Trump Has Inherited a Terrifying Problem
Trump Has Inherited a Terrifying Problem by Mark Nestmann
Every president inherits something difficult.
Some problems are simply out of the incoming president’s hands.
Obama inherited a financial crisis. Reagan inherited double digit inflation. Kennedy, Nixon, and Ford each inherited the Vietnam War.
For President Trump, it’s debt.
Sure, every president inherits some kind of debt from his predecessor. But none of them had to follow the Borrower-in-Chief, Barack Obama. Obama doubled the federal debt during his tenure in the Oval. He pushed the total debt close to $20 billion – an 88% rise from when he first took the oath of office.
Here at the Nestmann Intelligence Unit, this figure weighs heavily on our minds. Especially as we watch the Dow fly past the 20,000 mark to its historic high.
The markets are excited by Trump’s promise of tax cuts, slashed regulations, and job growth. But with the debt at a record high, we’re worried that Trump will find himself choked by a lack of funds.
What happens to the market if the president can’t make good on his business policies?
The Market Is Pricing the Second Coming of Ronald Reagan
Reagan’s former budget director, David Stockman, is worried. He says the markets are anticipating a return to Reaganomics. A return to unrestricted competition and low taxes.
But he says, “There’s no reincarnation coming.”
The key difference here is that Reagan had room to move. When he entered the White House, Reagan had to wrestle with only $1 trillion of debt. A mere 30% of the GDP to President Trump’s 107%.
Worse, on March 16, Congress will impose a new debt ceiling. The ceiling is expected to come in at $20.1 trillion. That leaves Donald Trump slammed up against the debt wall. There will be no more room to borrow, putting Trump’s ambitious plans at risk.
Stockman predicts a bloodbath. The debt ceiling will act as a reality check for the markets, he says. That could mean a sharp reversal from these historic highs.