By Quin Hillyer at The Washington Examiner, Feb.7 (before the House had voted on it);

The federal budget deal worked out in the Senate on Wednesday is wildly irresponsible. The House ought to reject it, overwhelmingly – and if it doesn’t, then President Trump should veto it the minute it hits his desk.

The agreement would bust existing budget caps not just for desperately needed military spending, but for a massive explosion in domestic discretionary spending that is neither necessary nor affordable. The new social spending is advertised as some $130 billion for the next two years – but, by raising the “baseline” for future budgets, this really means a likely $700+ billion hike in spending and new debt over a 10-year span.

A nation already reeling from years of massive deficit spending, including a demonic $666 billion deficit in the most recently completed fiscal year, cannot afford this new profligacy. The new spending will either crowd out private investment, catalyze the first major spike in inflation in more than three decades, or put unbearable pressure on interest rates – or all three. The end result could well be an economic evil not experienced in the United States since about 1981 — namely, “stagflation.”

This combination of inflation and stagnation could begin to hit as early as this autumn, torpedoing whatever remaining chances the Trump administration and the Republican Congress have of holding off a Democratic election wave.

And it’s not needed. With the economy already humming, with the unemployment rate at 50-year lows, the demand for social services ought to be far lower than usual, not higher. With a massive tax cut having just been enacted, the further need for any sort of economic “stimulus” should be nonexistent – but the deficit concerns, which argue against the spending, should be more insistent than ever.

In fact, if ever there is a time to retrench from domestic discretionary spending, it is precisely at moments like these when an already full-employment economy is getting a further boost from a major tax cut, especially after nine straight years of a loose monetary policy. These are the days when government should be banking the revenues that usually come from a strong economy, so as to better afford efforts to ameliorate future downturns.

[The full column is here.]


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