Yesterday saw all three of the major U.S. stock indexes reach new all time highs, and today the Dow is over 19000 for the first time ever. The post-election Trump bull continues to run, but for how long? Almost all economic prognosticators expected the market to go down after the election, albeit for different reasons. Some thought Mr. Trump’s anti-free trade policies would tank the market, while others (including me) thought that the Fed stimulus of the market was on its last legs anyway, and no later than the expected Dec rate hike would start bringing the market back to earth. Of course that could still happen, but at the moment, the markets are partying–literally–like its 1999.
One of the frustrating aspects of Mr. Trump to many observers during the campaign season was that he seemed to simply make things up. So, Mr. Trump wanted to cut taxes, and increase spending, and reduce the national debt–all at the same time. Of course, picking two of the three–your choice–is possible, but usually only with the other going the opposite direction. Mr. Trump’s response, well we can have pro-growth policies. I’m as much for growth as anybody, but I don’t think you can have enough growth to accomplish all these objectives. Regarding the national debt, as I’ve argued before, its not an ideological issue, its an accounting issue. And while many observers are discussing Mr. Obama’s attempts to hem Mr. Trump in on things like the Iran deal, he has already successfully put a major sabotage in place for the new administration.
On 16 Mar 2017, the federal debt limit of $20.1T is expected to be breached and could cause a major crisis. Because now the Republicans own all three branches of government, and they can no longer blame Mr. Obama and Mr. Reid (legitimately in my opinion). They now own the debt. And if Mr. Trump wants all the Republicans to walk the plank so he can have a massive infrastructure bill, I think we may have some problems–at least I hope so.
conservatives are going to go crazy,” Donald Trump’s senior advisor, Stephen K. Bannon, recently told the Hollywood Reporter about his grand plans for a massive new spending program. “I’m the guy pushing a trillion-dollar infrastructure plan…. It’s the greatest opportunity to rebuild everything. Shipyards, iron works, get them all jacked up. We’re just going to throw it up against the wall and see if it sticks. It will be as exciting as the 1930s, greater than the Reagan revolution — conservatives, plus populists, in an economic nationalist movement.”
While Mr. Obama successfully got his additional spending and gave a big problem to his successor, the Republicans ought to step up to the plate. After all, they claim to be the fiscally responsible ones. This will tell the tale.
Another important consideration is how this goes down between Mr. Ryan and Mr. Trump. Many Berean followers are rightly concerned with Mr. Trump, from both the left and the right. From those on the right, including some of your Berean posters, if we’re concerned about being tied to Mr. Trump, we need to be encouraging the other part of the government to step up and do their constitutional duty–the House has the power of the purse and should not fold to Mr. Trump. Will we have a Paul Ryan America or a Stephen Bannon version?
BTW, anybody else think defunding Planned Parenthood ought to be on the agenda immediately as part of this budget deal?