Politicians like to spend other people’s money, and there isn’t political benefit in being responsible.  This is starting to bite us in the ass. 

President Trump is a real estate developer and is comfortable working with debt.  Cutting the deficit is not something he worries about.

Government debt is a scam.  Politicians buy votes today using money borrowed from people who aren’t even born yet.  Debt can be necessary in extraordinary situations.  Politicians and media insist that we are always in an extraordinary situation.

For two decades up to 2009, government debt had run at about 60% of the GDP.  That period covers the dot-com bubble, 9/11 attack, Gulf War, and war in Iraq and Afghanistan. 

The housing bubble burst in 2008 just before Obama took office.  By the end of Obama’s first term, debt had ratcheted up to 100% of GDP.  That became the new normal, and remained until Covid.

In 2020, at the end of President Trump’s first term, debt went up to 120% of GDP to deal with the damage done by the Covid lock-down .  That has become the new normal.

Dishonest economists will argue, by analogy, that debt is not a problem.  If a person earns $100k per year, and owes $120k on their home mortgage, that is certainly reasonable.  There are two problems.

The homeowner is only paying the interest, with nothing going to principal. When it’s time to sell, the homeowner hopes the house has appreciated enough to pay off the principal and cover transaction costs.  

The US government is not paying off the Louisiana Purchase or some other acquisition.  The budget goes toward operating expenses. 

A better analogy would be a person earning $100k, having $120k in consumer debt and paying the minimum every month.  That person is in financial jeopardy.  Any unplanned financial setback could be disastrous.

President Trump has an issue with government corruption and illegal immigration.  If that results in less spending, it should be directed toward the deficit until the US gets back to the levels we had just twenty years ago.