No Magical Solutions for Trump

Says Rep. Tom Cole, R-Oklahoma: Trump’s numbers don’t add up.

Someone in the national press corps is finally focusing on an issue less ephemeral than Donald Trump’s tweets: the fiscal disaster that looms if all of the president’s programs are enacted. Writes Rachel Blade and Josh Downey in Politico:

“I don’t think you can do infrastructure, raise defense spending, do a tax cut, keep Medicare, Medicaid and Social Security just as they are, and balance the budget. It’s just not possible,” said Rep. Tom Cole (R-Okla.), a senior member of the House Budget Committee. “Sooner or later, they’re going to come to grips with it because the numbers force you to.”

Duh.

If designed properly, tax cuts could be stimulative, but it takes a leap of faith to think that faster economic growth would recoup all the lost revenue. Carefully designed deregulation of the healthcare, banking, telecommunications and energy sectors could promote growth as well, although not without some offsetting risks and costs. Even if economic growth does rebound, it will likely trigger inflation and the Federal Reserve will raise interest rates. There are no magical policy levers that will allow the U.S. to fulfill all of Trump’s promises without running up deficits and the national debt.

My hunch is that the GOPs in Congress can water down the more fiscally irresponsible of Trump’s plans but won’t stop them all. Trump will blame the resulting deficits on Obama, just as Obama blamed his deficits on Bush. Words won’t change anything. Boomergeddon is coming. The only question is when.

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10 responses to “No Magical Solutions for Trump

  1. Well – the thing to remember is that virtually all of Federal spending – pay salaries in one fashion or the other and when you cut funding you cut Federally-funded jobs.. and ostensibly the private sector then uses regained formerly-taxed money to invest and create jobs.

    You’re not just cutting spending.. it has an economic cost also.

    Presumably – a private sector job will be more “productive” than a govt job and there will be “some” stimulative effect but not the windfall some think – ask Kansas…

    finally, I would ask – is more jobs in the Cruise Ship industry “better” than say a Nurse or Doctor that would treat – say Opioid addiction or an engineer/worker replacing a bad bridge?

    The bad news is that Trump is a flaming idiot.. the Good news is that Congress , though also idiotic … does tend to get forced back to reality at times. ( it’s NOT what Trump says that makes him an idiot – it’s what his talk represents in terms of how he thinks about things – like spending and deficits to name a couple). One can hope that over time – the “mouth” will get some “smarts”.. we can all hope…

  2. Much depends on economic expansion, I suspect. Plus I suspect that Trump is well may be much more flexible and pragmatic than most imagine, particularly if he keeps his eye on economic expansion with actions closely attuned to that goal, something he likely knows better than most everyone realizes. Dummies, financial and otherwise, do not make $billions in New York and international real estate. .

    • Economic expansion is a ______ joke. The post-Great Recession growth has been more anemic than any other recovery period since the Great Depression. Last weekend I sent JB the Fairfax County Executive’s FY18 budget presentation that included the following statements.

      In 2016, U.S. economy grew at a lackluster rate of 1.6% percent, down from the 2.6% GDP growth experienced in 2015.
       The County’s economy continues to be impacted by the effects of
      sequestration and defense spending cuts
       Loss of high paying jobs
       Recent job gains have been in lower paying sectors
       High office vacancy rate in the County – over 20 million sq. ft.
      vacant out of 116.4 million sq. ft.
       As of mid-year 2016, direct office vacancy rate was 16.5%, highest since 1991, when it was 16.8%
       During 2016, the local real estate market underperformed the nation
      again
      Based on the S&P/Case-Shiller home price index, home prices were up 5.1% nationally through October 2016, but grew 3.4% in the Washington DC Metro area
       County’s FY 2018 real estate equalization growth lower than anticipated – half of what it was in FY 2017

      Unless and until there’s sustained economic growth at 3% plus, we will all continue to bob in the water like a cork.

  3. I feel your pain and understand your skepticism. I would feel the same way save for my personal experience going though the great recession of the late 1970s. In my experience that recession was far deeper and seemingly hopeless than today’s doldrums. That late 1970s mess was turned around dramatically in four years.

    Thacher did the same for an even more hopeless Britain during the same era.

    In my personal opinion, O’Bama did everything imaginable to destroy this nation’s chances for economic recovery after 2008. He throttled all chances for a recovery, starting with giving a $trillion away, wasted, to his political supporters. The fact that damage that ensued from his disaster presidency was not far worse is testament to the inherent strength of this nation.

    Hence I am hopeful.

    Right now I am far more worried about Wars large and small, and the concurrent gross instability of the world internationally, and our exposed and weak position militarily to deal with rising peer states and the regional nasty players, how they might harm our chances for recovery, before it can get off the ground than I am about economy in the short and mid term.

    Fairfax has its own problems. You know my views on that.

