How should we respond to the next recession? That was the topic of an event hosted by the Brooking’s Hamilton Project where I spoke on Monday in Washington with OMB director Sean Donovan. I argued a number of points that address issues of current concern.

First, I argued that the possible election of “Demagogue Donald” dwarfs congressional dysfunction as a threat to American prosperity. I argued that beyond lunatic and incoherent budget and trade policies, Trump would, for the first time, make political risk of the kind usually discussed in the context of Argentina, China or Russia relevant to the USA. How else to interpret threats to renegotiate debt, prosecute insubordinate publications, and rip up treaties? Creeping fascism as an issue dwarfs macroeconomic policy.

Second, I cautioned that while 2009 could have been seen a repeat of 1929-1933 — it was not — there are no grounds for complacency. As the picture below illustrates, on current forecasts the economy will have performed as badly over the 2007-2018 period as it did over the 1929-1940 depression period. The single most important issue for containing government debt burdens, increasing US national security, encouraging more generosity towards the poor and raising middle class standards of living is accelerating economic growth.