Trump Strikes Deal With Dems, Supports Debt Ceiling Timebomb

Today, hours after Republicans rejected the Democrat plan for a four month debt ceiling  as “ridiculous,” and “irresponsible,” president Trump struck a deal with Democrats to do just that. Axios called it “the deal of a century,” with a Republican president bucking his own party to accept a deal with the opposition, to his own party’s surprise. The reported deal included an agreement to work together with Dems on immigration reform as it affects DACA applicants, the program designed to provide the children of undocumented immigrants a legal remedy if they meet certain qualifications.

The overall deal combines the debt ceiling, hurricane funding and budget resolution bills to keep the government running beyond this month.

Immediately, Senator Ben Sasse, Republican of Nebraska, declared, “The Pelosi-Schumer-Trump deal is bad.” The concern is that rather than solving the debt ceiling battle for another 18 months, the deal creates another unnecessary crisis at the end of the year. Some saw this as a Democrat play to roll Trump into a deal, knowing he’s desperate for a legislative victory. Even members of his cabinet disagreed with the short-term stop gap, feeling that a long-term measure would give more stability, and avoid another partisan fight during the holidays.

Debt ceiling battles are always contentious, with both parties attempting to use the must-pass legislation to attach wish list items, creating a fierce political battle in the days surrounding the deadline.

As usual, there’s a past tweet of the president’s that reflects an alternate view in the past:

Its unclear what changed his mind.

HELPING MODERATE DEMOCRATS

Following his September Surprise, the president got on a plane with Democrat Senator Heidi Heitkamp to speak in North Dakota. Heitkamp is trailing some potential GOP challengers in the senate next year, and this visit will no doubt serve to bolster her chances of holding onto her seat in a red state.

He went further than a plane ride, and verbalized praise for the vulnerable senator today, while discussing his tax reform efforts. “Sen. Heitkamp. Everyone’s saying, ‘What’s she doing up here?’ But I’ll tell you what — good woman, and I think we’ll have your support, I hope we’ll have your support. Thank you very much, senator.”

Trump won North Dakota by a 40 point margin last November.

Regarding the overall agreement, the president also expressed good feelings about reaching the deal on making DACA law in the next six months, after meeting with Rep. Nancy Pelosi (D-CA) and Sen. Chuck Schumer (D-NY).  “Chuck and Nancy would like to see something happen, and so do I,” Trump said.

Maybe this is what trump acolytes intended when they said they wanted to “shake up Washington” and shut down liberals. Now,  Trump is working actively to bolster moderate and Democrat Senators. That Obamacare repeal is looking more likely than ever. /sarc

At least one Trump supporter was miffed, however:

 

President Trump shown having a light moment with Senator Schumer (D-NY) after deal

Trump Calls for Stimulus to ‘Prime the Pump’

Donald Trump has again embraced the idea of a stimulus spending bill to help jumpstart the economy. In his interview with Time Magazine for the Person of the Year issue, Trump said that it was necessary to “prime the pump” to increase economic growth.

During the campaign, Trump had advocated an economic stimulus plan that was larger than that proposed by Hillary Clinton. Last August, Trump discussed his ideas on stimulus on Fox Business (quoted in Bloomberg), saying, “Well, I would say at least double her [Hillary Clinton’s] numbers, and you’re going to really need more than that. We have bridges that are falling down. I don’t know if you’ve seen the warning charts, but we have many, many bridges that are in danger of falling.” Clinton’s plan had an estimated price tag of $275 billion.

To pay for his plan, Trump said, “We’ll get a fund. We’ll make a phenomenal deal with the low interest rates…. People would put money into the fund. The citizens would put money into the fund,” he said, adding that he’d use “infrastructure bonds from the country, from the United States.”

Trump’s comments in the Time interview, which was conducted on Nov. 28, appear to indicate that he is not moving away from his plans to spend large amounts of money on an infrastructure stimulus. Trump’s full comment on the stimulus during the interview was vague on details.

“Well sometimes you have to prime the pump. So sometimes in order to get the jobs going and the country going, because look, we’re at 1% growth,” Trump said. “I was taking to the head of a major country, because most of them have called me and I’ve talked to all of them. ‘Yes, we are doing not well, not well. Our GDP is only 4.5%.’ I said wow, if our GDP was 4.5% we’d be the happy – I mean our GDP is probably less than 1% if you think about it. And going in the wrong direction.” GDP growth in the third quarter was reported at 3.2 percent.

