Are Conservatives Sacrificing Long-Term Survival for Short-Term Gains?

We ended a raucous decade with a bang, and now, according to one White House official, we start a new decade with a roar. With a booming stock market, robust employment, and consumers ready to gorge, 2020 might be one of the best years in the nation’s economic history. It also could be one of the final years of bathing in decadence and consuming champagne from the heavens. This year, eat, drink, and be merry for tomorrow we perish from too much debt fueled by the creature of Jekyll Island.

For Pete’s Sake

Peter Navarro, top White House economist, recently painted a rosy portrait of the U.S. economy in 2020. Are you ready for this? Three percent gross domestic product growth, the Dow Jones Industrial Average topping 32,000, and historic job and wage growth. And all this will be achieved through tax cuts, deregulation, cheap energy, and fair trade in one of the “greatest years in U.S. history economically.” Bring on the second edition of the Roaring ‘20s!

Navarro made this prognostication on 970 AM-NY during The Cats Roundtable, telling host John Catsimatidis:

"This economy under President Donald J. Trump is setting up beautifully for an economic boom and a bull market.

“Consumers are the anchor for the boom that's going to occur in 2020.

“Everybody who wants a job can get a job in the Trump economy. Everybody who wants to look for a better job has more opportunity to do so. And that gives families sitting around the kitchen table a lot of comfort.”

Unfortunately, nobody from the White House even whispers about the mounting national debt and exploding budget deficit. Ditto for the Democratic presidential candidates. Everyone seems oblivious to the fiscal doomsday that looms over America and the rest of the world. For conservatives, it is ostensibly about enjoying short-term gains and electoral victories at the expense of long-term prosperity. For the left, the only objective is to oust President Donald Trump from the Oval Office by any means necessary, even by bankrupting the country with multitrillion-dollar fairy tales. How dare you!

While tax cuts and deregulation today create euphoric feelings on stock exchanges and in the marketplace, they do not grapple with the real and serious problems facing America tomorrow.

Grab Your Abacus

The federal deficit fell just short of the $1 trillion mark this past fiscal year. However, it looks like it is on track to top $1 trillion in FY 2020 as it widened 12% to $343 billion in the first two months. Politicians will add it to the $23 trillion national debt without a care in the world and continue to turn a blind eye to America’s deteriorating financial picture. Is anyone even paying lip service to the $200 trillion in unfunded liabilities and expenditures? Well, that would mean tackling the politically unfeasible entitlement system and defense budget.

President Trump and the Republicans have come up with a myriad of excuses for busting the budget. The main reason is the military, noting that the previous administration failed to take care of the armed forces, even though, under former President Barack Obama, the United States still spent more than China, Russia, Saudi Arabia, France, the United Kingdom, India, and Germany combined. Despite the GOP promising to do better after the next election by being fiscally conservative again, it looks like the president and Senate Majority Leader Mitch McConnell (R-KY) have taken a raincheck on balancing the budget and eliminating the debt in eight years.

What’s more, after somewhat lambasting the Federal Reserve System, the right has championed the Eccles Building’s monetary easing. Many conservatives who argue that the Fed raised rates and reduced the balance sheet too fast often fail to explain when would have been a more appropriate time. As a result of another round of quantitative easing, the Fed enables the abuse of the public purse by both parties.

Debt is not confined only within the borders of the Land of the Free. The debt behemoth has pretty much swallowed the entire planet. According to the Institute of International Finance, global debt has exceeded $255 trillion and will reach 330% of global GDP. Whether it is by the European Central Bank or the Bank of Japan, rates are suppressed artificially, allowing the red ink tsunami to engulf entire nations in the name of economic growth.

It looks like historically low rates are here to stay for the next little while, feeding the boom phase of the business cycle. Once inflation rears its ugly head, the Fed and its counterparts will have no other alternative but to retreat from ZIRP and NIRP, which means bad news for politicians and consumers who put everything on the credit card.

In the end, unless something drastically changes, policymakers will need to choose between death by inflation or death by debt.

Tough Medicine to Swallow

Sure, it is fun to watch the left triggered and perturbed by stock indexes posting all-time highs, stellar job reports, and overall growth under Trumponomics. At the same time, it is imperative to ask the question: Is sacrificing long-term prosperity for immediate gains worth owning leftists? Indeed, memeifying the left will not increase savings and investments or keep a roof over your head. Will Republicans begin to make the tough choices? With medicine often unpopular with the electorate and an election on the horizon, you cannot count on it.

In 2020, party like it is 1920 because it will eventually be 1929 unless the GOP treats Washington’s decay by swallowing the tough medicine. If not, the Great Depression and the Great Recession will be a cakewalk compared to what is ahead. Hold your families and bank accounts close. A reckoning is nigh.

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Read more from Andrew Moran.