The short time horizon president

[As usual, read my Econlog post if you only have time for one today.]

Today offers another example of a theme I’ve been pushing for several years. Trump is president with a short time horizon, eager to take actions that look good today at a cost to future generations. Examples include:

1. Ramping up moral hazard in the financial system.

2. Reckless “tax and spend” fiscal policy.

3. Moving away from the rule of law, toward authoritarianism.

4. Ignoring global warming.

5. Politicizing monetary policy

In each case, Trump has a lot of “capital” to spend, as the US has traditionally been a pretty well run country. As Adam Smith pointed out, there’s a great deal of ruin in a nation. Even with Trump’s reckless actions, we are unlikely to face a fiscal crisis, a banking crisis, a global warming crisis or a serious move toward authoritarianism in the next few years.

Today we see another example. Before explaining this situation, let me remind readers that Trump is one of those guys who frequently accuses others of having the very flaws that he himself has. Thus the recent claim that Biden is a low IQ person. Or that other candidates were “liars”.

Trump recently accused the Chinese of negotiating in bad faith on trade, backing off from promises that they had previously made. Of course there’s no way to know if any of this is true, as nothing said by Trump or his aides can be trusted. In any case, Trump has now done exactly what he accused the Chinese of doing—reneging on a trade deal with Mexico, which he agreed to just a few months ago.

The US has built up a lot of reputational capital in foreign affairs. We often make serious mistakes, such as the Vietnam and Iraq Wars, but there is always a certain logic to our actions. We are one of the “serious” countries, and have been one for most of our history.  Trump has decided to spend some of the reputational capital for short-term political gain.

If we’d been a wild and crazy country for the past 100 years, there is no way the rest of the world would have trusted us to control their money (as we effectively do with our leverage in the global banking system.) Thus Trump has the ability to recklessly use powerful economics sanctions against other countries precisely because all previous American presidents have been so un-Trump like in their policies.

This is just one of the many reasons why Trump is by far the worst President in US history. He’s not just a bad American president, like Nixon or LBJ. He’s not really an American president at all. He’s a completely different animal—a sort of a Venezuelan or Filipino president living in the American White House.

Enjoy it while it lasts; your children will pay the price.

PS.  The sad decline of Lindsey Graham

PPS.  The pathetic abasement of Ronna Romney McDaniel



26 Responses to “The short time horizon president”

  1. Gravatar of Saturos Saturos
    31. May 2019 at 14:16

    Wonder how Scott feels about this:

  2. Gravatar of ssumner ssumner
    31. May 2019 at 16:33

    Saturos, Good to hear from you again. Why don’t they announce the sales figures? Macmillian has another macro textbook coming out, written by Rubb and Sumner. I wonder how the sales will compare.

    I actually sort of welcome the rise of MMT. I figure the weaker the alternative to market monetarism, the better for us. I’m not sure we can win out over New Keynesianism, but I am confident we’d win a head to head with MMT.

  3. Gravatar of Michael Sandifer Michael Sandifer
    31. May 2019 at 16:44

    Very good comments. You peg Trump exactly right, and have from the beginning. I pegged Trump as a moron on my YouTube channel 8 years ago. He made really stupid comments on CNBC back then.

    Trump is indeed a banana republic-type politician.

  4. Gravatar of Benjamin Cole Benjamin Cole
    31. May 2019 at 16:57

    I have been reading about the Nixon aministration since 1968.

    Let me assure you Nixon was a much worse president than Trump.

    E. Howard Hunt said that while he was employed in the White House that a plan was hatched to murder columnisr Jack Anderson and he that he was prepared to carry out that plan.

    Hunt confirmed this plan on a nationally broadcast TV show hosted by William Buckley.

    Among many other misdeeds, Nixon left behind 200 million cluster bombs in Laos, a nation that never declared war on the US or harmed us in any way.

    By most accounts, Nixon knew he could not win in Vietnam but extended the war past the 1972 elections, so that it would not look like he “lost” Vietnam before 1972.

    Another president, the second President George Bush, instigated unnecessary wars in Iraq and Afghanistan that have cost taxpayers $7 trillion yet were counterproductive (let alone the ghastly carnage). That is fiscal irresponsibility with a capital “F.”

    The funny thing about Trump is, I am not sure he is any worse or better than establishment figures. Like Clinton and Reagan, he seems to prefer to avoid major foreign entanglements.

    Trump’s desire to spend money on domestic infrastructure rather than foreign occupations strikes me as a huge positive.

    As a person, Trump is the vulgarian reality TV show host who became president of the United States. His policies can be erratic but are benign compared to many of his predecessors.

  5. Gravatar of Lorenzo from Oz Lorenzo from Oz
    31. May 2019 at 17:05

    Worst President in US history is a big call. When he does as much damage as Herbert Hoover, let me know.

    Person most unfit to be President is more plausible, and not the same thing.

  6. Gravatar of Patrick R Sullivan Patrick R Sullivan
    31. May 2019 at 18:00

    Or as much damage as Hoover’s successor, who had a bunch of Stalin idolators in his administration.

