Friday, January 20, 2017

President Trump and Fiscal Policy: Austerity Big Time?

I can already see some of the cuts ;)

The Hill suggests that we should expect a huge decrease in government spending. According to them:
Overall, the blueprint being used by Trump’s team would reduce federal spending by $10.5 trillion over 10 years. The proposed cuts hew closely to a blueprint published last year by the conservative Heritage Foundation, a think tank that has helped staff the Trump transition.
In all fairness, I am not, or at least was not until now, expecting big spending cuts and austerity. I expected the cuts in social programs, like say health, to be more than compensated by military and infrastructure spending. The recent historical record is that all Republicans since Gerald Ford have increased spending and the fiscal deficit. Maybe the Hill is right, and President Donald will throw the economy into a recession, following the rightwing/lunatic fringe's ideological hate of Big Government. That would make Trumponomics very different than Reaganomics. To be seen soon. Btw, this increases the degree of uncertainty about his presidency.

No comments:

Post a Comment

Inequality and Stagnation by Policy Design

By Thomas Palley (guest blogger) This paper argues the mainstream economics profession is threatened by theories of the financial crisis a...