President Donald Trump has told chiefs of each federal agency that it’s time to cut the fat and waste by slashing 5 percent from their budgets. The effort is meant to curb the spending that has in some part driven up the budget deficit, but the biggest drivers of debt and deficit spending remain untouched.
In a televised cabinet meeting, the President noted,
“I'm going to ask each of you to come back with a 5-percent budget cut from your various departments. Whether it's a secretary, an administrator, whatever, I'm going to ask everybody with a 5-percent cut for our next meeting. I think you'll all be able to do it.
“Get rid of the fat. Get rid of the waste. And I'm sure you can do it. I'm sure everybody at this table can do it. It will have a huge impact.”
The Treasury Department reported that the federal government’s budget deficit grew 17% from the prior year to $779 billion. (The deficit is the net shortfall of money taken in within a given period of time, not to be confused with the debt which is the total money owed.)
The President credits compromises with liberals during the recent budget negotiations as driving spending increases in return for greater military spending.
Much of the budget deficit came from higher interest payments on the national debt as well as higher national defense spending.
Opponents of tax reform have been quick to place the blame on corporate tax collections falling by 22 percent, but they ignore that corporate tax receipts were more than offset by increased revenue from individual and self-employment taxes. Bottom line as CNN reports: government revenue was flat.
We are at a unique point. With historically-low unemployment at 3.7 percent and the economy roaring away above 4 percent, we would typically be experiencing budget surpluses (not deficits) as tax revenue would be up and social service needs would be down. However, federal spending is up and tax revenues are flat because our national leaders are making military readiness a higher priority and we are forced to pay higher interest payments to service of our debt due to rising interest rates.
Directing federal agencies to cut spending is an important step to demonstrate fiscal discipline, but it's just one giant to slay. The biggest monster on our collective backs the growing federal debt ($21 trillion) driven by entitlement spending which eats up about two out of three dollars.