Listening
to the howls from Democrats and the applause from Republicans, one would think
President Trump’s proposed fiscal year 2021 budget is a radical assault on the
welfare state. The truth is
the budget contains some minor spending cuts, most of which are not even real
cuts. Instead they are reductions in the “projected rate of growth.” This is
equivalent of saying you are sticking to your diet because you ate five
chocolate chip cookies when you wanted to eat ten.
President
Trump’s plan reduces the Education Department’s budget by nearly eight percent,
leaving the department with “only” 66.6 billion dollars. Cuts to other
departments are similarly small, while reductions in entitlement spending
consist mostly of reforms that will not affect most of those dependent on these
programs.
President Trump deserves
credit for proposing an 11.6 billion dollars cut in funding for the Department
of State and the US Agency for International Development (USAID). Foreign aid
does little to help impoverished people overseas. Instead, it benefits foreign
government officials willing to do the US government’s bidding. The State
Department and USAID are extensively involved in US intervention abroad,
including efforts to overthrow governments.
President
Trump’s budget proposes a number of increases in spending. For example, his
budget spends around 900 million additional dollars on vocational education. It
also includes additional spending on items including infrastructure and
childcare.
Few in DC have expressed concern over
the fact that President Trump’s 4.8 trillion dollars budget proposal is the
largest budget in American history. There is also little outcry from supposedly
antiwar progressive Democrats over Trump’s proposal to spend hundreds of
billions of dollars on militarism. This is not surprising, as many progressives
are happy to support increased warfare spending as long as conservatives go
along with increased welfare spending. Similarly, many conservatives are happy
to support increased welfare spending as long as it means that progressives
will vote for increased warfare spending. So, Congress is unlikely to approve
any of President Trump’s spending cuts, but Congress will gleefully agree to
all of his spending increases.
Even if Congress agrees to
all of President Trump’s cuts, federal deficits will still be over one trillion
dollars for the next several years. However, President Trump claims the budget
will balance in 15 years. In order to show a balanced budget by 2035, the
administration assumes three percent economic growth for most of the next
decade. This level of growth is unlikely to come to pass. Instead, the current
boom will likely end soon, and the economy will experience another major
recession. Signs that we are on the verge of a downturn include rising
homelessness and the Federal Reserve’s bailout of the repurchasing market.
The
current economic boom is built on debt, and the debt-based economy is
facilitated by the Federal Reserve’s easy money policies. The massive amount of
debt held by consumers, businesses, and especially government is the main
reason the Fed feels compelled to maintain historically low interest rates. If
rates were to increase to market levels, government interest payments would be
unstable. This would cause the government debt bubble to burst, leading to a
major crisis. However, continuing on the current path of low interest rates
will inevitably lead to a dollar crisis and a collapse of the welfare-warfare
Keynesian system.
Continuing to waste billions on wars
abroad and failed programs at home while pretending that we can avoid a crisis
via phony cuts and Fed-fueled growth will only make the inevitable collapse
more painful. The only way to avoid economic disaster is to cut spending and
audit, then end, the Federal Reserve.
Dr. Ron
Paul is a former member of Congress and Distinguished Counselor to the Mises
Institute.
Copyright © 2018 Ron Paul
