Trump isn’t Playing Multidimensional Chess (in Case you were Wondering)
President Trump in an interview with Sean Hannity this week:
“The country — we took it over and owed over $20 trillion,” Trump said. “As you know, the last eight years, they borrowed more than it did in the whole history of our country. So they borrowed more than $10 trillion, right? And yet, we picked up $5.2 trillion just in the stock market. … So you could say, in one sense, we’re really increasing values. And maybe in a sense we’re reducing debt. But we’re very honored by it. And we’re very, very happy.”
As many, many people noted on Twitter this week: that’s not how this works.
His policy acumen is basically at the level of someone whose sum total of knowledge is cable news coupled with an inflated confidence in one’s own opinion. This is not a person playing some complex political game. This is a person who does not understand the basics of policy and government (yes, I know, this is not news). And this is the person making major decisions about health care, the Iran deal, disaster relief, and North Korea.
BTW, I have seen some attempts to make sense of this. Josh Barro:
If the economy grows, the debt can grow too, and that’s fine.
[…]
I assume he thinks it’s like a real-estate investment: If you have a $50 million mortgage on a building, and its value rises from $80 million to $100 million, you have deleveraged without paying your debt down at all.
This is a stretch, to be kind. Plus, I would note: increases in the market capitalization of the Dow Jones Industrial Average does not results in equal growth in GDP. See the chart and the analysis of the six periods that the author identifies here–often the DJIA and GDP are not correlated at all, which has been true of late: “During the final period, from 2009 through 2015, stocks averaged 12.8% despite a weak GDP of only 2.7%.”
Another problem with Trump’s thinking here is that if he gets the tax cuts he wants, the debt will increase.
It’s as if Trump believes that all assets belong to the government. I wonder what conservatives who think that is a clever argument against liberal policies will say in response.
No, actually, I already know.
Yes, if only we were still being led by the delicate geniuses who ran up that massive federal debt. I’m sure their awesome brilliance was just about to solve the problem once and for all if that idiot Trump hadn’t gotten in the way.
Mike
No, Mr. Trump isn’t playing “multi-dimensional chess,” or even chess. He’s playing good old fashioned checkers and he’s getting ready to run the board. Out of the way Leftist losers. American is going to be made great again with you or without you.
As if the massive tax cuts wanted by the ninny you so slavishly fluff for won’t balloon the deficit even more? Don’t you ever get tired of embarrassing yourself around here…
Hush now, MBunge and MParks: the adults are talking, and it’s time for all good little Trumptards to be quiet.
Trump is only possible because over the past 40 years, the Republican Party has become the Party of Lies. We have reached the point that when Republicans spout the most absurd nonsense they are not even challenged. The media and the public expect that Republicans will lie about everything, all the time.
@MBunge: Argle bargle.
@MarkedMan:
While it’s true the GOP has become the Party of Lies, Trump is also “only possible” because Dems have, over the last 30 years, been more devoted to Bill and Hillary Clinton than they have to the needs of their voters.
@MikeyParks:
While I do agree he’s getting ready to run the board, I think it’s only because he hasn’t ran into the right opponent yet.
Trump’s the kind of dude who will lead a chant of “Lock her up” at his political rallies, then fill a bath tub with tears if a reporter writes a cross word about him. That is to say, he’s vulnerable.
Cable news is smarter than this.
He watches a lot of TV, but he doesn’t understand TV. Sad.
@Gustopher:
Some of it is, but not all of it. The kind of stuff I hear out of Trump is basically the same caliber as the typical infotainment “news”/commentary programming that dominates FNC–especially things like “Fox and Friends” and “Hannity.”
MikeyParks?
MBunge?
J-E-N-O-S?
Guarneri?
It’s less multi-dimensional chess than hungry-hungry hippos followed by stepping on rakes.
“Another problem with Trump’s thinking here is that if he gets the tax cuts he wants, the debt will increase.”
But magic sparkle supplysiderism says that the deficit will go down if taxes go down! Everybody drugged by Art Laffer knows that!!
Maybe he’s playing belligerent Rock Paper Scissors. “These are really sharp scissors! They cut through rock! And other scissors!”
It explains why he can never lose, but everyone around him can fail.
I don’t think it’s ignorance. I think it’s good old fashioned fleecing the rubes. They will believe anything he says. He will bring back coal! He will punish evildoers! He will build infrastructure! He will bring back jobs from Mexico and China! He will make everyone love Jesus! He will run the board!
@MBunge:
Let’s try to put this in a way that you may understand.
You have a car.
You bought the car because you NEED it to go to work. The car has value because it allows you to go to the place where you exchange your labor for money.
You lend the car to your immature offspring, and not surprisingly the kid gets into a car wreck.
