The Trump presidency is a roller coaster affair, even worse than most pundits feared. You can’t argue it isn’t box office, though, perhaps deliberately so. The long expected blow-up between Trump and Musk is pure theatre.
A relationship made for theatre…
However, there is one constant. The state of the US economy and its grotesque burden of debt. On this issue, Elon Musk is correct.
The budget deficit was an incredible 6.4% of GDP in 2024. Forecasters expect this to rise above 7% in every year of Trump’s presidency. The US debt pile currently exceeds 120% of GDP. This is unsustainable.
When Scott Bessent, the US Treasury Secretary, has to reassure markets that ‘the US is never going to default’, you know there is real trouble brewing.
Trump’s big, beautiful tax bill will remove the debt ceiling. Its impact is expected to add US2.4 trillion of additional debt over the next decade. The evidence is clear. Tax cuts mainly for the better off, never pay for themselves.
Add to this tariffs cutting growth, fears over Trump’s presidency undermining the rule of law and unpredictable foreign policy initiatives in the face of geopolitical instability, and you have a recipe for economic disaster.
Longer-term US interest rates are rising, exacerbating the debt problem whilst the US dollar weakens.
Trump’s economic approval ratings are dire, but these are not yet in territory to undermine his populist presidency. He continues to play out his hugely risky economic experiment. Republican fiscal conservatives must be turning in their graves, for that is where most of them are.
Bill Clinton was the last president to balance the budget. Rather than set up his own party, perhaps Elon Musk should change sides and vote Democrat…
Meanwhile, on this side of the pond it is a key week for the Labour government as it announces details of its spending review. More on this later but if it is not ‘big, beautiful and bold’, you would have to ask what is the point of Starmer/Reeves et al.
Inside Right Politics 