Mick Mulvaney Criticizes the GOP on Deficits and Immigration — Jeopardizing His Job
Author: Greg Valliere
February 21, 2020
WASHINGTON IS BUZZING OVER comments made this week by White House Chief of Staff Mick Mulvaney, who has committed a cardinal sin: he has spoken candidly, without the usual spin, about budget deficits and the need for more immigrants.
MULVANEY’S COMMENTS WERE LARGELY OVERLOOKED as two other stories hogged the headlines: the Democrats’ desperate search — thus far unsuccessful — for a savior to block Bernie Sanders’ astonishing surge, and President Trump’s scorched earth campaign to rid his administration of any dissenters.
YET A VOCAL DISSENTER is Trump’s Chief of Staff, who probably will be ousted by spring. Why? Mulvaney said this week that Republicans who once opposed big budget deficits are now hypocrites.
THE KEY QUOTE: “My party is very interested in deficits when there is a Democrat in the White House. The worst thing in the whole world is deficits when Barack Obama was the president. Then Donald Trump became president, and we’re a lot less interested as a party.”
THE DEFICIT WILL EXCEED $1 TRILLION THIS YEAR, even with a full-employment economy, and is on a path to soar well past $1 trillion annually for the next several years. This has begun to embarrass GOP deficit hawks like Mulvaney, who rose to prominence in South Carolina with an anti-spending Tea Party agenda.
DEFICIT SPENDING HAS BEEN EMBRACED BY BOTH PARTIES: It’s almost as if Washington has been seduced by the Modern Monetary Theory, which contends that deficits don’t matter much because there’s such an insatiable investor demand for Treasury paper. This theory overlooks the inevitable surge in debt servicing costs later this decade, in our opinion.
MULVANEY IS A VERY AMBITIOUS FELLOW, probably thinking about a presidential run in 2024, so carving out a niche as a deficit hawk makes sense. But his comments this week on immigration are riskier, considering the Trumpian aversion to not just illegal immigration, but legal immigration as well.
THE U.S. ECONOMY CAN’T GROW MUCH FASTER without allowing more immigrants into the country, Mulvaney said in a private meeting this week. According to a transcript obtained by The Washington Post, he said “We are desperate — desperate — for more people.” Mulvaney added: “We are running out of people to fuel the economic growth that we’ve had in our nation over the last four years. We need more immigrants.”
GOOD LUCK WITH THAT ONE: Trump may express support for allowing highly skilled workers into the country, but the distinction between them and illegal immigrants is lost on his rabidly anti-immigrant political base. Hard-line Trump adviser Stephen Miller wants restrictions on legal immigrants, a position that increasingly frustrates U.S. businesses, which have run out of workers.
AS WE TRAVEL AROUND THE COUNTRY, we constantly hear two complaints: first, there’s an acute labor shortage that is hurting economic growth; second, there’s no way trillion dollar budget deficits can persist without consequences. Trump’s chief of staff agrees — and he will pay for his candor, as all dissent is crushed.
The views expressed in this blog are provided as a general source of information based on information available as of the date of publication and should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities. Speculation or stated believes about future events, such as market or economic conditions, company or security performance, or other projections represent the beliefs of the author and do not necessarily represent the view of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies. Every effort has been made to ensure accuracy in these commentaries at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and AGF accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. Any financial projections are based on the opinions of the author and should not be considered as a forecast. The forward looking statements and opinions may be affected by changing economic circumstances and are subject to a number of uncertainties that may cause actual results to differ materially from those contemplated in the forward looking statements. The information contained in this commentary is designed to provide you with general information related to the political and economic environment in the United States. It is not intended to be comprehensive investment advice applicable to the circumstances of the individual.
AGF Investments is a group of wholly owned subsidiaries of AGF Management Limited, a Canadian reporting issuer. The subsidiaries included in AGF Investments are AGF Investments Inc. (AGFI), AGF Investments America Inc. (AGFA), AGF Investments LLC (AGFUS) and AGF International Advisors Company Limited (AGFIA). AGFA and AGFUS are registered advisors in the U.S. AGFI is a registered as a portfolio manager across Canadian securities commissions. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. The subsidiaries that form AGF Investments manage a variety of mandates comprised of equity, fixed income and balanced assets.
About AGF Management Limited
Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. AGF brings a disciplined approach to delivering excellence in investment management through its fundamental, quantitative, alternative and high-net-worth businesses focused on providing an exceptional client experience. AGF’s suite of investment solutions extends globally to a wide range of clients, from financial advisors and individual investors to institutional investors including pension plans, corporate plans, sovereign wealth funds and endowments and foundations.
For further information, please visit AGF.com.
©2021 AGF Management Limited. All rights reserved.