Federal Debt Could Spike Trump’s Big Economic Promises
The Associated Press: Donald Trump has big plans for the economy — and a big debt problem that will be a hurdle to delivering on them.
Trump has bold ideas on tax cuts, tariffs and other programs, but high interest rates and the price of repaying the federal government’s existing debt could limit what he’s able to do.
Not only is the federal debt at roughly $36 trillion, but the spike in inflation after the coronavirus pandemic has pushed up the government’s borrowing costs such that debt service next year will easily exceed spending on national security.
The higher cost of servicing the debt gives Trump less room to maneuver with the federal budget as he seeks income tax cuts. It’s also a political challenge because higher interest rates have made it costlier for many Americans to buy a home or new automobile. And the issue of high costs helped Trump reclaim the presidency in November’s election.
“It’s clear the current amount of debt is putting upward pressure on interest rates, including mortgage rates for instance,” said Shai Akabas, executive director of the economic policy program at the Bipartisan Policy Center. “The cost of housing and groceries is going to be increasingly felt by households in a way that are going to adversely affect our economic prospects in the future.”
Trump’s Tariffs Target Top Three Sources of U.S. Imports
This is not incompetence. It’s an attack. Creating economic chaos is fundamental to the authoritarian playbook.
After Running against High Prices, Trump Warns Americans That He’ll Raise Prices Across the Board The chaos is the point
In Shock Doctrine, her seminal work on the rise of authoritarnism in the contemporary world, Naomi Klein shows how fascists undermine democracies in order to replace them with authoritarian states by creating and exploiting economic chaos. In the disruptions that ensue, they seize power.
In advance of his inauguration next month, Trump is saying plainly that he is very intentionally bringing economic chaos on day one. As Maya Angelou said, “When someone shows you who they are, believe them the first time. People know themselves much better than you do.”
Salon.com: Donald Trump, who won in part due to inflation that peaked two years ago, campaigned on a policy of making everything from vegetables to televisions more expensive, suggesting a plurality of voters either did not understand tariffs — and the rippling economic impact of raising taxes on imported goods — or simply did not believe the Republican candidate would follow through.
In a Monday evening post on Truth Social, the president-elect reaffirmed that yeah, he’s serious.
Trumponomics Watch: Tax Cuts for the Rich Covered by Cuts to Medicaid, Food Stamps
“President-elect Donald Trump’s economic advisers and congressional Republicans have begun preliminary discussions about making significant changes to Medicaid, food stamps and other federal safety net programs to offset the enormous cost of extending Trump’s 2017 tax cuts next year,” the Washington Post reports.
“Among the options under discussion by GOP lawmakers and aides are new work requirements and spending caps for the programs.”
“However, concern is high among some Republicans about the political downsides of such cuts, which would affect programs that provide support for at least 70 million low-income Americans, and some people familiar with the talks stressed that discussions are preliminary.”
