Thursday, February 8, 2018
Republicans Have Learned To Love Budget Deficits
The Republican Party has a fickle relationship with federal budget deficits. Richard Nixon ran big budget deficits to stimulate the economy during his regime. He even declared his love affair by stating that "We are all Keynesian's now". He wanted a vigorous economy while he was in office and he believed what Keynes had preached during the Great Depression. Running budget deficits by cutting taxes and increasing government spending will stimulate economic growth. The Trump administration has cut taxes and it has increased government spending for the same reason that Nixon adopted Keynesian economics. A robust economy gives the president something to brag about. However, Trump's Keynesian policies, in a period of full employment, has a well known side effect. It increases the risk of inflation. The Fed raised interest rates to reduce the risk of inflation and the stock market went into a tailspin. The boom in the stock market had been driven by ultra low interest rates. This article also reminds us about the Republican Party's hatred of Keynesian policies during the Obama administration. They resisted every effort by the president to stimulate an economy that was recovering from recession by using Keynesian economic policies. They declared that the world would come to end if the federal budget deficit was not reduced during Obama's administration. They like recessions and they hate federal budget deficits whenever a Democrat is in the White House. They welcome the $1.5 trillion increase in federal debt produced by Trump's tax cuts along with a huge increase in defense spending. That will stimulate economic growth and it will be used by Paul Ryan and Tea Partiers to justify cuts in social welfare programs. The Republican Party has deteriorated into a political party based on hypocrisy.