Some people may think it is no big deal, when regulator’s spending surpasses its inflows.  Think about your household income.  If ABC family spends more than what they make, somehow they need to cover that excess spending from, say, credit cards.  The same logic applies here in that the credit card company is parallel with buyers of US treasury.  The Fed Chairman, Jerome Powell blamed expensive healthcare delivery system and the aging of our population contributing to such a deficit.  Recently, it was reported the total US national debts is about $21.6 trillion.

One may think that spending has great impacts to the economy, and it does within certain boundaries.  Increasing in aggregate demand has a positive impacts on companies’ revenue from sales.  That makes the stake/stock holders (Wall Street) is happy.  The happiness of Wall Street even higher when the administration cut both the corporate and individual income tax.  These bring huge effects to the DOW (26,743.50 level on September 21, 2018)—the highest since 1929.  So, the economy will expand and unemployment is reduced to the lowest level as well.  In theory, all current macro economics policies will increase the standard of living of many, except those who got trapped with their student loans. In reality, it may not.  Please check if your monthly take home salary has increased this year surpassed the inflation rate, compared to a year ago.

However, if you own, 1 million Amazon’s (AMZN), Alibaba (BABA) or Apple (AAPL) shares, your wealth surely has increased tremendously.  So, you can make your own conclusion where the current economic policies are heading to or directed toward 🙂  But, one needs to be able to have the initial capital/fund/money to buy that 1 million shares at the first place.  We strongly believe that only a handful of US citizen will have that kind of investment money.

Cutting tax while it increases the aggregate demand, it surely will reduce government revenue from tax such that deficits will increase.  However, if the US can increase its export, the build ups may be slower.  Increasing export means winning the competition in the world market. This only happens if the US is able to produce high quality products and  cheaper than other sellers.

The trade skirmish that have been initiated by the administration to many of its trading partners may have lowered the US export.  But, at the same time, it also reduces the US import because of increasing imposed tariffs.  Depending which one is higher, the net effect will have final impact to the budget deficits.

So what did we learn from the discussions above?  It seems that managing the US Colleges and Universities are affected more by the administration’s policy in recent years.  Consequently, education industry is riskier and more challenging to be managed than before. The risk of financial failure does increase, especially to those who relied heavily on government support or aid programs, i.e., Pell Grants, Federal Student Aid, such as Perkins, Stafford, Parent Plus and others.  That is one of the main reasons, why efficiency nowadays, becomes an important vocabulary in managing a higher ed institution.