Some of us are old enough to remember a time when the Republicans claimed to be the fiscal disciplinarians of US politics. It hasn’t been true since World War II, but it’s become an accepted staple of political myth-making. However, Donald Trump and the current GOP might finally kill the lie off for good. 

According to the Congressional Budget Office (CBO), the US will return to trillion-dollar annual budget deficits from 2020 onwards as the tax cuts pushed by Trump and Republicans, and higher public spending, strain America’s finances. The deficit will be US$804 billion for the current financial year, which ends on September 30, a big rise from the US665 billion deficit for fiscal 2017 and US$242 billion more than the CBO projected last (northern) summer. The increase is due, the CBO says, to the Republicans’ tax cuts. And they don’t buy the Laffer Curve nonsense peddled in the US and here by tax cut advocates, that company tax cuts will be so stimulatory that they’ll produce a net tax revenue increase.

The US hasn’t run deficits exceeding a trillion dollars since it was recovering from the recession induced by the financial crisis in 2012. Back then, of course, Republicans were strident critics of deficits, but have remained silent as Trump has opened the spigots, and done so when unemployment is less than half the level of 2010-12. The CBO’s outlook shows the level of fiscal stimulus will sharply lift economic growth this year, before the expansion loses momentum as the Federal Reserve lifts interest rates. 

Given the rising deficits, the CBO now predicts that government debt held by the public will swell to nearly 100% of US gross domestic product at the end of the 2020s. That would be the highest level since 1946 and more than twice the average over the past five decades — and would increase the likelihood of a “fiscal crisis” in the US, according to the CBO. And if the US economy slows, then debt and deficit will rise even faster. 

But even worse, the CBO says its figures very likely underestimate the size of the deficit. It is required to calculate the effects of the laws as written, which means the CBO has to assume the unlikely event of deep cuts to discretionary spending by Congress, as mandated under current budget laws. This includes defence, infrastructure, medical research, crop supports and subsidies and many other areas of outlays. Despite demands from some Republicans that Congress “starve the beast” and use the tax cuts as an excuse to slash spending, neither party actually wants to implement deep cuts to these programs, especially in an election year. That is why the Republicans and Democrats agreed in March to ignore spending cuts mandated in a previous budget agreement.

The CBO projections also assume significant tax increases toward the end of the 2020s because the Trump tax cuts were designed to give permanent cuts to corporations and heirs of large estates, but linked these to temporary, expiring personal tax cuts for the middle class. Trump and the Republicans were forced to do this because the US$1.5 trillion budget limit did not allow them enough money to cut all the taxes they wanted to cut. If those personal tax cuts are renewed in the mid 2020s, then the fiscal outlook will be even bleaker.

Post-war fiscal history suggests that the only thing that will really curb the US deficit is an extended Democrat occupancy of the White House. Given GOP concerns about an electoral “blue wave” coming crashing toward them because of Trump, that might yet spare us from trillion-dollar deficits.