  4. stimulus is jobs.. no question – the money went for things like highways…and other infrastructure

    what was/is bad about stimulus is that it adds to the deficit/debt..

    “stimulus” is no more different than an increase in “Defense” spending – adds ships/weapons .. the jobs that build that – and that is not paid for and also adds to deficit and debt.

    increases in Medicare (entitlements) are also “stimulus” that translates into more health care – that pays for more doctors , x-ray techs.. and ALSO adds to deficit/debt.

    a hope-for “expansion” is NOT something you “decide” will “pay for” increased spending. You WAIT UNTIL the “expansion” actually does bring in the additional bucks then you spend it (or better… cut the deficit with it).

    that’s the way it works in Va and should work in Congress.

    If Obama had not convinced Congress to act – this country would have gone into a depression… that was the choice…

    Jobs lost per month:

    2008
    September 2008 – 433,000 jobs lost
    October 2008 – 489,000 jobs lost
    November 2008 – 803,000 jobs lost
    December 2008 – 661,000 jobs lost

    2009
    January 2009 – 818,000 jobs lost
    February 2009 – 724,000 jobs lost
    March 2009 – 799,000 jobs lost
    April 2009 – 692,000 jobs lost
    May 2009 – 361,000 jobs lost
    June 2009 – 482,000 jobs lost
    July 2009 – 339,000 jobs lost
    August 2009 – 222,000 jobs lost
    September 2009 – 199,000 jobs lost
    October 2009 – 202,000 jobs lost
    November 2009 – 64,000 jobs created
    December 2009 – 109,000 jobs lost

    total = 8.8 million jobs

    the deficit when Bush left 1.4 Trillion
    the deficit when Obama left = 492 billion

    • I don’t know about the road part, but the broadband stimulus was a job-killer. I know three local Virginia-Maryland companies that were in the broadband service business and that applied for stimulus money. While the government’s decision-making process was operating, the market stopped funding all smaller broadband providers, including these three. While two actually got the money, it was too late. They folded because they didn’t have the cash to run the business. A number of fine people lost jobs and some of my clients who leased them radio spectrum didn’t get paid.

      I don’t see this as a Democrat-Republican thing. But it’s more evidence to me that, more often than not, when the federal government gets involved in commerce, no good things will happen.

  5. some things got funded, some did not..

    the fact is that the economy lost between 12 and 18 trillion dollars and they were only able to get about a trillion approached to help replace the jobs lost.

    The Feds actually did try to WAIT for the economy to restart but it was not going to happen… the private sector money was not in play and had been put away for fear it would be lost also.

    The stimulus would have had to be 2-3 trillion to have more immediate results… The one trillion was not enough to prevent all the damage.

    here’s a list of what SOME of it was spent on – remember this money for various named projects – it all translated into jobs.. paychecks for people – in an effort to put some people back to work – and yes – at a cost to the deficit and debt…

    Transportation

    Total: $48.1 billion,[42] some in the form of Transportation Income Generating Economic Recovery (TIGER) Grants

    $27.5 billion for highway and bridge construction projects
    $8 billion for intercity passenger rail projects and rail congestion grants, with priority for high-speed rail
    $6.9 billion for new equipment for public transportation projects (Federal Transit Administration)
    $1.5 billion for national surface transportation discretionary grants
    $1.3 billion for Amtrak
    $1.1 billion in grants for airport improvements
    $750 million for the construction of new public rail transportation systems and other fixed guideway systems.
    $750 million for the maintenance of existing public transportation systems
    $200 million for FAA upgrades to air traffic control centers and towers, facilities, and equipment
    $100 million in grants for improvements to domestic shipyards
    Water, sewage, environment, and public lands[edit]
    Total: $18 billion

    $4.6 billion for the Army Corps of Engineers for environmental restoration, flood protection, hydropower, and navigation infrastructure projects
    $4 billion for the Clean Water State Revolving Fund wastewater treatment infrastructure improvements (EPA)
    $2 billion for the Drinking Water State Revolving Fund drinking water infrastructure improvements (EPA)
    $1.38 billion for rural drinking water and waste disposal projects
    $1 billion to the Bureau of Reclamation for drinking water projects for rural or drought-likely areas
    $750 million to the National Park Service
    $650 million to the Forest Service
    $600 million for hazardous waste cleanup at Superfund sites (EPA)
    $515 million for wildfire prevention projects
    $500 million for Bureau of Indian Affairs infrastructure projects
    $340 million to the Natural Resources Conservation Service for watershed infrastructure projects
    $320 million to the Bureau of Land Management
    $300 million for reductions in emissions from diesel engines (EPA)
    $300 million to improve Land Ports of Entry (GSA)
    $280 million for National Wildlife Refuges and the National Fish Hatchery System
    $220 million to the International Boundary and Water Commission to repair flood control systems along the Rio Grande
    $200 million for cleanup of leaking Underground Storage Tanks (EPA)
    $100 million for cleaning former industrial and commercial sites (Brownfields) (EPA)
    Government buildings and facilities[edit]

