Trump is a conservative – but that won't stop him sending deficits soaring

US leaders from Reagan to Obama have used borrowing to fund spending, and the president-elect is likely to be little different

It is a post-financial-crisis myth that austerity-minded conservative governments always favour fiscal prudence, while redistribution-oriented progressives view large deficits as the world's biggest free lunch. This simplistic perspective, while perhaps containing a grain of truth, badly misses the true underlying political economy of deficits.

The fact is that whenever one party has firm control of government, it has a powerful incentive to borrow to finance its priorities, knowing that it won't necessarily be the one to foot the bill. So expect US President-elect Donald Trump's administration, conservative or not, to make aggressive use of budget deficits to fund its priorities for taxes and spending.

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