Commentary: U.S. reckless trillion-dollar deficit deserves attention

Source: Xinhua| 2018-02-13 17:16:23|Editor: Lifang
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by Xinhua writer Wang Zichen

WASHINGTON, Feb. 12 (Xinhua) -- Gone are the days when eliminating the federal budget deficit over a decade was a guiding principle for the U.S.Republican Party.

On Monday, President Donald Trump sent Congress a budget proposal that foresees 7 trillion dollars in deficit over the next decade, about double the amount forecast in Trump's first budget.

Presidential budgets carry no enforcement functions, as Congress controls the federal purse strings. But a departure from the longtime Republican orthodoxy about balancing the budget speaks volume about the party that traditionally prided itself on fiscal conservatism.

It also reinforces the impression from a few days ago, when deficit took a back seat to other priorities in the budget deal, that ever-larger budget deficits have become Washington's means of making policy and practicing politics.

During the two terms of Democratic President Barrack Obama, the Republican Party was following the party line and demanded the government strictly abide by fiscal discipline, after it got control of Congress.

However, since Trump took office, the Grand Old Party seems to have taken a U-turn on deficit.

For anyone with even a vague idea of the U.S. partisan politics, they could hardly ignore the fact that Republicans now congratulate themselves on every new tax cut and defense buildup and Democrats are always eager to increase social spending.

It seems that the two parties have finally found some common ground: deficits are no big deal.

Indeed, the federal deficit being at least 1 trillion a year is probably already accepted wisdom along the Pennsylvania Avenue.

With government debt standing at 20 plus trillion dollars, the United States is heading into some of its biggest budget deficits outside of wars and to the exact opposite of what the economic textbooks teach.

It's one thing to have trillion-dollar deficits to stimulate the economy during a deep recession, but to have permanent trillion-dollar deficits for a healthy economy borders on irresponsibility.

Fear for more Fed tightening and higher interest rates comes naturally, and the stock markets -- not only that in New York, but those from Europe to Asia -- might have already taken a hit.

Experts are saying that budget deficits are a likely factor in last week's rout in major benchmark indices.

Having such large deficits during peaceful, strong economic times is a reckless fiscal policy. What's more stunning and perhaps unprecedentedly irresponsible is that there is little discussion -- except, to his credit, the lonely Senator from Kentucky, Rand Paul -- of how to control the fiscal situation.

"If you were against President Obama's deficits, and now you're for the Republican deficits, isn't that the very definition of hypocrisy?" Paul asked on the Senator floor, forcing a brief government shutdown early Friday morning.

And that raises the ultimate question for American politicians, and the U.S. system as a whole: when it comes to one's own political interest, he or she wants to have nothing to do with the unpopular but necessary tax increases or spending cuts, leaving future generations to pick up the tab.

A deficit is like an IOU which one day will have to be paid back. There is no magic wand, but only a choice between raising taxes and cutting government debt, or finding a reasonable balance between the two.

For now, investors still hold U.S. treasuries as "safe" financial assets, but Uncle Sam cannot expect to kick the can down the road indefinitely.