Interest

When most commentators talk about Trump they spend an inordinate amount of time on his personality which of course is interesting and as they say not presidential. They would be wise to look more closely as how his business experience is affecting his policies. Most businessmen understand that you have to spend money to make money and most also borrow as opposed to spending their own cash. This is even more evident in the real estate business as every homeowner knows. Trump wants to go into debt to kick the economy into high gear and then recoup the investment through growth. Even if the economy reaches 4% or even 5% GDP the growth will offset the debt but it will also bring back inflation which in turn will raise interest rates which in turn will raise the cost of servicing the debt. In other words the growth will cover the increase cost of government but it will not cover the increase cost of interest on the debt. Eventually some cuts in spending will be necessary and that means entitlements like social security. The government currently spends about $270 billion per year paying the interest on the debt and this low because government policies over the past couple of decades have artificially kept rates low. As the government begins to unload the stimulus money it used during the past ten years it will put upward pressure on interest rates and that will use up any excess revenue from growth.