Quebec debacle shows Trump will sink the economy, too
That was quite a show Donald Trump put on in Canada. Insulting our closest friends and trading partners while sucking up to Russian leader Vladimir Putin — well, that got people’s attention. As Guy Verhofstadt, former prime minister of Belgium, tweeted, “Just tell us what Vladimir has on you. Maybe we can help.”
On the economic front, Trump’s antics at the G-7 summit are sure to provoke a response not favorable to the United States. There are unfair tariffs on all sides, but the public should know at least this about the president’s confusion on trade deficits: The U.S. doesn’t have one with Canada. It has a trade surplus. As for steel, Trump’s manic obsession, the U.S. sends more steel to Canada than Canada sends here.
Brewing behind this turmoil are economic policies sure to wreck the president’s pride and joy, the U.S. economy. Torpedoing Western trade alliances will sink it alongside other economies. Stocks take a dive every time there is credible evidence of a trade war in the offing. It’s looking more and more as if one will actually happen.
Then there are Trump’s reckless tax cuts. Price tag: an astounding $1.5 trillion over 10 years. They helped deliver a druggy economic high. Deficit pushing does that — until it turns on you.
Former Federal Reserve Chairman Ben Bernanke recently put the consequences in colorful terms. “In 2020,” he said, “Wile E. Coyote is going to go off the cliff.”
The Congressional Budget Office projects that the federal deficit will pass $1 trillion in fiscal 2020 — and that’s assuming the economy grows far faster than the Fed and private economists forecast.
The deficit as a percentage of the economy was 3.5 percent in fiscal 2017. The CBO expects it to keep rising until it hits 5 percent after fiscal 2023. But that’s the optimistic view.
The CBO’s “alternative fiscal scenario” sees a deficit of over 6 percent of the gross domestic product by fiscal 2022 and debt exceeding 100 percent(!) of GDP by fiscal 2027. This assumes there is no recession. After nearly nine years of economic expansion, one will visit shortly.
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