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The conflict between Trump, who wants to increase the debt ceiling (and wants Biden to do it now....), compared with Musk who wants to slash government spending despite hurting the people who rely on it (....what does this say about the morality of th world's richest man?)

Raw Story)

Trump lashes out at 'nasty trap' laid by Democrats in lengthy screed

President-elect Donald Trump took to his Truth Social platform on Wednesday to complain about the state of the omnibus spending deal — and demand that no deal pass without raising the debt ceiling for next year.

The debt ceiling, which can force the United States to default on payment obligations it already made, was extended to 2025 after a month of furious negotiation last year by then-House Speaker Kevin McCarthy (R-CA), who tried to squeeze draconian cuts to social spending out of the deal, and the Biden administration. At the time, some Republicans were opposed to raising the debt ceiling at all.

Now on the hook if the nation defaults and blows up the world economy, Trump is complaining that the debt ceiling was timed by Democrats to be a "trap" against him.

"Sounds like the ridiculous and extraordinarily expensive Continuing Resolution, PLUS, is dying fast, but can anyone imagine passing it without either terminating, or extending, the Debt Ceiling guillotine coming up in June?" asked Trump.

"Unless the Democrats terminate or substantially extend Debt Ceiling now, I will fight ‘till the end," he continued. "This is a nasty TRAP set in place by the Radical Left Democrats! They are looking to embarrass us in June when it comes up for a Vote. The people that extended it, from September 28th to June 1st, should be ashamed of themselves. It was political malpractice!"

Trump added: "Also, the Communist Global Engagement Center, a project of Crooked Hillary Clinton, should not in any way, shape, or form be extended and, the shielding of the very corrupt J6 Unselect Committee of Political Losers and Thugs would be suicidal for any Republican approving it. Likewise, this is not a good time for Congress to be asking for pay increases. Hopefully, you’ll be entitled to such an increase in the near future when we, 'MAKE AMERICA GREAT AGAIN!'"

All of this comes as one of Trump's closest allies and strategist, tech billionaire Elon Musk, blew up GOP support for the resolution and threatened primary challenges against any Republican who votes for it — a development that upended the whole process.
.....

A right royal mess, all because Musk is beholden to the balanced budget/debt and deficit myth.

(cont)

Two decades later, despite the failure of Neoclassical “Dynamic Stochastic General Equilibrium” models to anticipate the biggest economic crisis since the Great Depression, and despite Nobel Laureates like Paul Romer and Joseph Stiglitz rubbishing them, DSGE models are still the workhorses of Neoclassical economics.
......

Unfortunately, in economics (which is not a pure science), anomalies are historical and transient, rather than eternal and reproducible (as in pure science). The Great Depression, WWII, the post-War “Golden Age of Capitalism”, the 70s Stagflation, the 80s stock market bubble, the 90s recession, the Great Recession, now the post(?)-Covid boom and inflation… Each new crisis knocked the previous one off its pedestal. The fact that Neoclassical economics can’t explain the Great Depression—or that it has an explanation which is an insult to anyone who lived through it (Prescott 1999)—doesn’t matter to any modern economist who is working on today’s issue of inflation. Old failures can be forgotten.

Just as importantly, the underlying Neoclassical vision of capitalism is a highly seductive one. It is a meritocracy in which what you earn is what you deserve, where harmony rules because of equilibrium, and which is free of coercion: there’s no need for government control when the market works “perfectly”. Therefore, even if some students break away from Neoclassical economics because of one of its failures, enough “true believers” can be found in the student body to replace existing “true believers” when they retire.
......
The final factor that enables economics to escape the revolutionary change it desperately needs is rather ironic: myths in economics survive because, despite the dominance of our politics by economic ideas, you don’t need economic theory or economists to have an economy. The economy exists independently of economists, and would probably function a lot better if economists simply didn’t exist. In contrast, engineering doesn’t exist independently of engineers: you need engineers to create the technological marvels the rest of us take for granted, and when something goes wrong with the things that engineers create, engineers face real consequences: a collapsing bridge fingers the engineers who didn’t take account of its harmonics, a crashing plane implicates the engineers (or their managers) who approved a faulty design.

To use Nicholas Taleb’s phrase, economists don’t have any “skin in the game”: they don’t suffer any serious consequences when their advice is badly wrong, and there is a myriad of complicating factors that they can point at to explain away any failure. Ironically, the fact that economists aren’t strictly necessary is something that gives them great power. They are the witchdoctors of capitalism, holding the leaders of our society in their thrall as they read the entrails of their Dynamic Stochastic General Equilibrium models, while at the same time they have no idea how that society actually works.
......

