Tag Archives: trump

The Wizard of Odd – Trump Edition

wizard hat and money

Two years ago I wrote an article that poked fun at President Obama’s notion that America’s economy was strong and that it would adapt to the global economy. Since then the elephant in the room that President Obama and most of America ignored has only gotten fatter.

Swamped by debt, American households owe more money now than ever before. Government debt is at an all time high. Our trade deficit has worsened. America’s high standard of living rests on a foundation made of sand.

If you went out and borrowed a large sum of money you could purchase all sorts of goods and services and make it appear that your personal financial situation is strong. You might even think to yourself that future pay raises will allow you to pay off your debt and maintain your lifestyle. But deep down you know, or you should, that there is a limit to how much debt you can take on. Some day the party ends and you have to pay back what you borrowed. Then your standard of living will decrease.

But somehow, according to most politicians and economists, when you multiply the above scenario by 325 million people, it’s different. Magically, government debt presents no problem at all!

In his state of the union address, President Trump touted the rise in the stock market and decreases in unemployment since he took office. This is odd since during the presidential campaign he called the stock market a “big, fat, ugly bubble” and described the unemployment numbers as fake.

After the election, based on the promise of a business-friendly Trump administration, the stock market rocketed upward anticipating economic growth. Though it is true that consumers and companies spend more money when they feel wealthier because of asset price gains; it is also true that spending money based on unrealized gains may not be the most prudent plan. With recent tax cuts, an action that increases the national debt, many businesses felt even richer and they increased spending and hiring. This led many people to believe that all is well with the economy. Perhaps this explains the relative silence about the massive increases in spending (and debt) that will result from the latest budget legislation.

I have a few questions.

Who is going to buy the increased production of American workers this faux economic boom provides?

President Trump vowed to decrease the trade deficit but, in 2017, it increased. If he continues to fail in his goal, we will increase our debt to other nations as we consume our production plus that of export nations.

Oddly, hardly anyone is talking about what happens if he succeeds. In 2017, the U.S. dollar lost 12 percent of its value against a basket of currencies that included the euro, yen, pound sterling and Canadian dollar. This means the price of foreign goods will rise and that we can buy fewer of them. Significantly, a larger percentage of our collective work effort will be going into producing goods that foreigners consume—in other words, into exports. Since we will buy fewer foreign products and consume fewer of our own, our standard of living must decrease. The wealth that has been flowing our way for so many years will reverse.

How have we been deceived into thinking that our national debt doesn’t matter?

It is odd that President Trump and other elected leaders believe making America great again means prosperity powered by increased indebtedness.

Governments may think they can borrow forever but the Bible says otherwise. To repay debt with more debt is not repaying at all. The Bible says it is wicked to do so (Psalm 37:21). Christians surely know our nation will suffer serious consequences for this behavior. We should be outraged at recent tax cuts followed by spending increases.

Inevitably, massive debt erodes the value of a nation’s currency to the point where foreign holders of dollars would rather buy U.S. assets or our exports than buy treasuries (debt). This means interest rates must rise to attract buyers of government debt used to run our oversized government. The cost to run government becomes more onerous as interest payments on the national debt increase. (Think of an adjustable-rate mortgage on a national scale.)

Higher interest rates increase the cost of doing business and cut into profits. Consumers buy fewer houses and automobiles because of increased loan costs. The economy slows down into a recession and workers get laid off.

The supply of goods collapses because we can buy fewer imports and more of the goods made here are exported. Less supply means prices increase further. If we try to maintain the current level of government spending, inflation will get even worse.

Does this scenario sound to you like a booming economy? The power brokers in our nation would like us to believe the economy is so good that it is in danger of overheating. They turn the facts on their heads, claiming rising prices result from too much of a good thing (demand from a booming economy) instead of from too much of a bad thing (demand caused by inflation of the money supply via debt). Instead of taking blame for high prices resulting from money inflation, they tell us they can control it. (This article explains why they won’t be able to next time).

But, as I said in my article two years ago, reality takes a back seat to hope in the Land of Odd. In Obama’s make-believe world, government supplied us with hope; in Trump’s fairy tale, “free” markets that are “fair” to America will deliver us from our folly.

Trump’s Tax Plan: America Gets a Lump of Coal in its Christmas Stocking

Christmas stocking hung fireplace

President Trump has referred to the tax relief plan he signed into law yesterday as “a giant Christmas present” for the American people. I’m convinced he really believes it is.

It certainly looks like one. I don’t know anyone who will refuse the hundreds or thousands of dollars this tax bill affords them. Yet we need to ask this question—who is this present really from?

Democrats oppose the plan because they believe the tax plan favors the rich and increases the deficit (like they really care about the deficit). Republicans support the plan because they believe it will create jobs and stimulate economic growth. Both, as usual, ignore the real problem with this bill—it fails to reduce the size of government.

Democrats always want big government. Republicans claim to want reduced government spending, but when push comes to shove they settle for what looks like economic freedom, but in actuality is enslavement.

