When Obama was president, Republicans made a huge deal about deficits bankrupting the country, refusing to adequately fund the recovery program and demanding deep cuts in federal spending. Now that Trump is in, deficits suddenly don't matter.
The tax cut will add a trillion dollars to the national debt. The budget deal that was recently struck to keep the government open restores both military and some domestic social spending that was cut by Republican congresses during the Obama presidency—adding more deficit.
The deficit, and with it the national debt, is projected to start rising again, after coming down during Obama's presidency. Deficit hawks are going nuts.
But Democrats should resist the temptation to pile on. Within very broad limits, there is nothing wrong with deficits and public borrowing, so long as money is put to good use. We came out of World War II with a much larger debt ratio—and that ushered in a 30-year boom. Winning that war was a good use of public debt.
A trillion-dollar tax cut for the rich, however, is not good use. Spending that money on infrastructure would be fine, and the time to have done that was while federal borrowing costs (interest rates) were low. Overspending on the military today is not a good use either.
Both Bill Clinton and Barack Obama made the economic and tactical error of making deficit reduction per se a major public issue. They thereby helped Republicans deny government the resources to rebuild America's public household, and entrenched the conservative idea in the public mind of budget balance equaling fiscal virtue.
Keynes wept!
Deficits are often just what's needed, and not all deficits are created equal. Fiscally, let's whack Trump where he deserves to be whacked—for a needless and regressive tax cut. When the Democrats get back in, they will need to double down on public investment.
