>>> WELL KIMCOME BACK. NEITHER A TAX CUT NOR A BOOMING
ECONOMY IS PUTTING A DENT IN IT
THE WAY THE PRESIDENT PROMISED.
THE FEDERAL BUDGET DEFICIT
INCREASED IN THE FISCAL YEAR
2018.
2018. THAT’S A 17% INCREASE OVER THE
LAST FISCAL YEAR.
THAT BRINGS THE DEFICIT GRAND
TOTAL TO A WHOPPING $779 BILLION
THIS YEAR.
THIS YEAR. NOW, SINCE THAT’S MORE MONEY
THAN MOST OF US HAVE, LET ME PUT
THIS INTO PERSPECTIVE FOR YOU.
THE DEFICIT IS THE DIFFERENCE
BETWEEN WHAT THE GOVERNMENT GETS
IN REVENUE, THIS IS ACTUALLY
FLIPPED REALLY, IT’S REVENUE
MINUS SPENDING.
MINUS SPENDING. IN THIS CASE WE HAVE SPENDING
MINUS REVENUE.
MINUS REVENUE. BASICALLY, WAIT YOU, IT’S WHAT Y
TAKE IN MINUS WHAT YOU SPEND.
THEY CAN’T KEEP PACE WITH THE
INCREASED SPENDING.
INCREASED SPENDING. LARGE DEFICITS ARE ASSOCIATED
WITH RECESSIONS OR WARS.
THINGS THE GOVERNMENT SPENDS A
LOT OF MONEY ON.
THE WAR OF 1812, BIG DEFICIT.
THE CIVIL WAR, HUGE DEFICIT.
WORLD WAR 1, BIG DEFICIT.
WORLD WAR II WAS A BIGGER
DEFICIT.
DEFICIT. THE FINANCIAL CRISIS IN 2008 LED
TO LARGE PEACE-TIME DEFICITS IN
THE YEARS AFTER BECAUSE THE
GOVERNMENT SPENT BILLIONS OF
DOLLARS TO STIMULATE AN ECONOMIC
RECOVERY.
RECOVERY. EACH OF THESE LARGE DEFICITS WAS
FOLLOWED BY SOME SORT OF BELT
TIGHTENING THAT SHRUNK THE
DEFICITS OR ACTUALLY CREATED A
BUDGET SURPLUS WHERE YOU TAKE IN
MORE MONEY THAN YOU SPEND.
ONE OF THE CONTRIBUTING FACTORS
IS THE GOP TAX CUTS.
CONGRESS KNOCKED OFF MORE THAN
$1 TRILLION WORTH OF FORECASTED
TAX REVENUE.
TAX REVENUE. AND THEN BOOVTED BOOSTED
GOVERNMENT SPENDING AT THE SAME
TIME.
TIME. PROMISING THAT THE GOP TAX LAW
WOULD DECREASE THE DEFICIT
BECAUSE IT WOULD UNLEASH GROWTH.
REMEMBER THE PRESIDENT TALKING
ABOUT FOUR, FIVE, SIX PERCENT.
SO FAR, WE HAVEN’T SEEN THAT.
JOINING ME, CNBC EDITOR AT LARGE
JOHN HARWOOD.
JOHN HARWOOD. THE DEFICIT IS SOARING.
REPUBLICANS, THE PARTY IN POWER,
DECRIED DEBT AND DEFICITS FOR
YEARS.
YEARS. WHAT GIVES?
WHAT GIVES? >> WELL, WHAT GIVES IS WE HAVE A
VERY CONSISTENT PATTERN.
IT’S GONE ALL THE WAY BAG TO
RONALD REAGAN.
RONALD REAGAN. IT’S GONE ALL THE WAY BACK TO
RONALD REAGAN.
RONALD REAGAN. HAS PRESIDED OVER RISING
DEFICITS.
DEFICITS. AND BOTH DEMOCRATS PRESIDENTS,
CLINTON AND OBAMA, HAVE PRESIDED
OVER FALLING DEFICITS.
WHY IS THAT?
THE REPUBLICANS CUT TAXES.
THEY INSISTED IT WOULDN’T
INCREASE THE DEFICIT, BUT IT
DID.
DID. WHEN DEMOCRATS RAISED TAXES,
THEY SAID THAT THAT WOULD MAKE
THINGS WORSE BECAUSE IT WOULD
PUT THE ECONOMY INTO RECESSION.
THAT DID NOT HAPPEN.
IN BOTH CASES, THE ECONOMY
RECOVERED AND THE DEFICIT WENT
DOWN.
DOWN. NOW THEY’RE RUNNING THE SAME
PLAY THIS TIME.
MANY PEOPLE, ALL ECONOMIC
FORECASTERS, AHEAD OF THAT TAX
CUT, SAID IT WAS GOING TO
INCREASE THE DEFICIT.
TRUMP, MNUCHIN, GARY COHN,
OTHERS, SAID THAT’S NOT GOING TO
HAPPEN.
HAPPEN. GUESS WHAT, IT IS HAPPENING.
>> DEFICITS BECOME A HOT TOPIC
FOR A LITTLE WHILE, DEBT AND
DEFICITS.
DEFICITS. THEN IT GOES AWAY.
