{"id":576329,"date":"2026-08-21T23:39:06","date_gmt":"2026-08-21T23:39:06","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/576329\/"},"modified":"2026-08-21T23:39:06","modified_gmt":"2026-08-21T23:39:06","slug":"starve-the-beast-the-40tn-cost-of-republicans-false-promises-to-cut-spending-us-economy","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/576329\/","title":{"rendered":"\u2018Starve the beast\u2019? The $40tn cost of Republicans\u2019 false promises to cut spending | US economy"},"content":{"rendered":"

You could pin the US\u2019s staggering $40tn in government debt<\/a> to Donald Trump\u2019s Keystone Cops-style governance. Tariffs he sold as a new source of revenue were struck down by the supreme court, forcing the government to return tens of billions of dollars to importers. Elon Musk\u2019s \u201cdepartment of government efficiency\u201d (Doge), ostensibly created to stop wasteful government spending, decimated federal programs and probably killed millions of children<\/a>, but did nothing<\/a> to close the budget deficit. The burst of inflation following Trump\u2019s misguided adventure in Iran sharply raised the cost of serving the government\u2019s obligations.<\/p>\n

Yet as the federal debt hits an all-time high, up from about $35tn when Trump took office less than two years ago, it is worth noting that the US\u2019s gargantuan indebtedness is in fact the product of a longstanding Republican strategy that took shape well before Trump could even dream about gold-plating the White House. It was called \u201cstarve the beast\u201d.<\/p>\n

One might recall Ronald Reagan\u2019s address to the nation on 5 February 1981, just two weeks after he had taken office, when he delivered the sad news<\/a> that \u201cwe\u2019re in the worst economic mess since the Great Depression\u201d. Government spending was out of control, he said. The budget deficit the year before had hit 2.6% of the nation\u2019s gross domestic product. Federal debt added up to a mind-boggling trillion dollars, a third of gross domestic product (GDP) \u2013 the broadest measure of the national economy.<\/p>\n

To end the government\u2019s profligacy, Reagan argued, required depriving it of revenue. \u201cThere were always those who told us that taxes couldn\u2019t be cut until spending was reduced,\u201d Reagan said. \u201cWell, you know, we can lecture our children about extravagance until we run out of voice and breath. Or we can cure their extravagance by simply reducing their allowance.\u201d And starving the government beast of tax revenue became the goal of Republican economic policy.<\/p>\n

The staggering budget deficit left behind by Reagan forced his successor, George H. W. Bush, to raise taxes, which cost him re-election. Every Republican administration since that speech has taken a machete to the tax schedule, slashing income tax rates for businesses and individuals, cutting estate taxes, and carving out broad tax deductions for preferred constituencies.<\/p>\n

What remained unsaid, over nearly half a century worth of tax cuts, was that the ultimate goal of the plan was not really to cure the \u201cextravagance\u201d<\/a> and fix the government\u2019s finances. It was, instead, to cement the Republicans\u2019 hold on power.<\/p>\n

Despite Republicans\u2019 sloganeering, their tax cuts never \u201cpaid for themselves\u201d by generating a burst of economic growth. Instead, they borrowed the money to keep up spending. That invariably left Democrats in a budgetary mess to clean up every time they came into office.<\/p>\n

Bruce Bartlett, a former Republican policy adviser who worked on a precursor to Reagan\u2019s 1981 tax cut plan, explained the strategy thus: \u201cIt\u2019s all part of Republican plan going on for quite a long time to tie the hands of Democratic presidents.\u201d The huge tax cuts in Trump\u2019s signature One Big Beautiful Bill Act (OBBBA) will \u201cmake sure the next Democratic president is a complete and total failure\u201d.<\/p>\n

History may come to see Trump\u2019s \u201cbeautiful bill\u201d as an unprecedented attack on the nation\u2019s public finances. The federal deficit (the annual shortfall when the government spends more money than it takes in) is now running at about 6% of GDP. The federal debt (the total owed) is running at about 123% of GDP, higher than during its peak in the second world war. Last year, paying interest<\/a> on that debt cost 3.2% of GDP, about a trillion dollars, more than was spent on national defense or Medicare.<\/p>\n

double quotation markRepublicans have never been punished politically for their dismal stewardship of the budget<\/p>\n

Destructive though it appears, the OBBBA was just one big step along a path set 45 years ago. Federal government revenues declined as a share of GDP in every Republican administration since Reagan\u2019s. Budget deficits widened every time. The precedent bodes ill for the Democratic administration that seems likely to succeed Trump\u2019s unhinged four years in power.<\/p>\n

Bill Clinton\u2019s administration offers the starkest example. Boxed in by a budget deficit equal to 4.5% of GDP that he inherited from George HW Bush, Clinton was forced to focus on deficit reduction<\/a>. \u201cClinton comes with all these plans and ideas but they all get stomped on,\u201d Bartlett recalled.<\/p>\n

Rather than shore up the US\u2019s threadbare safety net, Clinton ended \u201cwelfare as we know it<\/a>\u201d, putting a stop to Democrats\u2019 longstanding commitment to poverty alleviation. He raised taxes, despite their unpopularity, raising federal revenues over his eight years in the White House from 17% to 20% of GDP.<\/p>\n

At the end of his term, he bequeathed a budget surplus of 2.3% of GDP. His successor, George W Bush, happily spent the inheritance on huge tax cuts that largely benefited the rich.<\/p>\n

To be fair, the OBBBA, the latest chapter in the Republican\u2019s fiscal path of destruction, did cut spending \u2013 $1tn-plus from Medicaid and food assistance programs for the poor. But that was no match for $5tn-plus worth of tax<\/a> cuts doled out largely to the most affluent Americans<\/a>.<\/p>\n

And this leaves Democrats<\/a>, again, in a budgetary pickle. If the optimistic predictions come to pass and they win control of both houses of Congress in November and the presidency in 2028, they will arrive into the seat of power with at least one hand tied behind their back.<\/p>\n

Ambitious, expensive ideas like Medicare for All or allowances for families with children will struggle, given the ballooning deficits and debt Trump left in their way. Even undoing Trump\u2019s cuts to Medicaid, food stamps and subsidies for health insurance under Obamacare will seem forbidding.<\/p>\n

Republicans have never been punished politically for their dismal stewardship of the budget. Clinton, Barack Obama and Joe Biden didn\u2019t gain much from efforts towards deficit reduction. But it won\u2019t be easy for Democrats to simply take a page from the GOP\u2019s playbook. Financial markets are jittery. Rising bond yields<\/a> alone will raise the government\u2019s cost of servicing the debt, crowding out Democratic spending priorities.<\/p>\n

That\u2019s hardly the end of it. Once Democrats are in the White House, Republicans will surely rediscover their long-lost concerns about the government\u2019s lack of fiscal restraint, and do their standard budget hawk cosplay thing to force Democrats to fix the budget.<\/p>\n","protected":false},"excerpt":{"rendered":"You could pin the US\u2019s staggering $40tn in government debt to Donald Trump\u2019s Keystone Cops-style governance. Tariffs he…\n","protected":false},"author":2,"featured_media":576330,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[138,219,111,139,69],"class_list":["post-576329","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-new-zealand","tag-newzealand","tag-nz"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/576329","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=576329"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/576329\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/576330"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=576329"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=576329"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=576329"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}