Readers of this blog will remember that I predicted many months ago that the Trump Administration would lead us into one of three economic scenarios: “Funhouse Reagan,” with a regressive tax cut, an exploding deficit, and higher interest rates resulting from an unnecessary stimulus; “Reverse Robin Hood,” with cuts to the safety net offsetting the tax cut; and “Trade Warrior,” which is one of the other two scenarios with a trade war added on top.
The predicted enormous regressive tax cut will be enacted this week, thereby setting the stage for the three scenarios. Which will it be? Paul Ryan and the CLs will be clamoring for cuts to “welfare” programs, but that will be a heavy lift for a GOP which could barely summon up enough votes to give away candy for Christmas. “Trade warrior” hasn’t happened yet, but it’s on the horizon. The administration will be doing its best to undermine the WTO and withdraw from NAFTA in the coming year.
My bet is still on “Funhouse Reagan,” but I could be wrong, and the alternatives are even worse.