    Or LBJ who bequeathed the mess that is Medicare/Medicaid, the expansion of GSEs like Fannie and Freddie, and, oh, that little misadventure in Southeast Asia….

    Or, JFK who spent most of his time Fiddling and Faddling the help, rather than listen to people who could have warned him away from the Bay of Pigs disaster. Or Jimmy Carter, who was concerned about our ‘inordinate fear’ of mankind’s most destructive political ideology EVER. (The one Bernie Sanders idolizes to this day.)

    Yeah, comparatively speaking, Trump is horrible.

  7. Gravatar of Benjamin Cole Benjamin Cole
    31. May 2019 at 19:13

    Times change, and standards change, theories change, perceptions change.

    So, the fact that Nixon imposed a 90-day freeze on wages and prices, and an across-the-board 10% “surcharge” (tariff) on all—-all !!!, not just one or two nations’—-imports in 1971 is not really comparable in some ways to the targeted Trump tariffs of today.

    But history is fun:

    “On the afternoon of Friday, August 13, 1971, these officials along with twelve other high-ranking White House and Treasury advisors met secretly with Nixon at Camp David. There was great debate about what Nixon should do, but ultimately Nixon, relying heavily on the advice of the self-confident Connally, decided to break up Bretton Woods by announcing the following actions on August 15:[12][13][14]

    Nixon directed Treasury Secretary Connally to suspend, with certain exceptions, the convertibility of the dollar into gold or other reserve assets, ordering the gold window to be closed such that foreign governments could no longer exchange their dollars for gold.

    Nixon issued Executive Order 11615 (pursuant to the Economic Stabilization Act of 1970), imposing a 90-day freeze on wages and prices in order to counter inflation. This was the first time the U.S. government had enacted wage and price controls since World War II.

    An import surcharge of 10 percent was set to ensure that American products would not be at a disadvantage because of the expected fluctuation in exchange rates.”


    The largest one-day increase ever (to that date) in the Dow Jones Industrial Average followed on Monday, when markets reopened. The

    The arch criticism that attends to Trump is usually made outside historical context. Johnson, Nixon and Reagan all bullied Federal Reserve chairs much more than Trump, who only mouths-off in public, from what we know. Nixon and Reagan were often more protectionist than Trump. Milton Friedman said Reagan challenged Hoovr as kinf og the protectionists (Smoot Hawley, as pointed out by Doug Irwin, was rather toothless).

    As I said, times, theories and standards change. It has become a point of honor in orthodox macroeconomics to hail imports, of any scale and from any source and to slavishly defend the independence of the Fed (even though it appears to be a captured regulatory agency).

    Maybe better times are ahead.

  8. Gravatar of Matthias Görgens Matthias Görgens
    31. May 2019 at 19:40

    Scott, for winning an argument weaker alternatives are better.

    For finding the truth you want the other sides to be as strong as possible.

    > Enjoy it while it lasts; your children will pay the price.

    Well, not mine. At least not more than we already pay the price for Venezuelan bad governance etc, since I don’t live in neither the US not Venezuela.

  9. Gravatar of dtoh dtoh
    1. June 2019 at 01:24

    Worse than Johnson I? Scott, you diminish your credibility.

    I’m so old I remember Lenore Romney

  10. Gravatar of Michael Sandifer Michael Sandifer
    1. June 2019 at 03:54


    Johnson was an ultra competent politician. He got his agenda through Congress. He was very politically talented and intelligent. The Vietnam war escalation was a disaster, particularly given the lie to justify it, but at least he had the decency leave office in disgrace, after choosing not to run again.

    Trump is so stupid and incompetent, he still hasn’t filled many jobs in the executive branch. It’s obvious he never will. And, his administration is the first I’m aware of that doesn’t present any bills to Congress. His staff hasn’t produced a single budget even, because the administration lacks the expertise. Trump just waits for bills from Congress, doesn’t understand them, and signs them if he feels like it. He’s a complete buffoon and ignoramus and he doesn’t care, except politically.

    Sure, no President’s budget is passed as is, but the point of producing a complete budget document is to make a President’s preferred agenda clear, in thousands of pages of detail.

    Trump is like a 5 year-old trying to drive a car, after a few drinks. He’s a complete mess, very much like idiots like Maduro.

  11. Gravatar of Dtoh Dtoh
    1. June 2019 at 06:19

    Michael Sandifer

    I was referring to Johnson I (17th President) not Johnson II (LBJ). Sorry for not being clearer.

  12. Gravatar of E. Harding E. Harding
    1. June 2019 at 06:22

    “precisely because all previous American presidents have been so un-Trump like in their policies”

    Sumner, that doesn’t make the tiniest lick of sense. Trump makes bad policy precisely because his predecessors did the same. He didn’t start the sanctions regimes on Cuba/Russia/Iran/North Korea. In fact, on the last 3, Congress mandated he keep the sanctions! There is overwhelming congressional support for Trump’s sanctions on VE. The entire GOP has always supported withdrawal from the Iran Deal. And so on, and so forth.

    “a sort of a Venezuelan or Filipino president living in the American White House”

    No. His policies are simply a continuation of Reagan/Bush.