Neoclassical economists do not use mathematics: they abuse it. I coined the neologism “mythematics” to describe what they do, and my colleague Asad Zaman coined the equally apt “mathemagics”. What Neoclassicals do appears to be mathematics to the uninitiated, but they either use the wrong mathematical tools, or start from ludicrous assumptions, or make even more ludicrous assumptions when the results they reach don’t have the properties they desire.
.....

Add the existence of a banking sector that creates money when it lends (Moore 1979), and replace the assumption that capitalists invest all their profits with the more realistic assumption that capitalists invest more than profits during a boom, and less than profits during a slump, and you get Minsky’s “Financial Instability Hypothesis” (Minsky 1982)—see Figure 13. Include government deficit spending and you get a complex-systems version of Modern Monetary Theory (Kelton 2020).


Keen's completed publication will be available in mid 2025.

Money is oppressive of Blacks and other minorities... it's a white man's thing...

Oops...

(msm)

Bloomberg reports that United States treasury yields are significantly higher now than they were in 2017 when Trump's first term began, which allowed him and Republicans to pass tax cuts without making any offsetting spending cuts that could have been politically painful.

Conservatives such as Rep. Chip Roy (R-TX) have started to draw the line about ensuring the government makes major spending cuts before he signs off on any new tax cuts.

Is Trump about to come up against the mainstream 'government-debt bad' mythology?

Milei has just achieved a surplus via massive government cuts.....and poverty in Argentina is sky-rocketting.

Good one, Milei.

More trouble for Trump on the horizon, as some Repubs who are indoctrinated by the mainstream "balanced government budget" mythology seek 'budget reconciliation:

(Raw Story)

Swing-district Republicans fear 'worst-case scenario' in big MAGA budget bill.

The New York Times has written an outline of Republican plans for a major budget reconciliation (read: 'balanced budget') package and what it suggests seems to involve slashing money for programs that benefit low-income Americans to fund tax cuts for the wealthy and corporations.

Among other things, the Times reports that the GOP is eyeing work requirements to Among other things, the Times reports that the GOP is eyeing work requirements to Medicaid that would cause an estimated 600,000 people to lose their health coverage; slashing the portion of Medicaid paid out by the federal government, thus putting an increased burden on states to fund the program; taxes on people whose offices offer free gyms; taxing all scholarship and fellowship income; ending the home mortgage tax deduction; and slapping a ten percent tariff on all imported goods, which would raise costs on consumers.

In addition to all that, Republicans are considering completely repealing clean energy tax credits that were part of the Inflation Reduction Act signed by former President Joe Biden in 2022.

However,  these plans have run into some opposition from many Republicans whose districts have benefited from the investments made in the IRA.

In fact, a group of 18 Republicans wrote Speaker Mike Johnson (R-LA) to warn that "a full repeal would create a worst-case scenario where we would have spent billions of taxpayer dollars and received next to nothing in return."

Republicans currently have a very narrow majority in the House of Representatives, meaning that passing any kind of bill will be very tricky presuming House Democrats remain united in opposition.

Elizabeth Warren's alternative list of DOGE government- spending cuts:

(Alternet)

'Unrealistic and cruel': Top Dem tells Elon Musk how to cut $2 trillion in a decade

U.S. President Donald Trump's Department of Government Efficiency has faced intense criticism and even multiple lawsuits, some progressive groups and lawmakers are also engaging, including Sen. Elizabeth Warren on Thursday.

When Trump announced DOGE in November, he said the presidential advisory commission would work to "slash excess regulations, cut wasteful expenditures, and restructure Federal Agencies." Warren (D-Mass.) on Thursday detailed 30 proposals that would cut at least $2 trillion of government spending over the next decade.

In a lengthy letter  lengthy letter to the chair of DOGE, billionaire Elon Musk, that was first reported by Time, Warren highlighted that "you have publicly called for sizable cuts in funding—from $500 billion in annual spending to 'at least' $2 trillion in cuts to federal spending—although recently, you said you may not actually be able to meet that goal."

"I have very serious concerns about both the DOGE process and the policies that you have publicly discussed to date," she wrote. "With regard to process, as I raised in a still-unanswered letter to President-elect Trump regarding Mr. Musk, sent on December 16, 2024, it is not clear that you and other DOGE leaders are able to identify and mitigate your conflicts of interest and adhere to commonsense ethics standards. As a result, the committee appears to be a venue for corruption, allowing well-connected billionaires to put government policies in place that enrich them while hurting ordinary Americans."

