Obama may have borrowed and spent hundreds of billions of dollars on a fiscal stimulus that I think was misguided, but at least he had the excuse of following pretty standard counter-cyclical Keynesian economic theory. He was taking the advice of some very well regarded economists.
Trump, on the other hand, is borrowing and spending at a time when the economy is still on the upwards slope of a recovery. By the time the bill works its way fully into the economy it may be just in time to help inflate a bubble, not ease a recession.
In the meantime, if Republicanss are supposed to stand for anything it’s supposed to be for fiscal responsibility. Spend money wisely with proper oversight, spend reasonably within your means, and keep taxes as low as possible while meeting the true responsibilities of the government. And now they hold all three branches of government, and the result is… a violation of everything they proclaim to believe in. A trillion dollar deficit during an economic boom is insane. Now is the time to be reducing the debt, so that when the next recession comes the U.S. doesn’t run out of economic bullets and head to whatever the equivalent of Argentina’s way is when you’re the world’s reserve currency. Or what happens when suddenly you’re not the world’s reserve currency. Which, considering the way Trump has been antagonising allies and screwing with trade, becomes a more real possibility every day.
The net result of Trump and the Republican’s borrow and spend spree could easily be an overheated economy, which will require interest rates to rise. If that remains so for an extended period, the cost of U.S. debt service is going to blow up the budget even more. And this is just before a huge demographic group is going to leave the workforce and change from tax sources to tax sinks. Just super.
There is a hellacious amount of debt being held by the public, by municipal and state governments, corporations, you name it. If Trump drives interest rates up through borrowing, to quote Peter Cook, “There would be a lot of trouble.”
Here in Canada we could be especially boned. Trump’s tariff tantrum may put Canada into recession, just as the U.S. economy overheats, and after our own idiots in office spent us into oblivion with idiotic policies. So U.S. interest rates go up, and ours can’t. That could crash the Canadian Dollar.
I tell you, Trump is the only person on this planet outside of ISIS that could have put most Albertans on the side of Justin Trudeau in a spat against America. I don’t think Trump understands Canadians. This move of his isn’t sitting well here. He shouldn’t have been so quick to piss off his closest ally just because he doesn’t like our current leader or because he thinks he wields a big stick and can just break agreements and dictate new terms. He might even get his way if the economic consequences become harsh, but the more pain he inflicts the less support he is likely to find from the Canadian population in the future. That means our politicians will do the same. This is true also in all the other countries he is trying to put the screws to. This is doubly stupid during a time when populist nationalism is rearing its ugly head around the world again. I know! Let’s stir it up!
I’m pretty sure I’ve seen this movie before. Is there somewhere I can get a refund?