Friday, November 25, 2016

Political Pranks

'Tis the season for them and I'm waiting with baited breath to see what the Obama administration has planned to discomfort the incoming Trump folks. Remember when W took over just in time for the EPA to reduce the allowed levels of Arsenic in drinking water from 50ppb to 10. Sounds great, but the 50ppb had worked out just fine up to that point and was in line with levels of naturally occurring Arsenic found in the water in many areas of the south west. Bush eventually got this regulation cancelled but not before the press roasted him for upping the allowed level of Arsenic by a factor of 5.

For pranks like this to work, you have to wait until the last possible moment before the opposition ogre is sworn in, then beat him up for the consequences. In Trumps case I'm expecting Janet Yelin to announce an increase in interest rates, probably a week before the inauguration. The Obama people have been holding interest rates down for the last 8 years in an effort to get the economy going, stepping on the gas as it were. Unfortunately high taxes and additional layers of regulation are like holding the brake pedal down, so no movement. Japan has been trying this for the last 30 years or so and it hasn't worked there either.

When Obama took office, we were paying interest on $8T in debt. As of today we are paying interest on $20T in debt although at a lower rate than in 2008. If the rate is raised, we will be paying a good deal more in interest and less will be available in discretionary funding for whatever pet projects Trump has in mind. There will be pressure from the Dems to raise taxes to cover the increased debt payments and derision from the press if Trumps back pedals on lowering taxes.

Other such stunts are certainly possible and the administration has until Jan 22 to think of them. What they will be I don't know. That some sort of wrench will be tossed into the wheels, I have little doubt.

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