Photo via Nikki Haley for President - nikkihaley.com
Nikki Haley campaigning
Nikki Haley
During the GOP Presidential Primary debate in Milwaukee, Nikki Haley earned high marks for her energy and economic messaging critical of Trump's huge increase in the national debt. Moreover, once it became clear that the moderators had little control over the contestants, and none over the audience, she earned high marks for being forceful and relentless, especially in the face of the boorishness of Vivek Ramaswamy.
She was also the only candidate to introduce factual economics into the debate when she stated that during the presidency of Donald Trump nearly $8 trillion was added to the national debt, roughly a 25% debt increase in four years. She made clear that the deficit problem was bipartisan and asserted that our children will never forgive us for this financial debt.
What she said next is getting very little attention. She listed among her remedies, “Stop the spending; stop the borrowing!” Stop What? Medicare, Medicaid and Social Security, of course. In other words, she would back the usual Republican bait and switch: cut taxes; create a deficit; bemoan the deficit; then advocate cuts in spending on social programs.
Trump Deficits
When she mentions the gigantic deficits of President Trump, she makes no distinction between the two primary drivers of deficits during the Trump years. The first was the Tax Cuts and Jobs Act of 2017 that, as predicted, resulted in no measurable increase in business investment nor economic growth, just a debt-financed upward redistribution of wealth. The borrowing required to finance this tax cut is projected to increase the debt by $10 trillion by the time the act expires in 2025.
The second contribution to the debt was the response to the outbreak of Covid-19, which included the CARES Act and the PPP—paycheck protection program—totaling 2.3 trillion dollars. In contrast to the optional debt-financed transfer of wealth to the rich, as the economy contracted something drastic had to be done in the face of Covid-19. After all, in March and April 2020 the economy lost 21 million jobs in six weeks. Haley made no distinction between borrowing for a tax cut versus borrowing to fight the economic impact of Covid. Nor is hers a serious commitment to debt reduction since her primary example of debt explosion took place during Trump’s presidential term, and yet she would vote for his second term if he is nominated!
Nor does she make any distinction between borrowing to finance a tax cut versus borrowing to finance infrastructure spending, i.e., the construction, maintenance and repair of long-lived, productive public sector assets like streets, roads, interstate highways, bridges, water and sewer systems, harbors, airports, school buildings, and other structures that will last a long time and enable the private sector market system to work better.
|
|
What to Do?
When Ramaswamy declared that climate change is a “hoax,” Haley disagreed with an emphatic finger-wag but didn't offer a clue what to do about it. After all, the donor class must be served, and they want lower taxes and less regulation, not more of either and certainly not more of both. Meanwhile all science-based proposals to meet the threat of climate change involve just that—higher taxes and more regulation. The standard default option of free markets does not work since the preconditions for free markets do not exist in the protection of the atmosphere. In fact, an unregulated "free" market actually incentivizes polluters to pollute.
We can only hope that future debates will be more productive; here are a few possible questions for the moderators to ask: How would you pay for a serious program of greenhouse gas emission constraints if at the same time you advocate for a balanced budget? What would be your division of responsibility between the private sector and the public sector in addressing climate change? Will our children ever forgive us if we do not address climate change now? Or if we hand them deteriorated infrastructure? Will they forgive us if we continue to underinvest in their education, particularly that of urban and rural schoolchildren; and if we continue to underinvest in broadband for their education, and for business expansion in rural areas?
Answers to these and many other questions require that office seekers be far more conversant in economics than they have thus far demonstrated. To her credit, at least Nikki Haley raised the subject. Apparently, it is up to the public to demand that she and the rest of the contenders take it seriously.
