December 9, 2024
President-elect Donald Trump and the Republicans will soon own the same economic problems they talked about on the campaign trail. After all, it’s not like our big challenges will magically disappear overnight.
For instance, U.S. debt is growing twice as fast as our strong gross domestic product. And, like it or not, the debt problem is well beyond an easy fix at this point.
See, every president for the past 75 years has talked about fixing the debt. But apart from President Clinton’s success in actually doing it, the administrations in charge didn’t seriously try.
So, it keeps getting worse.
And let’s remember that inflation is not dead. The bond market has been volatile, but the 10-year Treasury yield is up 60 basis points since September.
That’s certainly not a vote of confidence from the market. Nor is it what the Federal Reserve wants to see.
Regardless, the Fed cut short-term interest rates and plans on more cuts. While lower rates might help a bit, they bring inflationary consequences. Never forget there are no free lunches!
So-called mandatory spending, like Social Security and Medicare, increases every year. Inflation contributes to that, as does a population that’s getting older.
It comes down to this: the presidency isn’t a prize, but a responsibility. Now that the second Trump administration has secured its prize, it now must figure out what to do with it.