Tuesday, December 20, 2016

Trump's Choice For Budget Manager Is Hard To Understand

The Office for the Management of the Budget is one of the most powerful offices in the administration.  It is also an office that most people don't understand or appreciate.  It is responsible for assuring the federal income is equal to, or close to, federal spending.  Trump has nominated several candidates for high offices who have been critics of the agency to which they have been nominated to lead.  He may have outdone himself with his OMB choice.   An economist who is an expert on the US budget said that Trump's OMB choice is the most ideological and unqualified candidate for that position in decades.  In other words he is much like Trump.

Trump's choice for OMB is ideologically opposed budget deficits.  In fact, he is ideologically opposed to the federal government.  He has been one of the leaders in House who believes that it would not be a problem if the US defaulted on its debt.  He has that in common with Trump who claims that he is skillful at renegotiating payments to creditors. However, he is at odds with Trump on another important matter.  Trump wants to make substantial cuts in federal taxes and he also wants to increase federal spending on infrastructure and defense.  That, of course will lead to huge federal budget deficits.  If Trump decides to negotiate US debt with its creditors, US treasury notes will no longer be regarded as risk free and deserve the low interest rates that it currently pays on US debt. 

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