The challenge is, you still need your car to get to work.
So, you spend money (via your credit card) to fix the car so that you can move things forward in your life. even rent a car (for a short term) while your car is being repaired (again, incurring more debt via credit card). And you realize that over time you will pay that repair bill back… and the repair costs were FAR lower than buying a new car. So, problem, but not insurmountable.
So: Who is at fault here? The person that crashes the car, or the person that choose to fix it?
.
The challenge we face is that it seems like every time we seem to trust a GOP president to “drive the car” lately, they tend to crash it. Then the next guy gets blamed for fixing the car.
So, if you are concerned about deficit spending and what it takes to “fix” the previous f’ups… maybe you should be VERY concerned that the current immature kid is doing about 90 straight toward a brick wall.
@MBunge: Well, I feel like going just a little bit under the surface so let me sort of unpack your ridiculous comment. “Delicate geniuses” you say “ran up that massive federal debt…” Which created some unnamed “problem” that somehow involves Mr Trump getting “in the way” of a “solution” from these unnamed geniuses (which you imply you do not think would work).
The federal deficit actually was ‘solved’ once upon a time. Actually — twice upon a time. By Pres Lyndon Johnson and Pres Bill Clinton both of whom advanced balanced budgets. Clinton did it twice.
The federal debt was created by Pres GWBush and the Republican congresses with whom he worked. And the economic disaster he presided over, can’t forget that.
The people who managed our recovery from the Great Recession such as Ben Bernanke had done PhD level work on the Great Depression. So I’d say they come a lot closer to genius level than thee, dear friend. And for those who complain at the slower pace of this recovery than the upward pace following the Great Depression: 1/ FDR didn’t have Mitch McConnell and an R-party congress. 2/ There was a freaking WAR! Kind of stimulating to the economy, yathink?
And finally, for those people who elected Mr Trump in Wisconsin, Pennsylvania and Michigan, what problem has the federal debt meant to them? Actually, it has financed VA and FHA housing loans and interstate highways and universities and such.
Thanks, I feel much better now. Are you going to clean up all that straw and bullsh!t you brought in?
The reality is that debt is older than the republic–we financed the war for independence on debt. Part of the major political deal that Hamilton struck with Madison and Jefferson that led to DC being the capital (and Aaron Burr to sing about being in the Room Where it Happens) was about debt.
Debt has been a constant. That isn’t tp say that there aren’t consequence for debt, but to act like this was some recent phenomenon that helped bring Trump to office is sheer ignorance.
Indeed: most of the concern about debt and deficits is rhetorical, as evidence by the fact that the GOP is currently unconcerned with it (see their tax proposal).
Proper understanding of the debt is as a record of all dollars spent by the federal government and not taxed back. So it’s a net issuance of $21 trillion in financial wealth to the non-government.
There are essentially three arguments against it. One is that we, as rational individuals, look at the national debt, calculate our lifetime earnings and subtract whatever our per capita share of the burden is, decreasing our personal spending. Yes, there are economists who actually believe this happens.
Two and three are really part of the same thing: inflation and interest rates will skyrocket in response to ongoing deficits. All the evidence indicates this is wrong. Recall that rates and hyperinflation were the doomsday expected to result from countercyclical deficit spending during the Obama Administration. And yet rates and inflation fell even when those deficits hit 10% of GDP.
Not to mention that national debt in 1980 was $800 billion and the short-term rate (which indirectly moves longer-term rates) was 20%, while national debt now is $21 trillion and the short-term rate is 1.25%. Japan has over the last 20 years tried every trick in the book to inflate and their interest rate is negative.
And FYI, the stock market has been going up because headline government spending continues to go up year-over-year.
@JohnMcC: Also, the Depression, and most recessions have been interest rate/demand deficiency recessions. Fixable quickly by cutting the interest rates that caused them. This was a balance sheet recession, trillions of dollars of paper value in homes, commercial buildings, stocks, CDOs and other financial instruments wiped off the books. Balance sheet recessions take longer to recover from as the Fed can’t resolve it by cutting rates.
@gVOR08: Check that. But grist to be ground in another season. (And thanks for apparently reading my rant.)
@MikeyParks: Blind faith is such a touching thing to witness. Where’s your guide dog, fella?
@JohnMcC:
Yes – it does seem odd that the GOP claims to be very concerned about the debt, but keeps doing things that increase it (discretionary wars, tax cuts for the top earners, etc). And don’t even get me started on the Laffer Curve – that’s something stupid enough that it could have come from John Rawls. Sure, it technically exists, but treating it like a bell curve centered on some magically low number is insane.
None of that will save us when interest on the national debt eats the budget though…
Trump can’t even admit that the Renoir he has is fake.