The president of the Committee for a Responsible Federal Budget said the proposed deal to raise the debt ceiling and spending caps may be the worst budget deal ever and represents a bipartisan “abdication of responsibility.”
President Donald Trump announced the new deal on Monday,
from both parties in his tweet. The deal reportedly raises federal spending by $320 million in 2020 and increases the debt ceiling through July 2021, after the next presidential election.
Maya MacGuineas, the head of the CRFB, said in a statement on Tuesday the deal “may end up being the worst budget agreement in our nation’s history. ” She joined CNBC’s “Squawk on the Street” and criticized the architects of the deal, saying easy monetary policies around the world and strong demand for U.S. government debt are not reason to continue expanding the budget deficit.
“I can blame them for serving as terrible stewards for the country. This is a bipartisan, really, abdication of responsibility. And of course, we should hold our politicians accountable because what they’re doing is opting for short-term political gains instead of long-term responsible choices,” MacGuineas said.
The deal comes after Treasury Secretary warned congressional leaders that the department could run out of money in early September. The total U.S. government debt is now above $22 trillion, and the country has not run a budget surplus since late in Bill Clinton’s presidency.
For fiscal year 2019, which began last October, the federal government has run a $747 million deficit through June, according to the Treasury department. The cumulative deficit was about $607 million for the comparable period in fiscal year 2018.
“Just because you’re a college student with no income and a credit card company offers you a credit card, it doesn’t mean you should spend up to the limit all the time,” MacGuineas said.
The Federal Reserve is poised to cut the overnight funds rate at the end of the month, joining other central banks in easing monetary policy. U.S. Treasury bonds of all maturities are trading at yields far below prior decades.
“Right now the U.S. has the luxury of low interest rates. We should take advantage of that to help fix this fiscal situation rather than wait until tomorrow when the cost could show up in so many painful ways. But we really are leaving ourselves immensely vulnerable to a situation that cannot continue,” MacGuineas said.