Deficit may be the real test of how Republican Trump truly is

Former Speaker of the House John Boehner told CNBC's Scott Wapner Tuesday that Donald Trump, who Boehner voted for and says he likes, is "barely a Republican."

Republicans on Capitol Hill are about to find out exactly what that means.

One of their principal complaints about Barack Obama's presidency was deficit spending. In August, the conservative Breitbart News wrote, "The truth is that Obama vastly expanded the deficit in a doomed and ill-conceived experiment in Keynesian stimulus spending, much of which was wasted on priorities that helped Obama's political supporters — especially the public sector unions — but did little for the economy."

Donald Trump in Wilkes-Barre, Pennsylvania on October 10, 2016.
Jessica Kourkounis | Getty Images

But some Republicans in Washington — think of them as alligators in what Trump refers to as "the swamp" — fear that Trump's presidency could be even worse for the U.S. deficit, given that he is calling for both large tax cuts and ramped up infrastructure spending. That could present a particular challenge to members of the conservative Republican Freedom Caucus, who are adamant opponents of deficit spending.

"The Freedom Caucus people's heads will explode when they see Trump's first budget, because Trump is all about spending," said a former Bush Administration official. The official pointed out that Trump aggressively used debt during his business career and famously said during the campaign, "I'm the king of debt. I'm great with debt. Nobody knows debt better than me."

To anti-debt Republicans, that kind of rhetoric is alarming. "He's a tax-cut and spend Republican," the former Bush official said. "Not a tax and spend Republican, a tax cut and spend Republican." The official cited Trump's comments including keeping expensive pieces of Obamacare in place, tax cuts and significant new spending on a border wall with Mexico.

The official said political pressure will be intense on rank and file members of Congress to go along with whatever Trump proposes. "I'm guessing they'll just ignore their previously held diligence on deficits and just get on board the Trump train," he said. "All the politics on this are upside down. It's crazy."

Trump supporters on Capitol Hill aren't conceding that just yet. Rep. Chris Collins, a congressional liaison to the Trump transition, said Trump will pay for any spending he does — possibly through a massive tax repatriation deal that brings corporate holdings overseas back to the United States and taxes those holdings by as much as 10 percent.

"One thing you've heard Donald Trump talk about again and again is an albatross of a $20 trillion debt hanging around the necks of our children and grandchildren," Collins said. "I think that tells you all you need to know."

"You are not going to see us driving up the deficit and debt," Collins said.

Trump economic advisor Anthony Scaramucci argued in an op-ed in the Financial Times on Friday that infrastructure spending financed by "historically cheap debt and public-private partnerships" would actually reduce deficits because of the economic growth it would unleash. On Twitter, he followed up by contrasting Trump's ideas with other forms of fiscal stimulus Scaramucci has opposed in the past. "Not all spending is created equal," Scaramucci tweeted. "Right kind (infrastructure) managed by right person (DJT) while borrowing costs are low is smart."

In his interview Tuesday, Boehner argued that the path forward is a deal in which repatriated offshore holdings of U.S. corporations can be used to offset new spending on roads and bridges. "I think repatriating the $2.5 trillion of U.S. business taxes sitting overseas is a smart step," Boehner said. "And then using economic analysis to determine, all right, what's this going to do for our economy, and then trying to use that money to develop a longer term infrastructure. This will get broad bipartisan support."

For conservatives on the Hill, Trump may barely be a Republican, but he definitely is president-elect. And that means they may have to start sorting out which priorities they value most.