In an interview with Time magazine for its Person Of The Year issue, President-elect Donald Trump said something... true?
“Well sometimes you have to prime the pump,” Trump told the Time editors. “So sometimes in order to get the jobs going and the country going, because look, we’re at 1% growth.”
“I was talking to the head of a major country, because most of them have called me and I’ve talked to all of them,” he went on. “[They said,] ‘Yes, we are doing not well, not well. Our GDP is only 4.5%.’ I said wow, if our GDP was 4.5% we’d be the happy ― I mean our GDP is probably less than 1% if you think about it. And going in the wrong direction.”
OK, well, that last part is wrong. The United States’ real GDP grew 3.2 percent in the third quarter of this year, which was better than the 1.4 percent growth the country experienced in the second quarter. But whatever. The point is that with his talk of “priming the pump,” Trump appears to be embracing the version of Keynesian economic theory that has dominated American policymaking since World War II.
The idea is pretty simple: When the economy gets into a rut, the government can get it out by spending money. Hiring workers to fix bridges and paint schoolhouses puts money in their pockets, which they can, in turn, go out and spend on other goods. Retailers can thus afford to employ workers to sell those goods, who in turn can spend their pay on other things, and off we go. The economy grows.
Republicans have made a show of rejecting this idea since President Barack Obamatook office in 2009. House Speaker Paul Ryan (R-Wis.), Senate Majority Leader Mitch McConnell (R-Ky.) and others have insisted that government spending is economic poison, and that a responsible government can somehow cut its way to growth. This is what much of Europe has been trying to do since the financial crisis, with lousy economic (and political) results.
More: Donald Trump Just Contradicted Everything Republicans Have Said About The Economy For 8 Years
Republicans obstructed President Obama's attempts to increase government spending to help stimulate the sluggish economy - so will they now embrace Trump's proposed policies to increase the national debt with massive government spending for infrastructure projects? I suspect they will...
“Well sometimes you have to prime the pump,” Trump told the Time editors. “So sometimes in order to get the jobs going and the country going, because look, we’re at 1% growth.”
“I was talking to the head of a major country, because most of them have called me and I’ve talked to all of them,” he went on. “[They said,] ‘Yes, we are doing not well, not well. Our GDP is only 4.5%.’ I said wow, if our GDP was 4.5% we’d be the happy ― I mean our GDP is probably less than 1% if you think about it. And going in the wrong direction.”
OK, well, that last part is wrong. The United States’ real GDP grew 3.2 percent in the third quarter of this year, which was better than the 1.4 percent growth the country experienced in the second quarter. But whatever. The point is that with his talk of “priming the pump,” Trump appears to be embracing the version of Keynesian economic theory that has dominated American policymaking since World War II.
The idea is pretty simple: When the economy gets into a rut, the government can get it out by spending money. Hiring workers to fix bridges and paint schoolhouses puts money in their pockets, which they can, in turn, go out and spend on other goods. Retailers can thus afford to employ workers to sell those goods, who in turn can spend their pay on other things, and off we go. The economy grows.
Republicans have made a show of rejecting this idea since President Barack Obamatook office in 2009. House Speaker Paul Ryan (R-Wis.), Senate Majority Leader Mitch McConnell (R-Ky.) and others have insisted that government spending is economic poison, and that a responsible government can somehow cut its way to growth. This is what much of Europe has been trying to do since the financial crisis, with lousy economic (and political) results.
More: Donald Trump Just Contradicted Everything Republicans Have Said About The Economy For 8 Years
Republicans obstructed President Obama's attempts to increase government spending to help stimulate the sluggish economy - so will they now embrace Trump's proposed policies to increase the national debt with massive government spending for infrastructure projects? I suspect they will...
