates cite rosy assumptions of economic growth. Cruz believes “America can get to 5 percent growth” under his plan. Trump has said, “We are looking at a 3 percent but we think it could be 5 [percent] or even 6 [percent]. We are going to have growth that will be tremendous.”
The truth is that there are limits to the share of our fiscal challenges that economic growth alone could legitimately solve. U.S. growth has averaged 3.2 percent since 1947 and future growth is expected to be about 1 percent lower than that as a result of the aging population.
Yet candidates keep using unrealistic growth assumptions to defend their budget-busting proposals.
What happened to Republicans and their commitment to fiscal responsibility? Four years ago, there was an agreement on that side of the aisle that we needed tax reform and that it would be revenue neutral. There was talk about spending cuts and entitlement reforms. Now, the Republicans are positioning themselves as the party of record tax cuts, no credible spending cuts, and as a result, a growing government and record debt levels.
In order to return to being the party of small government and fiscal responsibility, Republicans need to develop fuller plans to get control of the debt and start by shifting their focus onto where in the budget they can find real savings.
The late New York Gov. Mario Cuomo once said: “You campaign in poetry. You govern in prose.” When it comes to the fiscal challenges our country faces, Republicans have mostly gotten the poetry right. They’ve all railed against the national debt.
But when you delve into the prose of their campaign proposals, the numbers just don’t add up.