The landslide victory of Trump and the Republicans in November showed that the country is in urgent need of change, and Americans made it clear to Washington that “this is not working” relative to the current situation in the United States. [emphasis, links added]
While the mandate may be clear, executing this change will be a huge challenge.
The Biden-Harris administration has thrown our fiscal sector into complete disarray, limiting many of Trump’s options and making core policy proposals contradict our fiscal realities.
Here are three of the biggest challenges the incoming administration must address.
Cut spending and deficits
With the debt burden at $36 trillion, more than 120% of GDP, growing at about $1 trillion every 100 days, and with the deficit as a share of GDP twice the historical average, any spending cuts will need to be carefully planned.
Tools and strategies that may have worked in the past must now be used with greater caution.
With disruptors Elon Musk and Vivek Ramaswamy leading the Department of Government Efficiency, better known as DOGE, they will be able to easily identify adequate spending and regulatory cuts.
However, implementation must prioritize efforts to increase GDP before spending cuts. …shear…
oil production
One of the three stools in Treasury Secretary nominee Scott Bessant's “3-3-3” economic plan (and deficit reduction) Unlock growth momentum by adding 3 million barrels per day or more of oil production.
The theory goes that more production will increase our energy independence and lower the cost of almost everything.
The challenge is that the oil industry needs a certain price to turn a profit, and even higher prices to invest and fill the pipeline (no pun intended) for future drilling and refining.
A recent Wall Street Journal article noted that “U.S. energy companies, on average, say they need WTI Crude oil prices need to reach at least $65 per barrel to be profitable, and $89 per barrel to significantly increase drillingAccording to the latest survey from the Federal Reserve Bank of Kansas City.
Experts believe that even if industry is deregulated, there may not be enough cost savings to change this dynamic.
From a practical perspective, trying to stimulate growth through oil production amid a hard bottom in oil prices is a difficult problem.
This is a difficult problem that the Trump administration needs to solve. …shear…
Trump has assembled many strong individuals on his team and has an entrepreneurial vision, but his economic and financial task remains a monumental one.
Americans need to be patient as good policy goals face tough fiscal realities in the United States.
Read the full article on Fox News
