The folks at the Centre for Policy Studies in the U.K. invited me to write for their online publication CapX about the U.S. presidential election. It’s always an honor to write for a publication hosted by the think tank Margaret Thatcher co-founded.
I made a point I’ve made before here: Neither Harris nor Trump is ready for the fiscal storm that we know is coming next year, let alone any unforeseeable fiscal challenges that may arise over the next four years.
This ‘mother of all fiscal cliffs’ could blow a $5trn hole in the US economy just to keep current law in place. Making matters worse for the US fiscal situation, the first year of a new administration is generally a time when presidents want to spend more to reward their various voting blocs for electing them. So not only is no candidate promising fiscal rectitude, but the political winds will be at the president’s back to spend more on new initiatives next year.
And that rather grim picture is just for the stuff that we know is going to happen. Any number of other problems could present themselves in the course of an entire year of world events which could demand more tough decisions and possible need for government spending. The potential reemergence of inflation should not be discounted, as neither candidate seems willing to acknowledge economic trade-offs in government budgeting, and the electorate demonstrates little patience for any talk of actual spending cuts that would significantly alter the US fiscal trajectory.
You can read the whole thing here.