Fiscal Discipline Abandoned

David Stockman's recent critique, On the Gross Fiscal Negligence of the Washington GOP, offers a scathing examination of the Republican Party's fiscal policies, particularly under the Trump administration. Stockman, a former Reagan-era budget director, argues that the GOP has abandoned its traditional role as a guardian of fiscal responsibility, instead contributing to an unsustainable trajectory of national debt and deficits.

The $22 Trillion Deficit Dilemma

Stockman highlights that current policies are set to add $22 trillion in baseline deficits over the next decade, compounding the existing $36 trillion public debt. He contends that even an aggressive plan to cut $8 trillion would still leave the nation with a $50 trillion debt by the mid-2030s, exacerbated by the increasing costs of entitlement programs as the Baby Boomer generation ages.

Escalating Federal Spending

Despite a 4.9% increase in federal revenues year-to-date, federal outlays have surged by 9%, amounting to an additional $340 billion. Stockman points out significant spending increases across various departments:

Commerce: +100%
Homeland Security: +52.3%
Interior: +43.8%
Veterans Affairs: +16.6%
Transportation: +12.7%
Agriculture: +11.0%
Health and Human Services: +10.7%
Interest on Debt: +9.6%
Social Security Administration: +8.8%
Defense: +8.3%
Energy: +7.3%

He criticizes the Trump administration for not proposing any rescissions or entitlement reforms to address this spending surge.

The One Big Beautiful Bill (OBBB) and Tax Policy

Stockman scrutinizes the GOP's "One Big Beautiful Bill," which aims to extend the 2017 Tax Cuts and Jobs Act (TCJA). He argues that this extension would primarily benefit the top 5% of earners, who already contribute 61% of federal income tax revenues, while adding approximately $5 trillion to the national debt. He challenges the notion that these tax cuts will stimulate sufficient economic growth to offset their cost, labeling the "grow your way out" strategy as a flawed and historically unproven theory.

Misallocation of Corporate Tax Cuts

Analyzing the aftermath of the 2017 tax cuts, Stockman notes that increased corporate cash flows were largely directed toward shareholder returns rather than productive investments. Between 2018 and 2023, operating cash flows of S&P 500 companies rose by 28%, yet dividends and stock buybacks increased by 49% and 42%, respectively. This resulted in a 31% decline in funds available for net investment on Main Street, undermining the intended economic benefits of the tax cuts.