Immediate forecasts on the impact of the spending bill passed in early February include deficits exceeding $1 trillion and a total national debt of $30 trillion. While the bill does address some major needs and non-controversial spending, the ultimate forfeitures in the bill include national security, national prosperity, and fiscal restraint. Barring a complete shift in fiscal attitude from Congress or an about-face by President Donald Trump on deficit spending, things do not look positive for the United States.
The spending bill tacks on $300 billion to total expenditures, with a little more than half going to defense spending. The bill also sets aside $80 billion for post-hurricane disaster relief for areas such as Houston and Puerto Rico. In addition to disaster relief, the Children’s Health Insurance Program (“CHIP”) received 10 years of dedicated funding.
The bill also includes a myriad of other odds and ends, such as racehorse tax credits and restructuring of Medicare/Medicaid to offset costs for poorer recipients. The real standout from the bill is its neutralization of sequestration (a policy where budget cuts for non-defense spending had to be reflected in cuts for defense spending).
While deficit spending is the norm in the United States — sequestration was ultimately a failure in that Congress simply raised all spending, rather than cut its total spending — this bill comes with special challenges and caveats. American economic recovery in the wake of the “Great Recession” has been sluggish.