Other members of the incoming Trump Administration have signaled their support for government intervention in the economy as well. In a post-election interview with the Hollywood Reporter, Steven Bannon, who will be a Senior Advisor to President Trump, said, I’m the guy pushing a trillion-dollar infrastructure plan. With negative interest rates throughout the world, it’s the greatest opportunity to rebuild everything. Shipyards, ironworks, 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.”

Wilbur Ross, the incoming Secretary of Commerce, and Peter Navarro, an economist and advisor to Trump criticized Obama’s stimulus in a policy paper during the campaign. “All we have gotten from tilting at Keynesian windmills,” they wrote, “is a doubling of our national debt from $10 trillion to $20 trillion under Obama-Clinton and the weakest economic recovery since World War II – combined with depleted infrastructure and a shrunken military.” Still, they don’t seem to have a problem with the idea of stimulus spending on infrastructure, just that the Obama spending was poorly targeted.

Steven Mnuchin, who will be President Trump’s Secretary of the Treasury, has said that “taxes, regulatory, trade, [and] infrastructure” will be among the new administration’s top priorities. According to Reuters, Mnuchin said that the Trump team is considering creation of an “infrastructure bank” to fund projects. Mnuchin is also considering issuing Treasury bonds with terms as long as 50 or 100 years, far beyond the 30-year term of current federal debt.

Infrastructure stimulus spending is not typically a strategy supported by conservative Republicans. When President Obama passed the American Recovery and Reinvestment Act of 2009, a $787 billion stimulus package, he did so with no Republican votes.

The support of stimulus spending by the Trump Administration may set up an early confrontation with Republicans in Congress. Many Republican congressmen are deficit hawks who campaigned on cutting federal spending and shrinking the government. Trump’s plans for more government spending will put these Republicans in a crossfire between Trump supporters and debt-conscious voters in their districts.

The conflict will provide a window into the character of the new Republican Party. Will conservative Republicans stand for the traditional Republican platform of less spending and smaller government or will they listen to the siren song of borrowing and spending from the incoming president?

Just a Quick Reminder: Our Debt is Yuuuuuge

With all of the attention given to the presidential elections, it’s easy to forget that the U.S. just ended the 2016 fiscal year. This means it’s time for the annual examination of how much more debt we have!

According to the newest Treasury Department figures (H/T to The Washington Examiner and CNS News), total U.S. debt held by the federal government was $19.573 trillion on October 1. That’s an astronomical amount of debt, quite a bit larger than our current Gross National Product.

As the Examiner and CNS pointed out, and the Treasury numbers confirmed, U.S. debt technically jumped more than $1.4 trillion in the last 12 months. That’s thanks to the Treasury Department temporarily not taking on more debt via use of “extraordinary measures.” Those measures staved off a debt increase from March 2015 through early November — and then the debt jumped hundreds of billions of dollars within a month.

Looking at the Fiscal Year 2016 debt in context to our larger debt picture, the Congressional Budget Office (CBO) projected in August that the annual deficit would be about $540 billion. That’s larger than immediate prior years, but lower than what we’ll see over the next decade. (The deficit and an increase in the national debt are two different things, thanks to how the federal government does its accounting.)

Contrary to liberal tripe about the feds needing more taxes, CBO projects that government revenues via taxes, fees, etc. will rise over the next decade as a percentage of GDP and continue to be above the 50-year average. The real culprit for our growing debt, spending, will go up even more — well beyond the 50-year norm — putting the U.S. at an even worse fiscal position than we’re at now. CBO projects we will add nearly $8.6 trillion to our debt by 2026.

But even this scary scenario, which would likely impact our economy’s growth, doesn’t tally up the worst of it all. The big-picture analysis most often cited by media outlets is the “baseline” projection by CBO — the optimistic one. In the August projections, CBO gave a list of alternative fiscal scenarios that could play out, depending on the decisions politicians make. A quick tally of those scenarios shows that the debt could be as much as $2.755 trillion higher than the positive projections, or $792 billion lower.

Short version: We don’t need more taxation. We need more economic growth and less spending. However, neither party wants to effectively reform the entitlements (Medicaid, Medicare, Social Security, food stamps, and other parts of the budget that don’t get annually approved by Congress) that are the major cause of our budget increases in recent years, and are projected to, for the most part, rise in cost. And effective tax reform is nowhere to be seen.