George Savage: Is Donald Trump Working for Obama?

Is Donald Trump working for the president?  No, really.

The United States faces a looming sovereign debt-driven fiscal calamity that could strike without warning.  Finance professor John Cochrane explains in today's Wall Street Journal (behind the paywall):

If you decide that the government will just keep kicking the deficit can down the road, sell your 30-year Treasurys. Sell fast, before everyone else does—because if we all try to sell, we just drive down the price and long-term interest rates rise. So as long as we don't solve 2025, we are at risk of a spike in long-term rates if investors dump long-term U.S. debt.

It gets worse. Our government borrows money for relatively short terms. Every few years it has to borrow new money to pay off the old debt. But if we, the bond market, decide that the government will end up inflating its way out of its fiscal problems, we refuse to roll over short-term debt. Then the government must print new money to pay off the maturing debt, bringing us inflation right away.

Short-term debt is the fuel of financial crises. It's safe to lend for a year, even to an insolvent government, if you think everybody else will roll over your loan next year. But if you get a hint that others won't lend the government new money next year to pay back your loan, run now. This is basically what happened to Greece, Portugal and Lehman Brothers. They didn't need money for immediate deficits or even to pay interest; they needed money to roll over maturing short-term debt. The market ran away because it didn't trust a long-run solution. We are vulnerable to the same sort of run.

Only a couple of weeks back, Wisconsin congressman and House Budget Committee chairman Paul Ryan presented the first and only credible plan to eliminate the risk of a catastrophic loss of confidence in US debt.  Donald Trump doesn't think much of Ryan's plan.

Meanwhile The Donald, abetted by his media chorus, spent the last couple of weeks channeling popular dissatisfaction with the president's ruinous policies into a kooky search for his long form birth certificate.  

President Obama, thankfully, finally burst the Trump bubble:

I know that there's going to be a segment of people for which, no matter what we put out, this issue will not be put to rest.  But I'm speaking to the vast majority of the American people, as well as to the press.  We do not have time for this kind of silliness.  We've got better stuff to do.  I've got better stuff to do.  We've got big problems to solve.  And I'm confident we can solve them, but we're going to have to focus on them — not on this.

Unfortunately, the president made his remarks just before boarding Air Force One for a day of taping an appearance on the Oprah Winfrey show followed by several big money fundraisers for his 2012 reelection effort.

But The Donald is thankfully now finally focusing on the real issue concerning the average voter:  President Obama's college transcripts.