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Democrats are the new deficit hawks in the age of Trump

Key Points
  • Warnings about the nation's debt are coming from Democrats these days.
  • Democrats are fighting the Republicans' tax plan, which might end up costing $1.5 trillion over a decade.
  • Republicans tout the plan as a way to boost jobs and growth, while Democrats pushed spending in 2009, during the financial crisis, to stimulate the struggling economy.
Sen. Ron Wyden (D-OR)
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The warnings about the nation's $20 trillion debt have been dire: Washington is on track to "explode" the debt. The proposed budget is "radical" and "extreme." Politicians should be "ashamed" of empty promises to reduce the deficit.

But those warnings aren't coming from the tea party conservatives who rode a wave of fiscal frustration to Capitol Hill seven years ago and upended the Republican establishment. Instead, they are coming from Democrats who are embracing their inner deficit hawks to attack the tax plan forged by GOP leaders and President Donald Trump's administration. On Wednesday, Sen. Ron Wyden, D-Oregon, even quoted Republican Majority Leader Mitch McConnell.

"The longer we wait to address the debt in a serious manner, the more the safety net frays, and the harder this crisis will be to address," Wyden said, recalling comments he said McConnell made in 2010. "At some point, a choice has to be made, and that point is now."

Democrats are ringing the alarm bells as the Senate on Wednesday begins committee debate on its fiscal 2018 budget. The proposal includes significant spending cuts to popular programs such as Medicare and Medicaid, although they are not binding in the long run. Yet it also includes instructions for lawmakers to craft a tax bill that can cost as much as $1.5 trillion over a decade.

The House is slated to hold a floor vote on its version of the budget Thursday. That plan would not allow tax reform to add to the deficit, but congressional Republicans are expected to accept the Senate version instead.

Democrats' hawkish rhetoric is a far cry from the years following the 2008 financial crisis, when they fought for ramping up government spending to resuscitate the ailing economy. The 2009 stimulus package, which clocked in at $787 billion, was billed as a way to create jobs and put money in the pockets of ordinary Americans. Economists Alan Blinder of Princeton University and Moody's Mark Zandi estimated that 17 million more jobs would've been lost during the recession without it.

Now, the shoe is on the other foot.

Republicans are the ones proposing budget-busting legislation, which they are touting as a way to create jobs and put money in the pockets of ordinary Americans. The White House argues that passing tax reform would boost economic growth to an annual rate of 3 percent, a milestone that has proven elusive since the Great Recession.

Democrats, however, are opposing any rewrite of the tax code that adds to the deficit. This week, they unveiled their own budget that keeps the country's debt-to-GDP ratio steady over the decade.

"We raise spending. We raise revenue. I think that's what we would always propose," Rep. John Yarmuth of Kentucky, ranking Democrat on the House Budget Committee, told reporters this week.

To be sure, the country is on a very different footing than it was in 2008. The financial crisis is over, the unemployment rate is just 4.4 percent, and the economic expansion is the longest in American history. That calls for a very different fiscal response in Washington. Democrats, Yarmuth said, are not contradicting themselves.

"I would turn it around and ask the question why Republicans are not afraid to raise the deficit to give tax cuts to people who don't need them," he said.

Indeed, Republicans have also changed their tune on the national debt. Fiscal conservatives such as the House Freedom Caucus are backing the Republican tax plan, claiming that most — if not all — of the cost will be offset by faster economic growth and the elimination of deductions and loopholes.

"I'm old enough to remember when Republicans were the party of fiscal discipline," said Jim Manley, a Democratic veteran of Capitol Hill who has worked for Sen. Edward Kennedy and former Majority Leader Harry Reid. "Now, as soon as they're in the majority, they're running away from this position as quick as possible."

Manley also cautioned Democrats not to paint themselves into the same box.

"I hope no Democrat from here on out ever goes down this path of deficits matter," he said. "Republicans have shown once and for all [voters] simply don't care."