Just like Melania Trump copied Michelle Obama, President-elect Trump plans on borrowing heavily from President Obama’s economics. The incoming executive told Time Magazine that to get the economy up and running, he’s prepared “to prime the pump.”
That phrase follows from the interventionist theory of the late British economist John Maynard Keynes. Antithetical to classical free market thinking, it has been the justification of everything from FDR’s New Deal to Obama’s stimulus.
Keynesian economics came into vogue around the time of the Great Depression. The theory teaches that market depressions are the result of a spending deficit which can be remedied by government stimulus. As if the economy was a massive engine, the theory prescribes kick starting the machine with government spending to get it moving.
It’s clear the New York businessman finds the idea, or at least the vocabulary, of the theory compelling. “Well sometimes, you have to prime the pump,” he told Time, “So sometimes in order to get the jobs going and the country going, because look we’re at 1 percent growth.”
And to get the huge gains he wants, Trump plans on following his predecessor’s example.
Obama brought Keynes into the Oval Office and began priming the nation’s economic pump in 2009. He quickly signed the American Recovery and Reinvestment Act, a stimulus package with a $787 billion price tag. Later that Summer, he followed up with the $3 billion Cash for Clunkers program to subsidize the purchase of more fuel efficient vehicles.
It was textbook Keynesian economics and the Trump administration appears ready to follow suit with only a few differences. Trump plans on matching that spending with massive tax cuts and strict protectionist trade barriers. Chief White House strategist Steve Bannon calls it “an economic nationalist movement.”
Trump’s immense infrastructure bill will likely serve as the first vehicle for injecting capital into the market. While the numbers are still in flux — Trump has floated between $500 billion and $1 trillion of spending — their origin is predetermined. To prime the pump, the U.S. will need to borrow heavily. According to Bannon that’s what necessary for industry to get “all jacked up.”
“With negative interest rates throughout the world, it’s the greatest opportunity to rebuild everything,” Bannon told The Hollywood Reporter, after noting that “the conservatives are going to go crazy.”
Across the conservative spectrum, shock jocks such as Sean Hannity and budget wonks such as Paul Ryan both used to slam Democrats for doing what Trump prescribes, namely meddling in the free market. Even Breitbart News used to call Obama a socialist.
But that free market ideology might be waning. Conservatives were silent when Trump negotiated a crony deal to stop Carrier’s exit last week, a move reminiscent of Obama’s Solyndra subsidies.
While Republicans sort out their economics, it’s worth reviewing Obama’s scorecard. When he became president the U.S. national debt was roughly $10 trillion and economic growth rates hovered around 2 percent. Eight years later, the debt is about to double and growth remains anemic. It’s hardly a playbook worth emulating.
If Trump is looking for a role model, he should consider a Republican. Ronald Reagan would be fitting. A rejection of market intervention, his supply side ideology called for less government spending not more. And unlike Obama’s efforts, it worked.
Philip Wegmann is a commentary writer for the Washington Examiner.
