Like many things about Donald Trump, his approval ratings are contradictory and misleading. The Wall Street Journal reports that:
Only 44% of Americans currently approve of President Trump’s job performance (while 48% disapprove) which is historically low for a new President.
On the other hand, the percentage of Americans who have positive feelings about him has been steadily increasing ever since he declared his candidacy in June of 2015, and has now reached a high of 43% (see chart). Since his State of the Union speech was generally well received, this rating is likely to go even higher.
Here is my own perspective. As I have said many times on this blog, I believe our country’s two biggest and most urgent problems are:
Slow economic growth, averaging just 2% per year since the end of the Great Recession in June 2009. This means fewer jobs, smaller raises for workers and less tax revenue to spend on important national initiatives.
Massive Debt, now standing at 77% of GDP (for the $14 trillion public debt on which we pay interest), the highest since right after WWII. The Congressional Budget Office predicts that this debt level will keep on steadily getting worse, without big changes in current policy. It is therefore a huge threat to our national security and prosperity.
I have great confidence that the Trump administration and Congressional allies will put a high priority on faster growth and are likely to be able to achieve it. I can’t yet tell if Trump understands the seriousness of our massive debt. But the Tea Party and Freedom Caucus members in the House of Representatives do very strongly understand this problem and will insist on addressing it. I believe that they will be able to persuade the President to support them in doing this.
Conclusion. At this point I am a supporter of President Trump because I think that our national government is moving in the right direction.
He has picked highly qualified and independent-minded assistants such as Jim Mattis for Defense (who considers Russia to be a threat), Rex Tillerson for State (who has urged action on climate change) and Mike Mulvaney for Budget Director (who wants entitlement reform). Mr. Trump has tweeted that “I want them to be themselves and express their own thoughts, not mine.”
For a president to have strong willed assistants is in the best American tradition: Washington (with Jefferson, Madison and Hamilton), Lincoln (with Chase, Seward and Stanton), Roosevelt (with Acheson, Marshall and Stimson), and Reagan ( with Baker, Shultz and Weinberger) all wanted their cabinet members to engage in vigorous discussion about fundamental policy.
Trump forgoes ideology for simple cross-partisan principles such as America First, safety from terrorism and violent crime and better jobs and schools for the poor and working class, and defiance of self-serving elites.
He is comfortable with controversy and dissent and often incites it to advantage. His tweets and pronouncements can be outrageous and overstated but they demonstrate a healthy skepticism toward ossified orthodoxy and are designed to stimulate debate rather than to close it down.
His biggest mistake so far, the ill-advised travel ban for immigrants put on hold by a judicial Temporary Restraining Order, has been taken in stride by his administration while they reconsider how to proceed.
Conclusion. Ever since Mr. Trump’s election to the presidency, I have been saying that his ultimate success in office depends on whether or not he can address our country’s two biggest problems: 1) slow growth and 2) massive debt. At this point I am optimistic that he will succeed in doing these things.
Like many other fiscal conservatives I have been overlooking Donald Trump’s moral failings in hopes of electing a president who would be able to disrupt our current economic stagnation and move the U.S. towards faster growth which is the only way to achieve broad-based prosperity. But at some point we all have to say that enough is enough and the appearance last week of the video with lewd remarks about women is the tipping point for me. Even though I can no longer support or vote for Mr. Trump, I would like to summarize where I agree (and disagree!) with him on various issues. In decreasing order of importance:
Massive Debt. Mr. Trump at least talks about our almost $20 trillion national debt (and large annual deficits) even though he has made no proposals to deal with this problem. Mrs. Clinton has shown even less interest in this issue.
Tax Reform. Mr. Trump wants to lower tax rates for both individuals and corporations in order to stimulate economic growth. This is a very good idea as long as the tax rate cuts are made revenue neutral by closing loopholes and shrinking deductions. The Republican House has an excellent plan, “A Better Way” to accomplish just this. Hillary Clinton talks far more about economic inequality than about growth.
Regulatory Reform. Mr. Trump specifically mentions both the ACA and Dodd/Frank as being harmful to economic growth whereas Mrs. Clinton defends them.
