Harris and Trump: a choice between bad and worse

On January 20, 2025, the new president’s famous Day One, the activity at 1600 Pennsylvania Avenue will be intense. President Kamala Harris, a gourmet, will be reorganising the White House kitchen after using the presidential pen to send “thank you” notes to celebrity chefs who organised “Cooking for Kamala” fundraisers. Her mother told her to learn how to cook, she did — see video of her cracking an egg with one hand — and wants to be remembered for her culinary skills, which might include baking cookies, an art defamed by Hillary Clinton.
Day One is none too soon to think about a second term, and wonder whether the motivation provided by Trump-hatred gone, the more than 400 economists and advisers who signed a letter supporting her policies will stand with her when the $25,000 grants to new homeowners drive up house prices. When promised quasi-price controls on food create shortages. When insurers refuse to include price-controlled medicines in their coverage. When soaring debt is slowing the economy.
President Donald Trump, a man of simpler culinary tastes than Harris, will commission a White House physician who, unlike his earlier one, will not make ice cream less accessible and sneak cauliflower into the mashed potatoes. He will renew contact with his Big Mac-and-chips supplier of 2,430-calorie meals. The fridge will be stocked with enough Diet Cokes to fuel his reported 12-per-day fix. The larder will be cleared of coffee and alcohol.
Having spent Christmas making a list of his naughty enemies and checking it twice, he will choose an Attorney General nominee that possesses the persistence of Victor Hugo’s Inspector Javert, preparatory to having such revenges that will be the terror of the earth. Meanwhile, Dems will be planning his first impeachment, the crime and misdemeanour being his victory in the election.
These important differences should not obscure the no-matter-who-wins similarity. Both candidates have approached the problem of the nation’s finances in the manner of ostriches, heads firmly implanted in the ground, behinds aloft and vulnerable to a swift kick from the rating agencies and investors who will demand higher interest rates to compensate for the risk of being repaid in newly printed, depreciated dollars. The end of the world might not be nigh, but the day of reckoning might be.
In the middle of next year, the debt limit will need be raised to avoid default. That problem will be papered over with some sort of political compromise that kicks the can down the road, but this time it will be a shorter and dead-end road. That problem “solved”, Harris would do what Democrats do best, spend, and Trump what he does best, cut taxes. Deficit reduction is for wimps.
Estimates of our past (debt) and current (deficits) profligacy abound, and definitions vary. Some estimates of the national debt are said to be overstated because they include sums we Americans owe ourselves. Others are said to be understated because they exclude underfunded obligations such as pension funds or future commitments. No matter. Good enough are the most commonly used data, which shows a national debt of more than $35 trillion, and rising, and annual deficits in the $2 trillion range, around 7 per cent of GDP. Neither is sustainable. Neither is on the radar screen of Harris or Trump.
Both are on the radar screens of the rating agencies and of the dollar bears, who anticipate that politicians will increase the supply of dollars to depreciate their value and pay off creditors with a debased currency. That means higher prices for imported goods, paying higher interest rates to nervous lenders, an inability to borrow at reasonable interest rates should a spurt in military spending be required by the outbreak of hostilities, and the slower growth that results from higher interest rates.
One way or another the piper will be paid, either by spending cuts, higher taxes or a declining standard of living. Since the first two payment forms require action by informed and courageous politicians, and the latter, call it stagflation, can simply be allowed to happen, with no single set of fingerprints on the national ledger, it will be the solution of politicians’ choice. Representative Jodey Arrington, the Texas Republican who chairs the House budget committee, says, “No president in history … gets a …Nobel Prize for reining in spending, the deficits and our debt.”
Throw in Harris’s welter of regulations, or Trump’s huge tariffs that will add to the cost and price of imported goods, already inflated by a weaker dollar, and America’s leading export might become global stagflation, a blow with which many of Europe’s already weak economies would have difficulty coping.
America’s problem is not its misbegotten fiscal policy and its flood of red ink. That policy can be changed. It is the absence of political leaders willing and able to change it, as did FDR after Hoover and Reagan after Carter. Alas, our choice is between Harris’s counter-productive economic proposals, and Trump’s lethal mash-up of deficit-increasing tax cuts, price-raising tariffs, and new regulations. The bond vigilantes will decide.
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Irwin Stelzer is a business adviser