Today, once more the United States government will be hitting another in a series of debt-ceilings. The end result lies in a potential government shutdown.
With an ever-increasing annual budget, it appears Washington DC wants to deflect from the possibility of a government shutdown. While sanctioning Syria and blaming Russia can distract from the care-free attitude of the swamp, it won’t solve the crisis.
Democratically-elected politicians think in the mentality of high-time preference, using all of their available money and resources in the moment. The end result creates waste and future headaches to say the least.
All while getting re-elected over and over again to make the same mistakes.
As with his predecessor, President Trump will more than likely raise the debt ceiling once more, without addressing the main and most pressing issue.
The United States is in debt beyond its limit and has been the biggest debtor nation for several decades.
The high-time preference has created a situation beyond all compare. Trump’s proposals for infrastructure sound excellent, yet lowering taxes, while future budget deficits appear, will not work. Heavier taxation for said projects as well will also only add to the existing debt.
During his campaign, President Trump supported a restoration of tariffs and made overtures to the long-forgotten American School of economics.
A restoration of tariffs in international trade, which would make up for lower tax rates, would raise potential revenue for said projects. Similarly tariff revenue could be used towards the current deficit. All while avoiding increasing tax rates.
Of course, a reduction in spending for existing programs, along with phasing out or consolidating existing ones would also work. Repealing Anti-Trust laws, more a hindrance, may also assist American businesses in their future growth.
The idea of using tariffs in international trade often invokes scorn from major economists. Much in the same regard as gold, tariffs are seen as obsolete and “barbaric.” Some even go further and make weak comparisons to isolationism or autarky.
Even though all major world industrial powers used tariffs to help their economies grow, along side an infant United States. One of the greatest critics of tariffs, Thomas Jefferson reluctantly imposed tariffs to help the developing American economy during his presidency from British imports.
As we race towards a chaotic showdown on Capital Hill, sound economic thought is often scattered amidst the wind. While an “anything goes” attitude prevails.