Political dysfunction in the United States is at an all-time high. Republicans and Democrats are fighting pitched battles on immigration, Obamacare, tax cuts, regulation, infrastructure and just about every other major policy issue you can name.
These fights are bitter, involve a lot of name-calling and show no signs of abating soon. The stakes could not be higher. These policy fights are a prelude to the congressional elections in November 2018 when the entire House of Representatives is up for grabs.
Right now the Republicans are in control, but a loss of 24 seats will put the Democrats in charge and hand the gavel over to Nancy Pelosi as the speaker of the House. Once that happens, the impeachment of Donald Trump will begin within a matter of weeks.
In this toxic environment, it seems that Republicans and Democrats cannot find common ground on anything. It turns out that’s wrong; they can agree on something. More spending!
As this article explains, the Republicans have thrown in the towel and given up any pretense of being fiscally conservative. Republicans have joined forces with Democrats to eliminate budget caps on defense and domestic spending. Entitlements were already out of control because they’re on budget auto-pilot and don’t require new appropriations or votes. Now even the budget items that were subject to votes are out of control.
The bad old days of $1 trillion annual government deficits of the Obama administration (2010, 2011, 2012) are back under a Republican administration. Of course, none of this spending is paid for, because the recent tax cuts already increased the deficit before the new spending spree took effect.
Many economists try to find a silver lining by saying spending will be stimulative for the economy. Don’t believe it. We’re past the point of no return.
With a 105% debt-to-GDP ratio, heading toward 110%, the historical evidence is clear that bigger deficits do not produce real growth — they just produce higher interest rates, slower real growth and, ultimately, inflation. Got gold?