YOU AND I HAVE SEEN THIS HAPPEN
ON A CYCLE MANY TIMES.
HOW DO YOU GET PEOPLE TO ENGAGE
IN THE NECESSARY CONVERSATION
ABOUT WHEN THE GOVERNMENT SHOULD
SPEND MORE THAN IT TAKES IN AND
WHEN IT ABSOLUTELY SHOULDN’T?
WHAT’S THE WAY IN WHICH YOU GET
PEOPLE TO CARE ABOUT DEFICITS
AND DEBT?
AND DEBT? >> WELL, I DON’T KNOW, ALI,
WHAT’S A WAY TO GET PEOPLE TO
CARE ABOUT THE RIGHT SEQUENCING,
SINCE SO MUCH OF OUR POLITICAL
REACTIONS ARE COLORED INSTANTLY
BY PARTISAN ARGUMENTS.
AS YOU REMEMBER, WHEN BARACK
OBAMA WAS PRESIDENT, PEOPLE LIKE
PAUL RYAN AND OTHERS SAID THAT
THE DEFICIT WAS RISING.
WE WERE ABOUT TO TURN INTO
GREECE.
GREECE. IT WAS A HORRIBLE THING FOR THE
ECONOMY.
ECONOMY. THAT WAS PRINCIPALLY A PARTISAN
ARGUMENT.
ARGUMENT. THERE IS CONCERN ABOUT DEFICITS.
BUT REPUBLICANS ARE CONCERNED
ABOUT DEFICITS.
ABOUT DEFICITS. PRINCIPALLY AS A MEANS OF
HOLDING DOWN GOVERNMENT
SPENDING.
SPENDING. THEY WANT GOVERNMENT TO DO LESS.
THEY WANT GOVERNMENT TO BE
SMALLER.
SMALLER. WITH REPUBLICANS IN POWER, THEY
TURN AROUND ON DEFICITS AND SAY,
WELL, THE WAY TO MAKE GOVERNMENT
SMALLER AND MAKE THE ECONOMY
BETTER IS TO REDUCE TAXES.
THAT WILL GENERATE MORE GROWTH
AND IT WILL THEN CREATE PRESSURE
TO REDUCE SPENDING, WHICH IS
WHAT PEOPLE LIKE MITCH McCONNELL
AND PAUL RYAN HAVE SAID.
WE NEED TO GO CUT SOCIAL
SECURITY AND MEDICARE.
>> YES, McCONNELL SAID IT THIS
MORNING.
MORNING. >> RIGHT.
>> RIGHT. THE PROBLEM IS DONALD TRUMP SAYS
HE’S NOT GOING TO DO THAT.
>> RIGHT, THAT’S THE PROBLEM.
>> LEFT WITH DEFICITS THAT ARE
GOING TO RISE TO $1 TRILLION BY
2020 ACCORDING TO THE
CONGRESSIONAL BUDGET OFFICE AND
BE ABOVE $1 TRILLION EVERY YEAR
AS FAR AS THE EYE CAN SEE.
>> THE PRESIDENT TWEETED THIS
MORNING THAT AN INCREDIBLE
NUMBER IS JUST OUT, 7 MILLION
JOB OPENINGS.
JOB OPENINGS. ASTONISH
ASTONISH ASTONISHING, IT’S ALL WORKING.
STOCK MARKET UP BIG ON
TREMENDOUS POTENTIAL OF USA.
LET’S FOCUS ON THAT NUMBER.
7.36 MILLION JOB OPENINGS.
THAT IS MORE JOB OPENINGS THAN
THE NUMBER OF PEOPLE ON THE
UNEMPLOYMENT ROLLS.
UNEMPLOYMENT ROLLS. WE HAVE MORE JOBS AVAILABLE THAN
WE HAVE PEOPLE OFFICIALLY
SEEKING WORK.
SEEKING WORK. THAT’S P THAT’S A FUNDAMENTAL
ISSUE WE HAVE TO FACE.
WE HAVE A BUNCH OF PEOPLE WHO
ARE EITHER NOT GEOGRAPHICALLY IN
THE RIGHT PLACE OR DON’T HAVE
THE RIGHT TRAINING FOR A WHOLE
LOT OF JOBS THAT ARE AVAILABLE.
>> EXACTLY RIGHT.
THAT’S WHY JANET YELLEN SAID
YESTERDAY WE ARE AT FULL
EMPLOYMENT.
EMPLOYMENT. SHE’S WORRIED ABOUT THE ECONOMY
OVERHEATING.
OVERHEATING. IT’S ALSO WHY THE IDEA OF
CUTTING LEGAL IMMIGRATION NOW IS
COUNTERPRODUCTIVE ECONOMICALLY
COUNTERPRODUCTIVE ECONOMICALLY BECAUSE WE NEED MORE WORKERS TO
DO THOSE JOBS.
WE NEED MORE SKILLS BUT WE ALSO
NEED MORE BODIES, MORE PEOPLE IN
THE UNITED STATES TO DO THAT
WORK.
WORK. IF THEY’RE NOT HERE, WE’RE NOT
GOING TO GET THE ECONOMIC GROWTH
THAT EVERYBODY WANTS.
>> THAT’S RIGHT, YOU NEED THE
LABOR FORCE WORKING IN ORDER TO