I am disturbed by the dangerous proposals you have discussed and released to date: proposals from you and your allies to cut Medicare, Medicaid, Social Security, veterans' benefits, and other programs."

"With regard egard to policy, I am disturbed by the dangerous proposals you have discussed and released to date: proposals from you and your allies to cut Medicare, Medicaid, Social Security, veterans' benefits, and other programs that tens of millions of Americans count on and rely on are unrealistic and cruel. It would be outrageous to cut these programs in the name of government thriftiness while handing out trillions of dollars in tax cuts for billionaires and big corporations," she continued. "But, your broad point—that the federal government spends trillions of dollars on wasteful spending is correct. And if you are serious about working together in good faith to cut government spending—in a way that does not harm the middle class—I have proposals for your consideration."

The letter features several recommendations to cut spending at the U.S. Department of Defense, which has never passed an audit. Specifically, it says: negotiate better contracts, recreate a renegotiation board to challenge excess profits, stop using the military to perform civilian jobs, end corporate welfare for Pentagon contractors and foreign governments, instruct the agency to stop gaming the budget process, boost energy efficiency and industry competition, tackle repair restrictions on military equipment, and "avert wasteful government spending on plutonium pit production at the Savannah River Site."

Warren also has suggestions for federal healthcare programs, such as curbing taxpayer abuse by Medicare Advantage insurers, engaging in more Medicare negotiations to lower prescription drug costs, supporting efforts to crack down on pharmacy benefit managers, quashing patent abuses by the pharmaceutical industry, exercising march-in rights to reduce medication prices, breaking up conglomerates, and keeping private equity out of the industry.

To save save on education, the senator called for eliminating or reducing funding for the federal Charter Schools Program and making for-profit colleges ineligible for federal grant aid. On the taxation front, she advised fully funding the Internal Revenue Service as well as clawing back tax expenditures and closing loopholes for the wealthy.

Her letter further suggests keeping the federal government's cloud and other information technology markets competitive, reducing waste in unnecessary federal arrests and detention programs, and working with the Government Accountability Office, inspector general offices, and other watchdogs "to detect and combat fraud, waste, and abuse."

"DOGE's agenda has focused on limiting the size of the federal government to increase efficiency and save taxpayer dollars. As the list above indicates, there are many opportunities for identifying savings that would not hurt the middle class, and that would eliminate wasteful special interest spending," Warren wrote. "But focusing solely on cutting federal budgets is myopic and counterproductive, and misses key ways in which the government can cut costs for ordinary Americans, saving them billions of dollars."

"For example, the federal government should continue its efforts to target abusive surprise fees charged by businesses across the economy," she noted, pointing to rules from the Consumer Financial Protection Bureau, U.S. Department of Transportation, and Federal Trade Commission (FTC) targeting "junk fees."

Empowering the U.S. Department of Justice and the FTC "to break up monopolies and ensure competition would have extraordinary benefits for families," the senator wrote.

cont.

Donald Trump has resorted to 'survival of the fittest' economics to 'MAGA', via tariffs on allies and adversaries alike. 

The question is: can he reduce inequality and socio-economic disadvantage in the US which already has the highest levels of inequality among wealthy countries, in fact comparable  to some of the poorest countries?

We have see classical economics which still informs modern economic practice, is no longer working to maximise economic progress for nations.

In an age of production by individual artisans competing in 'invisible hand' markets as postulated  by Adam Smith, Smith could  posit that producers of goods serving their own self-interest  would  also result in the best outcome for the whole society.

It's an obselete theory in the modern 'post-industrial' economy,  because production is no longer mostly peformed by individual artisans motivated by  self-interest, but mostly by governments eg, the US's  IRA and Oz's  "building Australia", publically-funded operations (which the private sector can't or won't do); and global corporations with supply chains in many countries.

[Not surprisingly, 'survival of the fittest' Conservatives reject such government programs, except in the case of the nuclear and military industries; eg Dutton wants the public sector to fund his nuclear program; and Trump wants to increase military spending while cancelling the IRA.]

As to the question of funding the public sector, Trump will bring this into sharp focus in the coming months as he reduces taxes on the wealthy (and companies) while US government debt is soaring - considered to be a problem by obsolete mainstream neoclassical economists who are bent on restraining public sector involvement in the nation's productive operations.

Can Trump reduce taxes and government spending,  and increase the standard of living of median wage workers faced with high prices  and others who rely on government programs, as promised?

Stay tuned.....