    “let me remind readers that Trump is one of those guys who frequently accuses others of having the very flaws that he himself has”

    Sure, but those Trump accuses of having certain flaws almost always have the flaws Trump says they do. Biden really is low IQ. Bernie really is crazy. Jeb really is low energy.

    Also, you haven’t shown how democratizing monetary policy is bad, or how the rule of law contrasts with authoritarianism, rather than complementing it.

  13. Gravatar of Brian Donohue Brian Donohue
    1. June 2019 at 07:56

    Kind of hoped you might take a week off from the circus to notice the screams from the bond market.

    Maybe tomorrow. Or you could share thoughts on the NBA finals or something.

    I’m mostly here for the monetary policy convo.

  14. Gravatar of Brian Donohue Brian Donohue
    1. June 2019 at 07:59

    Whoops. Shoulda taken your advice and read your very good EconLog piece first.

    Carry on.

  15. Gravatar of ssumner ssumner
    1. June 2019 at 11:05

    Everyone, When discussing the quality of presidents, you need to familiarize yourself with the concept of “value added”, and the distinction between a president and an administration. Many of you grossly overweight the influence of any one person on the course of history.

    dtoh, You said:

    “Worse than Johnson I? Scott, you diminish your credibility.”

    You mean the guy that brought us 5% RGDP growth for 5 years? Or the Johnson who was impeached?

    Hah, I wrote that before I saw your second post!

    Brian, You said:

    “Or you could share thoughts on the NBA finals or something.”

    My team didn’t make it because Fred f*****g Van Vleet shot 14/17 from 3 over the final three games of the series, after missing everything in the Philly series.

    Actually, I can’t get too mad at him, as I’m also part Dutch.

    I’m already looking forward to Milwaukee winning the title in 2020.

  16. Gravatar of E. Harding E. Harding
    1. June 2019 at 11:31

    “and the distinction between a president and an administration”

    President picks the administration.

    “you need to familiarize yourself with the concept of “value added””

    Why is Trump so much worse in value added than, say, Bush, Clunton, Obama, etc.?

  17. Gravatar of Scott H. Scott H.
    1. June 2019 at 15:52

    Kind of a weird analysis. I’m not saying you’re wrong, but Trump is such a different animal it’s tough to say there will be some huge cost to all this.

    Certainly there’s been no huge reward so far.

  18. Gravatar of Lorenzo from Oz Lorenzo from Oz
    1. June 2019 at 16:07

    So, what is the metric for measuring what is “Administration” and what is “President” so we can measure “value added”?

  19. Gravatar of Negation of Ideology Negation of Ideology
    2. June 2019 at 08:15

    My vote for worst President ever is Andrew Jackson. He single-highhandedly caused a 6 year depression, one of the worst in our history, by destroying the Bank of the US and issuing the Specie Circular by executive order. No other potential President of that time would done that. His value added was certainly negative – he even had to fire two of his own Treasury Secretaries in his bizarre quest to destroy our monetary system.

    Also, he broke George Washington’s treaty with the Native Americans of Georgia and is guilty of the Trail of Tears. I’m not sure if other potential Presidents would have done that, but I doubt John Quincy Adams would have.

    That’s not a defense of Trump, who is truly awful, the worst in a long time.

  20. Gravatar of ssumner ssumner
    2. June 2019 at 09:03

    Scott, You may be right that there will be no huge cost, as no single individual is all that important. But there will be a cost.

    Lorenzo, The fact that Trump’s advisors privately indicate that he’s an idiot that must be babysat like a kindergardener is one indication that his “value added” is pretty low. They often ignore his orders.

    Negation, Yes, there’s a good argument for Jackson. Interestingly, Trump asked for Jackson’s portrait to be hung in the White House.

  21. Gravatar of E. Harding E. Harding
    2. June 2019 at 10:46

    Jackson was one of America’s best presidents. Maybe the best. I wish we had forty more like him.

  22. Gravatar of Todd Kreider Todd Kreider
    2. June 2019 at 13:16

    “Enjoy it while it lasts; your children will pay the price.”

    Such drama; such angst.

    As usual, The Children will be far better off than their parents and short of starting a nuclear war, what Trump does or does not do will not affect this.

  23. Gravatar of Michael Sandifer Michael Sandifer
    2. June 2019 at 16:54

    Todd Kreider,

    That’s a very naive statement. Argentina was the 12th wealthiest country on earth in the early 20th century. It was a developed country. After their turn to populist economics and authoritarianism, they took a permanent tumble. Taking affluence and democracy for granted is very dangerous.

  24. Gravatar of Todd Kreider Todd Kreider
    3. June 2019 at 06:24

    Argentina was mostly rural in the 1920s, and its growth was largely based on agriculture. The U.S. is not headed for decades of dictatorship as Argentina became.

  25. Gravatar of msgkings msgkings
    3. June 2019 at 07:46


    Can’t get too mad at VanVleet because you are part Dutch? Who knew you were such a nationalist… 🙂

  26. Gravatar of msgkings msgkings
    3. June 2019 at 07:48

    @E. Harding:

    What do you mean ‘we’ you anti-semitic Russian POS?

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