The New York Times wrote an interesting article looking at the deficit spending impact of Trump’s proposals so far. They conclude that he is on course to add $10 TRILLION dollars to our debt over the next 10 years. Please note that is after only one week in office. As Trump is the most delusional, irresponsible person to hold this office in at least 100 years, we should expect that next week and the weeks after that will bring more economic suicide, so the ultimate number could be far greater than $10 trillion.
So far, there is no resistance whatsoever from the Republicans, you know, those guys who are always ranting about deficits when they are out of power. Where is Grover Norquist and his deficit pledge now? You haven’t heard that name for awhile, have you?
Now is a good time for everybody to re-acquaint ourselves with some basic facts:
Over the long haul, significant deficit spending leads to inflation. Extreme deficit spending leads to hyper-inflation. That isn’t to say that deficit spending is always bad. Indeed, in times of war or economic depression, government-led stimulus may be the only option to avoid calamity. But practiced to extremes over a long period of time, inflation is the likely result. Inflation is a cruel, hidden tax. Inflation devalues everything we own. Inflation is a cut in our savings. Inflation is a cut in our salaries. Inflation is a cut in the value of any assets we own. And inflation hits the lower 99% much harder than the upper 1% because the richest have been adding wealth much faster than the rate of inflation. Since 1980, the fact is that deficits go up when Republicans are President and they go way down when Democrats are President. This is not because Republicans don’t understand economics. It is not because Democrats are actually deficit hawks. Neither of those is true in the main. There is a completely different reason for this.Philosophically, Republicans and Democrats both like spending, but it is two entirely different kinds of spending. Democrats prefer spending on social programs and programs (such as clean air and water) that improve the quality of life of average Americans. Democrats like spending that makes our infrastructure better for all, and makes the nation more competitive. Republicans like spending that primarily benefits the giant corporations and the 0.1 percenters that head these corporations. In particular, they love military spending because that helps project power, influence and control that enables these corporations to exploit people all over the world.
If Presidents were kings, Democratic Presidents might run deficits just as big as Republican Presidents, but their deficits would be targeted at things that more directly benefit average Americans. But Presidents are not kings, even though Trump seems to be acting that way in his first week on the job. The reality is that Congress holds most of the spending power. And even though Republicans haven’t had complete control over Congress all the time, they have become very good at using their power to destroy things they don’t like. Likewise, Democrats have become downright miserable at reminding the public why traditional Democratic priorities are good for average Americans.
For 30 years, GOP Presidents increase deficits, Dem Presidents GREATLY reduce deficitsThis chart uses data from the Federal Reserve FRED database. The line is directly from FRED with no modifications. The annotations are mine. Here, we express the current deficit (not the national debt) as a percentage of the nation's GDP, which tends to adjust for inflation. Notice that all Republican Presidents for 36 years have increased the deficits. The only sustained reductions in deficits were during Clinton’s and Obama’s terms, and these were EXTREME reductions in the deficits.
It is tempting to say “What a good boy am I.” But remember that red spending is fundamentally different from blue spending. The cuts have happened primarily to “blue spending” — i.e.. social and quality-of-life programs whereas the deficits (i.e. expansion of programs) have gone mainly to “red spending” — i.e. grooving trillions of dollars to the giant corporations and the 0.1 percenters that run them.
This is not accidental. It is very deliberate. It is a program developed by Jude Wanniski during Reagan’s term, and it has been the de facto playbook for the Republicans for 30 years. The strategy even has a name: the “Two Santas” strategy, and this strategy is explained in an excellent 2009 article by Thom Hartmann.
Everybody should familiarize themselves with this strategy, because it is happening to us again. We need to get this out in the open. There will be lots of discussion about deficits in the upcoming months. We need to make sure everybody understands the game the Republicans have been playing for 36 years and are continuing, in spades, under Trump.
Yes, we must be responsible about deficits. No, we must not allow another “Two Santas” cycle to further rob the middle class. No, we must not allow the GOP to set up up one more time for huge cuts in social programs once we next win the White House.
