Former GOP governor: Trump has taken some major economic and political risks Read more at: https://www.newsobserver.com/opinion/article307295476.html#storylink=cpy

This column was first published in The News and Observer, May 28, 2025

There’s an old joke about the guy who accidentally swallowed an ice cube at a party. Next morning, he hadn’t passed it yet, and worried whether he’d better check in at urgent care for treatment. In some ways, the national economy is like that. Did we really swallow the promise of reduced inflation with no recession? Why haven’t we seen any real outcome yet? Should we be worried?

It has been a rough and risky first four months in the new Trump administration, including for the prospects of the national economy and national debt.

Most noteworthy on the plus side would be the closing of the border with a roughness that upset many. They knew it was coming. No campaign issue contributed more to President Donald Trump’s election than President Joe Biden’s open border policy. The harsh enforcement shouldn’t surprise anybody.

The Democrats’ response wisely focused on “due process,” with some political gain as Trump’s popularity falls. Not that voters are sympathetic to deported gangsters. Their real concern is the administration’s imperious defiance of federal judges.

Another high-risk, high-reward issue is Trump’s tariff gamble. Give him credit for announcing it on April 2 and not April Fools’ Day. Aside from the awkwardness of trying to shoehorn a major import tax onto retail markets, what has it done, aside from risking a trade war? Well, start with a modest net gain of $9.5 billion in tax revenue. With customary bluster, Walmart was told to “eat” the cost of tariffs on imported items. They can’t and won’t.

Jamie Dimon, CEO of JP Morgan Chase, sees “too much complacency” in markets following Trump’s tariff announcement, with serious risk of higher inflation and stagflation.

An even bigger threat is his “Big, Beautiful Budget” bill working through Congress. The House version chops away at Medicaid, universities and a few anecdotes of “waste, fraud and abuse,” while adding to the burgeoning, unaffordable national debt.

The President demanded Federal Reserve Bank Chairman Jerome Powell wave some magic wand to overturn the law of supply and demand. Powell only has power to adjust interest rates to what bond buyers will accept. He has no authority over what Congress adds to the debt.

For two decades, Moody’s Ratings credit bureau had valiantly pretended that federal finances deserved its sovereign AAA rating. No longer. The “last straw” was concern for the immediate future of the federal budget and its current debt of $36.9 trillion ($107,715 per citizen) and counting.

According to reports on the Congressional Budget Office analysis, Trump’s big budget bill would add nearly $3.8 trillion to the national debt over the next 10 years, or about $380 billion a year. About 3 to 4 percent interest, as we pay according to the U.S. treasury, would be tacked on to that.

Even so, the fiscal impact of relying instead on continuing current law would be far worse, adding $1.9 trillion in debt. That’s like the alimentary canal of a two-year-old, with unlimited appetite on one end and limited sense of responsibility on the other.

Searching for good news elsewhere, Trump’s swing through the Middle East did help Boeing win a big contract with Qatar and may soon bring Saudi Arabia into the Abraham Accords to help settle the unruly region. As a bonus, we now own a used luxury airplane from Qatar. No, it won’t belong to President Trump, even if he likes to taunt ordinary folks with his glory. By the time it’s debugged and rigged with every conceivable security technology, a new president can decide its fate.

Otherwise, the president has devoted attention to Iran’s nuclear ambitions and the deadly standoff between Ukraine and Russia. Given their unimpressed response, he may be spreading his efforts too thinly among far too many bewildering initiatives. It’s too early to tell at this point. If it brings resolution to any of these threats, it should deserve credit from most of us.

If not, stay tuned.