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With concerns about President Joe Biden’s cognitive decline abound, the Democrats and their mouthpieces are finding multiple ways to hedge their bets. This means not only evaluating whether to replace Biden (and with whom) but also what to do in case of a Trump victory.
In the case of the latter, they are already setting up former President Donald Trump to take the blame for Biden’s reckless economic policies.
A slew of high-profile economists recently came out with a letter saying that should Trump win in November, there is likely to be an “inflationary bomb” that follows, as they put it. This group includes some of the same economists that said in 2021 that Biden’s Build Back Better plan (which became the Inflation Reduction Act) would not be inflationary. One is also the husband of Treasury Secretary Janet Yellen, who herself said that inflation wasn’t going to be a problem and then that it would be “transitory.”
Now, these Democratic Party mouthpieces are putting out a warning about a future burst of inflation if Trump becomes president again. Why? Because they know economic peril is ahead, and they want to be able to say, “I told you so” and blame it on Trump.
Sixteen prominent economists are already trying to blame former President Donald Trump for any economic downturn if he wins. (Eric Thayer for The Washington Post via Getty Images)
The reality is that there has been a lot of trickery to hold down inflation and window-dress growth from the current administration. As they run out of tricks in their bag, they want to hand it over to Trump and leave him holding the bag economically, if you will.
While a stunt like releasing oil from our strategic reserve (and leaving our Strategic Petroleum Reserve near the lowest point in decades) was used to artificially suppress energy prices (and, in turn, those of other products and services), there are only so many times that trick can be done.
Moreover, the Congressional Budget Office recently raised their expectations for the current fiscal year deficit to $1.9 trillion. With this massive deficit, which as a percent of GDP is about double the historic average, there have been increasing concerns about the debt and its impact on the U.S.’s finances.
A recent Wall Street Journal piece titled, “Will Debt Sink the American Empire” points out the CBO projection that, “the weight of the debt will reduce income growth by 12% over the next three decades, as debt payments crowd out other investments.”
Then there is the question of financing the massive U.S. debt load, which includes not only ongoing deficits, but any of the short-duration debt that has been issued over the past several years that needs to be refinanced.
The likelihood is that given the massive supply of debt vs. interested borrowers at prices that would keep the Treasury market functional, the Fed is going to have to find a way to, directly or indirectly via one of their cleverly named programs, monetize the debt. Doing so will likely create ongoing, sticky and even possibly increased inflation.
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Other current Biden administration initiatives, including the “green” energy push, are also an economic drag.
There are other warning signs flashing red. Given that the current year’s massive deficit only spurred GDP growth to 1.4% in Q1 of this year, it’s clear that the underlying economic current is slowing and that even massive government window-dressing doesn’t provide enough of a boost to hide that reality.
Add on top of this a slew of consumers who are tapping savings and debt to keep up with their cost of living, and there are very real economic woes ahead, a good deal of which is based on policy that happened under the Biden administration.
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With the U.S.’s fiscal foundation on the ropes, it also limits what Trump would be able to do as president to fix the situation. He will have more limited options as he navigates a precarious fiscal scenario.
Nevertheless, should Trump win, the Democrats will do everything they can to lay the blame on him. That’s why they are setting up that narrative today. If Biden (or whomever the Democrat nominee ends up being) wins, they will continue to gaslight Americans on the economic story. But if Trump wins, they will say, “I told you so,” because they know what’s ahead, and it’s not pretty.
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