    Impact of the ARRA on Department of Defense facilities across the nation.
    Total: $7.2 billion

    $4.2 billion to repair and modernize Defense Department facilities.
    $890 million to improve housing for service members
    $750 million for federal buildings and U.S. Courthouses (GSA)
    $250 million to improve Job Corps training facilities
    $240 million for new child development centers
    $240 million for the maintenance of United States Coast Guard facilities
    $200 million for Department of Homeland Security headquarters
    $176 million for Agriculture Research Service repairs and improvements
    $150 million for the construction of state extended-care facilities
    $100 million to improve facilities of the National Guard
    Communications, information, and security technologies[edit]

    Federal Communications Commission (FCC) map showing the availability of broadband internet access in the U.S.
    Total: $10.5 billion

    $7.2 billion for complete broadband and wireless Internet access
    $1 billion for explosive detection systems for airports
    $500 million to update the computer center at the Social Security Administration
    $420 million for construction and repairs at ports of entry
    $290 million to upgrade IT platforms at the State Department
    $280 million to upgrade border security technologies
    $210 million to build and upgrade fire stations
    $200 million for IT and claims processing improvements for Veterans Benefits Administration
    $150 million to upgrade port security
    $150 million for the security of transit systems
    $50 million for IT improvements at the Farm Service Agency
    $26 million to improve security systems at the Department of Agriculture headquarters

    https://en.wikipedia.org/wiki/American_Recovery_and_Reinvestment_Act_of_2009#Infrastructure_investment

  6. This is the way I understood the Stimulus and the economic situation when Obama took office.

    I acknowledge that there are other viewpoints and perhaps others will share their views of what happened…

    The basic premise that I understood behind the (or any) stimulus is this. If the economy is damaged severely enough that private sector money flees to safe havens – it becomes an economic death spiral.. the worse the economy gets – the more private sector money flees to safe havens where it sits.

    When that happens – people are laid off and demand for goods and services plummets. People who are unemployed no longer have money to buy and people who still have jobs put off buying anything other than absolute necessities and hoard the rest in case they need it if they get laid off.

    People stop buying houses, new cars, furniture, insurance, you name it .. they drop back to the bare necessities of food and rent/mortgage and that’s it. cars gets sold.. vacations go away, college gets deferred.. etc…

    Companies who see reduced and reducing demand for their goods and services – lay off people who no longer are needed or will no longer be needed shortly, .. and the cycle continues – in the way we saw in 2008, 2009 and into 2010 where more than 8 million people lost jobs – at the rate of 400,000 to 800,000 PER MONTH!

    The most protected class of people were government employees and medical providers who were paid from Medicare and MedicAid and other govt-sponsored health programs. That kept the economy from total collapse.

    So what options are available to reverse this when it happens?

    the one the govt usually chooses is to borrow money (sell Treasury notes which get gobbled up as “safe havens” and increase the deficit) and with that borrowed money, essentially HIRE people to do work so they have a paycheck and can pay their rent and buy groceries, etc – which then goes into the economy as demand for products and services which, in turn, provides jobs to those who provide those goods and services, etc…

    so if you look at the things the stimulus paid for – it was broad and shallow… a LOT of it was infrastructure and maintenance that had been deferred… stuff that was needed but put off – and the jobs to do it – temporary until the job was finished.

    Remember the “Make Work Pay” Income tax credit? That was $400 for many singles and $800 for married and the idea was that people would spend it , not save it…

    Even when the GOP refused to extend it after 2 years, they themselves then voted for the FICA tax “holiday” which was intended to increase take-home pay in paychecks – at expense to Social Security and Medicare – which then, in turn, increased their unfunded liabilities and moved the dates closer to when they would reach the point where FICA taxes no longer would pay 100% of benefits.

    I’d be curious to hear others views and perceptions.

  7. Bravo LarrytheG, for bringing a flash of purifying light to this crazy mythology of Obama’s alleged failure. Fact is, he got us through the Great Recession brought on by W’s unneeded war and loosy-goosy home lending practices.

  8. Ahh … the foul stench of partisan politics as expressed through quantitative hallucination.

    From the right … Obama created an environment of slow growth in the US. Unfortunately, growth has been pretty slow in all of the developed countries since 2008. Hard to blame Obama for Australia’s stagnation.

    From the left … first, insist that the stimulus was what kept us out of depression and then declare Obama a financial hawk by comparing the 2009 deficit to the 2017 deficit. Didn’t both presidents serve 8 years? Who only look at one? The total deficits for Bush’s 8 budget years were $3,548B or an average of $443.5B per year. The total deficits for Obama’s 8 budget years were $6,324 or an average of $790.5B per year. By the third budget year of his tenure Obama had racked up more deficit dollars than the entire 8 years of the Bush Administration.

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