Donald Trump's Budget Director Doesn't Understand Economics
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Politics and Activism

Donald Trump's Budget Director Doesn't Understand Economics

From a non partisan point of view, his views should still scare you.

Donald Trump's Budget Director Doesn't Understand Economics

President Elect Donald J. Trump has appointed Republican congressman Mick Mulvaney of South Carolina to be his budget director.

This appointment is not only strange but very ironic because Mulvaney isn't even on the budget committee in the house.

I say this without a smidgeon of animosity. Mick Mulvaney doesn't understand basic economics.

The late, great John Maynard Keynes hoped that economics would become a profession as plain, boring and uncontroversial as being a dentist. He was so wrong it's actually quite hilarious. But regardless of this, there are many simple textbook principles that liberal and conservative economists can agree on i.e. that people face tradeoffs.

But Mick Mulvaney appears to disregard basic economics in favor of his rhetoric.

The Fed

Mulvaney claims that the Federal Reserve has successfully devalued the dollar and that this has had a negative impact on the economy. This is both wrong, and contradictory to what President Elect Trump has been saying. First, the dollar has appreciated in value for two straight years against the rest of the world's currencies. Second, dollar devaluation makes exports cheaper, effectively shrinking the trade deficit. This goes against Trump's position on trade, as he has cited a growing trade deficit as a problem to the United States. And Trump's actually right, the trade deficit has grown larger (although this isn't a big deal), and it's partly because the dollar's value has gone up.

The National Debt

Here we go again, one of my favorite topics.

Mulvaney has repeatedly stated his staunch opposition towards raising the debt ceiling. Let's throw aside the fact that the national debt isn't debt, and call it debt for the sake of discussion. The debt is a total accumulation of every budget deficit the federal government has run. And a budget deficit is a measure of how much more the government spent than took away in taxes. Mulvaney wants to keep the debt limit where it is, and if he gets his way, the deficits will add up and the country will eventually be forced to go over the cliff and make drastic cuts to public services.

There should be no debt limit at all, but raising it will do for now. It's important that the debt limit continuously rise in order for there to be sufficient demand in a growing economy. When we face a situation such as the one we're in now, millions unemployed, empty buildings and idle resources, the last thing we want to do is lower consumers' buying power. But this is effectively what Mulvaney wants to do. Taking away more in taxes and putting in less with spending is the last thing this economy needs.

He also has expressed a desire to eliminate the debt completely. But financial markets and savers across the globe rely on United States treasury securities as a safe investment. If the outstanding budget of the United States has us taking away more from taxes than what we put in, that'll effectively bring the money supply to $0.00. Everyone should agree that'd be quite the crisis.

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This article has not been reviewed by Odyssey HQ and solely reflects the ideas and opinions of the creator.
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