Summary: The media overflow with hysterical predictions about the next four years, but few well-grounded visions. Here is a brief look at some of what we can expect, and why, and what these events reveal about ourselves.
What makes America great? Great for whom?
Investors have pushed US stock to near-record valuations (record valuations on price to growth basis) on the belief that the Trump administration will enact a massive fiscal stimulus — tax cuts (mostly for the rich) plus infrastructure and military spending — resulting in another round of fantastic fiscal deficits. Just as hard-rock conservatives Reagan and Bush Jr. did.
Skeptics’ rebuttal points to the eight years of Republican criticism of Obama’s deficits — deficits which prevented the 2008 crash from starting a depression and supported the economy during its long, slow recovery. How could the GOP justify massive deficits now, during an expansion? Conservative’s beliefs and history help us better predict how the conservative majority in Congress will vote. Start with their beliefs about deficits, easily stated.
- Vast military spending and tax cuts are good; the resulting deficits are bad.
- Tax cuts are good in both booms and busts, no matter how large the resulting deficits.
- Deficits don’t matter for Republican Administrations, only for Democratic Administrations.
To see how this works we turn to one of America’s most influential presidents, whose administration radically changed America and set the patterns we still live by: George Bush Jr. The pivotal moment when fiscal policy change is described in this excerpt from The Price of Loyalty: George W. Bush, the White House, and the Education of Paul O’Neill by Ron Suskind (2004, p291). Cheney is the key mover, as in most things during the Bush Jr. years.