Trump is trading short-term pain for long-term economic gain

It was recently announced that the federal government’s annual budget deficit is getting larger. In addition, the trade deficit is also growing. Does this mean that President Trump’s economic policies are not working?

In 2018, the annual budget deficit increased by more than 16 percent from 2017 to $779 billion. That means that the public debt, which is the accumulation of all deficits, increased to more than $22 trillion.

The Democrats quickly pounced on this news to criticize Trump for his failed economic policies, especially the tax cuts.

The Trump tax cut, however, did not add one dollar to the deficit. That’s because in fiscal year 2018, with the tax cut in effect, the Treasury collected slightly more revenue than in fiscal 2017.

The increase in the deficit was due to increased spending, mostly for the military. In fact the tax cut probably helped to keep the deficit down because it helped increase annual economic growth from 2 percent to about 3 percent.

The Congressional Budget Office (CBO) forecasts annual deficits will get even larger in the next few years. However, the CBO does not have a great record for forecasting deficits, so using its forecasts may yield inaccuracies.