The rich rule over the poor and the borrower is slave to the lender. (Proverbs 22:7)

This “tax relief” is no such thing. Tax deferment is more accurate. The government will still be spending the same amount of money. Since government produces nothing, whenever government spends, it taxes. The American people will pay for it through the “invisible” tax of inflation or when they pay off the increased national debt.

This continued game of “kick the can down the road” ought to tell us whom President Trump’s Christmas gift is from. It’s from future taxpayers.

This is what we should expect from a president who says, “I love debt.”

Magical Thinking

Whenever we believe an action will result in a certain outcome without a plausible link of causation, we engage in magical thinking. In other words, correlation does not imply causality.

In my opinion, supporters of this new tax bill employ magical thinking when they understate or dismiss any notion of increased national debt because of it. The Congressional Budget Office estimates the tax plan will reduce government tax revenue by $1.4 trillion. The Joint Committee on Taxation estimates a $1 trillion increase in the deficit after accounting for economic growth. Even if this latter number is true, $1 trillion is a lot of money.

Furthermore, research shows that existing public debt in excess of 90 percent of GDP places a drag on economic growth. The ratio for the U.S. is over 100 percent. If the U.S. does experience slower growth due to debt overhang, it is unlikely the tax bill will have its intended effect. Of course, critics could raise the causation/correlation question for this research. Quantifying complex economic systems is a difficult task.

Common Sense

A recent survey by Yale University of over one hundred business leaders from Fortune 500 companies revealed that only 14 percent of CEOs planned to make significant investment in capital projects in the near future with money from tax cuts. Since capital expenditure leads to job creation, this does not bode well for President Trump’s declaration that the tax cuts will lead to more jobs. However, the same survey found that 43 percent of CEOs plan to ramp up hiring in the next six months. So, it seems that jobs may be created in the short-term, but the long-term outlook is not so rosy.

Recent corporate behavior indicates that they use excess cash to buy back stock rather than make capital investment. This benefits stockholders but does not provide jobs. Should we believe that corporations will use differently the extra money provided by tax relief?

Common sense should warn us that increasing our already dangerously high national debt is folly. It should tell us that placing government expenditures on a “credit card” only delays the day of reckoning and makes our economic problems worse.

Common sense tells me Trump’s tax relief bill is not a giant Christmas present to America. It tells me we got a giant lump of coal in our stocking. Maybe Congress doesn’t think very highly of the American people.

A Look In the Mirror

I found the widespread description of this past presidential election as a choice between the lesser of two evils perplexing. From an issues standpoint, I considered nearly every presidential election in my voting lifetime to be such a choice. Why were people in such turmoil over this election and not the previous ones?

For many people, what set this past election apart from others was the realization that neither candidate had the personal integrity required to be president of the United States.

This election was different. In past elections we evaluated candidates mostly on the positions they held, not by their personal character. Perhaps in trying to make this election seem like those in days gone by, many Donald Trump supporters urged others to ignore personal character and to vote for him on the basis of his political platform. Some Christians implored us to vote for Trump and to pray for him hoping God will change him. One wonders if these Christians employ the same reasoning to champion the marriage of their son or daughter to an unbeliever.

The Lesser of Two Evils Fallacy

It shouldn’t be hard for Christians to see through the lesser of two evils fallacy, but evidently it is. Christians can ask themselves which of the following biblical truths become invalid so that they can justify a vote for the lesser of two evils:

  • People groan under a wicked ruler. (Proverbs 29:2)
  • You reap what you sow. (Job 4:7-8; Galatians 6:7-8)
  • Have nothing to do with evil but instead expose it. (Proverbs 4:14-15; Ephesians 5:11)
  • Do not seek political saviors. (Psalm 146:3; 118:8)

Perhaps the worst part of voting for the lesser of two evils is that it is often done in the name of good. One theologian even suggested it was a sin not to vote for Donald Trump! Of course, as you have probably heard more than once, a vote for the lesser of two evils is still a vote for evil.

If Christians truly believed that both major party candidates were evil (as evidenced by their proclamation that they voted for the lesser of two evils) and they falsely believed that to not vote for one candidate was in fact a vote for the other, then, in my opinion, they mislabeled their dilemma. The choice before them was not for the lesser of two evils because they could have voted for a third-party candidate or not voted at all. This election was instead, an opportunity for them to pick their poison.

A Look In the Mirror

American Evangelicalism is at a crossroads. Our Christian subculture has devolved to the point that we declare one evil to be good simply because we believe another evil is worse. Too often, we have jettisoned the notion that we seek first God’s kingdom and his righteousness in favor of pragmatic and expedient solutions we believe will allow us to maintain our comfortable lifestyle.

The fact that our nation has come to the place it has, on the brink of moral and economic collapse, is an indictment against the American Church. Christian virtue remains, but it has been drowned in a sea of Christian accommodation of the culture. Up until now, we have averted persecution by avoiding spiritual warfare. Too few have been on the front lines and too many are non-combatants. The proof is in our lack of battle scars. We have looked too much like the world and therefore posed no threat to the powers of darkness. Collectively, our light has been engulfed by the darkness and we have become salt thrown out and trampled by men. It happened on our watch.

This election was a mirror held up to the Church so that we can see who we really are. I pray we will not go away and immediately forget what we look like.