Posted on 04/02/2016 4:22:32 PM PDT by Hojczyk
Donald Trump said in an interview that economic conditions are so perilous that the country is headed for a “very massive recession” and that “it’s a terrible time right now” to invest in the stock market, embracing a distinctly gloomy view of the economy that counters mainstream economic forecasts.
The New York billionaire dismissed concern that his comments — which are exceedingly unusual, if not unprecedented, for a major party front-runner — could potentially affect financial markets.
Over the course of the discussion, the candidate made clear that he would govern in the same nontraditional way that he has campaigned, tossing aside decades of American policy and custom in favor of a new, Trumpian approach to the world.
In his first 100 days, Trump said he would cut taxes, “renegotiate trade deals and renegotiate military deals,” including altering the U.S. role in the North Atlantic Treaty Organization.
He insisted that he would be able to get rid of the nation’s more than $19 trillion national debt “over a period of eight years.”
Most economists would consider this impossible because it could require taking more than $2 trillion a year out of the annual $4 trillion budget to pay off holders of the debt.
“I know the Wall Street people probably better than anybody knows them,” said Trump, who has misfired on such predictions in the past. “I don’t need them.”
(Excerpt) Read more at washingtonpost.com ...
If you cut that much, you’d still be running deficits, because about two trillion dollars is the current deficit.
And what if the Fed buys up all that domestically held T-Bill debt ? The government will still owe it, but at 0% interest and much smaller principal payments it becomes just a meaningless number on the Fed’s books. The Fed creates the money out of nowhere and the principal payment is a huge income stream as it is paid down. The domestic investors will be made whole and now have a $13T wad of cash to invest in stocks, corporate bonds, or whatever. Shouldn’t all that investment — coupled with the repatriated $2T corporate profits — cause a huge increase in GDP and therefor a big increase in tax revenues ? Especially when imports have become more expensive due to tariffs and American manufacturing is more attractive ?
BTW, $2T in cuts is possible without touching the military or SS/M or veteran’s benefits. EVERYTHING else would need to be eliminated, and that is not reasonable, but cutting $1T at first and then a little more each year while the tax revenues increase from a growing economy could generate a $2T/yr surplus or more over eight years.
Why would it be “very hard on everyone” ?
It would be done by reducing spending on welfare, government workers, etc. but would not be cutting SS/M or military. It would also raise tax revenue from tariffs on imports, and collect more taxes from a growing economy even though tax RATES had been cut on working class and businesses.
So who were you including in “everyone” ?
How large will our economy be if we have eight years of GDP growth like China had from 1989 - 2014 ? An average of 10% per year would put US GDP at $38T.
If the ratio of tax revenues to GDP stays roughly the same, while the Debt is no longer fed by a Deficit and spending is actually cut by eliminating useless bureaucracies, we could see tax revenues of $7.5T and spending of $3T. It doesn’t take long to pay off a $19T Debt with a $4.5T surplus each year. Even 5% GDP growth would put the US GDP at $26T and tax revenues at $5.5T with a $2.5T surplus to pay down debt.
Now, you might say we can’t experience GDP growth like China did because we are already a “developed” economy. Except rebuilding our manufacturing sector from its current state makes us an awful lot like China was then.
No, the annual deficits are around $500B ($468B in 2015), not $2T.
Worldwide chaos?
Please, go ahead, talk down my 401(k), you dumbass.
DANG!
As to a massive recession, if we’re going to eliminate a couple trillion from the budget, heck, eliminate social security, medicare and medicaid. Medicaid participants don’t deserve it and those medicare and social security people got us in this mess. Might have to cut veterans benefits too.
He’s already said “entitlements” are off the table.
He’s been throwing alot of odd stuff out there, lately. He’s different today than the guy who first talked about the illegal immigration issue and Islamic terrorism
According to Trump's tax plan, any family with an income of $50,000 or less pays no income taxes. Assuming that the overwhelming majority of the new jobs will pay less than $50K then where will all this new tax revenue come from?