Trans-Pacific Partnership trade deal. Mr. Trump opposes both TPP and NAFTA. Fair trade deals create more jobs than they destroy. Furthermore they produce lower priced products for everyone which boosts the economy. Wage insurance and better retraining programs will help those who lose their jobs due to foreign competition.
Immigration Reform. We need to solve our illegal immigration problem and Mr. Trump would probably be able to accomplish this, one way or another.
Conclusion. At this point it is pretty clear that Mrs. Clinton will be our next president. If the Republicans retain control of the House of Representatives, and she is willing to work with them, there is at least a chance to make progress on the growth issue.
As we celebrate the 239th anniversary of the signing of the Declaration of Independence in 1776, Americans have much to be thankful for. It is often said that the United States is the strongest, wealthiest and freest country the world has ever known. Although this may be somewhat of an exaggeration (see below), it is still indicative of how fortunate we are compared to the rest of the world. As we celebrate our good fortune, we need to be acutely aware that our continued success as a great nation is not automatically assured. In fact we face a number of troubling and persistent problems which are not likely to disappear unless we take strong action to address them. For example we have:
A stagnant economy with only 2.2% annual growth since the end of the Great Recession. And the Congressional Budget Office predicts no speed up over at least the next ten years, based on current policy. Such slow growth condemns 20 million unemployed and underemployed citizens to unfulfilling lives, as well as lackluster pay raises for many more tens of millions.
Massive debt. Our public debt (on which we pay interest) is now at 74% of GDP, highest since the end of WWII, and predicted by the CBO to grow rapidly under current policies. When interest rates return to the normal 5% level, interest payments on the debt will skyrocket, making it much more difficult to fund all of the federal programs we depend on for our quality of life.
Increasing Income Inequality is real even if overhyped in the media. America is still a land of great opportunity but basic fairness demands that all citizens be able to share in our national abundance.
Threats from abroad. ISIS now controls much of Iraq, Syria and northern Africa and must be defeated. NATO needs our very strong support, all the more so with the Eurozone and European Common Market under increasing pressure from within.
As the strongest nation in the world we have much responsibility for continued world peace and prosperity. We can’t fulfill this role adequately unless our own internal fiscal and economic policies are in fundamentally sound shape.
Let’s be thankful for what we have and bear down hard to insure that we keep it!
Our economy has been growing very slowly, about 2.2% per year on average, since the end of the Great Recession in June 2009. The Congressional Budget Office predicts that this slow growth will continue indefinitely, although with a brief respite of 2.9% growth in 2015 and 2016. The American Enterprise Institute predicts an even lower, less than 2% growth rate, going forward. Here’s the essence of the overall problem:
Slow growth keeps the unemployment level high and also means minimal raises for employed workers The resulting economic slack leads to
Low Inflation. But low inflation in turn means that the Federal Reserve can try to increase growth with quantitative easing and at the same time maintain
Low Interest Rates to encourage borrowing. But an unfortunate side effect of low interest rates is that Congress can borrow at will and run up huge deficits without having to worry about paying interest on this “free” money. This leads to:
Massive Debt. But what is going to happen when inflation does take off which is bound to happen eventually? Then the Fed will be forced to raise interest rates quickly and we will be stuck with huge interest payments on our accumulated debt. When this happens, interest payments plus ever growing entitlement spending will eat up most, if not all, of the federal budget. This will almost inevitably lead to a severe
Of course, there are alternative scenarios. Congress might become more responsible and cut spending and/or raise taxes. We might luck out, so to speak, with such prolonged slow growth that inflation stays low indefinitely and interest rates never increase. But slow growth is not pain free. There are 20 million unemployed or under-employed Americans who want to work and whose lives are much less satisfying as a result of being idle.
Isn’t it obvious that the best response to this slow growth fiscal trap is to adopt policies to make the economy grow faster? There are lots of things that could be done, many of which I addressed in my last post (https://itdoesnotaddup.com/2015/03/01/will-middle-class-economics-lift-us-out-of-secular-stagnation/) so I won’t repeat them here. But I’ll be coming back to them again and again in the future!