Then your debt should not have gone up $10 trillion since 2008.
http://useconomy.about.com/od/usdebtanddeficit/p/US-Debt-by-President.htm
“According to Trump’s tax plan, any family with an income of $50,000 or less pays no income taxes. Assuming that the overwhelming majority of the new jobs will pay less than $50K then where will all this new tax revenue come from?”
Macro economics. those people that make less than 50k still must buy stuff, but instead of paying tax, it frees up that money that would otherwise go to government tax,and the velocity of money increases and those that make more will be taxed more but that’s ok as there is way more cash flowing and it all gets taxed.
If I make say 10 million per year I’ve got no problem if they tax 5 million. Would you? It used to be the very rich were taxed at a 90% rate.
Because the Federal Government can spend that money so much more wisely than a rich investor or entrepreneur. Or, in your example, you.
Tossing out pie in the sky numbers like this then reading on this thread all the people who buy into it out of hand without even thinking if; 1 - it's possible (answer no) and 2 - is it even doable (answer no) is as concerning as it is amazing.
He's the front runner yet he talks like Ron Paul and acts like Howard Dean.
If he's going to start spit balling about debt, abortion and making allies pay for protection then we're all gonna pay in November.
Because the Federal Government can spend that money so much more wisely than a rich investor or entrepreneur. Or, in your example, you.
They haven’t yet. Most of the money goes for social services and the industrial military complex.
My point.
That is difference between CURRENT YEAR deficit and what the average has been under Obama. He has had five years where the deficit has been well over a trillion and two years where it was almost two trillion.
The deficit for the most recent year was under $500B (your article says only $326B while the one I found showed $468B) which means that unless we are counting on another deep recession that drastically reduces tax revenues while also pushing up spending for “stimulus” and welfare, we should not need to plan on $2T deficits.
I will be happy with Trump eliminating the deficit. He can’t eliminate the national debt in 8 years. LOL. Congress has to approve all these things, too, which they never will. Welcome to the real world.
In other words, don’t make ridiculous promises. And don’t be gullible.
That is the lesson from the Carter years. He had an enormous ego, too and he wanted things done his way or no way. His own party rebelled against him and he got nothing done...they would not pass anything. As a number of legislators stated publicly, "I was here before Carter and I will be here after Carter", and that is how it turned out for the one termer.
The legislators will owe nothing to Trump and the way Trump bullies and intimidates will repel Congress and everyone will try to undermine him. Trump had better read some books on how Reagan got Congress' cooperation.
He doesn’t actually need Congress to do anything new in many cases.
The work requirements for Welfare programs is already the law, but Obama waived it with an EO in 2009. Reverse the EO and direct your hand-picked managers to follow the law, cracking down on fraud, etc. All of that is within existing laws with nothing needed from Congress.
I doubt Congress has any say in how the Executive branch chooses to run the Department of Education, EPA, Energy, etc. as long as existing laws are followed — those that are not subject to “prosecutorial discretion”. Trump’s new heads for all those agencies could and should review all existing regulation enacted by those agencies and throw out any that are not specifically called for by existing legislation or are in any way in conflict with the literal or spiritual meaning of the enacted legislation. No Department is REQUIRED to spend the money budgeted for it and if it has been gutted and spent next to nothing, what is Congress going to do ?
There is a huge body of regulations that are really in conflict with the legislation as passed by Congress. All of the public hearing before regulatory agency boards amount to nothing — they are not obligated to pay attention to citizens’ concerns. Past Executive branches via their cronies created that body of regulations, and Trump’s hand-picked cronies can dismantle it. Congress may complain, court challenges may ensue, but that would take united opposition from Congress and by the time the courts make a decision the dismantling will be a done deal.
For seven years Obama has given us a lesson on just how far the power of the Executive can stretch while Congress and Courts are ignored. Trump should take advantage of these existing weaknesses in the so-called system of checks and balances. Then, just before he leaves office, he should ask Congress to pass a bill that fixes those weaknesses and restores proper checks on Executive power.
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