Assuming there is no terrorist attack anytime soon, the next big deal that we as a country will have to deal with will be a fiscal crisis.

It may be a recession or it may be something much more severe, such as the world losing confidence in the value of the dollar.

It is coming.

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This is not to deny that there are many positive signs in the economy today.

Corporate earnings are up, unemployment is near historic lows, the tax bill is energizing real returns and the administration is aggressively reducing the Obama regulatory overreach.

This is all good news. It should portend good times.

Then there are the series of “buts.”

As a nation, we have never gone a decade without a recession.

The business cycle is a difficult thing to ignore, especially when there appear to be three major public policy actions that — if carried to their natural conclusion — will play a large role in muting the good news of today’s economy.

First is the trade policy of President Trump Donald John TrumpBiden leads Trump by 36 points nationally among Latinos: poll Trump dismisses climate change role in fires, says Newsom needs to manage forest better Jimmy Kimmel hits Trump for rallies while hosting Emmy Awards MORE.

History seems to mean little to the president and the shrinking number of Stephen Bannon loyalists who still surround him.

But think of Smoot-Hawley, the ‘America First’ tariff regime of the late 1920s that was one of the major factors driving the nation into the Great Depression.

The decision to withdraw from the Trans-Pacific Partnership (TPP) negotiations was unquestionably the worst and most counterproductive choice the president has made since taking office.

The TPP would have given American entrepreneurs and farmers access to some of the fastest growing and most lucrative markets in the world: the Asian nations other than China.

It would also have given us at least a glimmer of hope that a regime could be put in place that would help protect one of our most important trade advantages: the intellectual property of our cutting-edge companies.

All this was abandoned in the name of some jingoistic gobbledygook that sounded good on the stump. We ended up cutting off one of our best chances to actually level the international trade field.

The decision will bring significant, self-inflicted economic loss on our nation over time.

The president now wants to follow up on his TPP action. He has threatened a unilateral withdrawal from NAFTA and a series of trade sanctions against China.

It is not a large leap of logic to conclude that there will be a worldwide chilling of commerce if this course is pursued.

It is step one to a recession.

The Congress, with the president’s support, just passed a continuing resolution which adds — when you factor in all its costs, including interest on interest — approximately half a trillion dollars of new debt.

We are now headed towards deficits that will likely total $1 trillion next year, and in the following years.

Continuing on this course, our debt — which is beyond anything we have seen other than during World War Two — will soon be astronomical.

It will be 100 percent of GDP.

And no one cares.

Actually, that is wrong. The people who buy this debt, who lend us money, without whom we cannot run the federal government? They care. They are worried.

The Chinese, who have been the largest single buyer of our debt, have threatened to stop. There are a number of reasons for this, including the Trump trade policies discussed above.

There is also the fact that, like our other creditors, they are concerned that they will not be paid back fairly.

Anyone buying our debt at this level of leverage has to be concerned that they will, in the end, only get back inflated dollars that are worth a lot less then the sum they lent us.

Step two to a recession or worse: people charge us a lot more to buy our debt or simply stop buying it.

The Federal Reserve now finds itself in a bad place and there is no good way out.

The Fed injected trillions of dollars into the economy in order to avoid a catastrophic economic collapse during the banking crisis. This action worked.

But they kept printing money long after the crisis, dramatically complicating the exercise of how to reduce this extra money, when it was no longer needed, in an orderly way.

Now, they are paying the piper.

They have no choice but to increase interest rates and stop repurchasing treasuries and mortgage-backed securities as they come due.

Depending on how quickly they choose to do this, it will inevitably chill economic growth, while theoretically controlling the potential for rampant inflation.

It will also add significantly to the federal deficit, as interest costs will spike.

In the interest rate area, every quarter of a percentage point the Fed tacks on — and the word is that they are looking to four such increases this year — adds approximately $425 billion to the deficit in financing costs over ten years.

Step three: the Fed, in doing its job of reducing the excess money supply it created, raises rates and slows the economy.

Too much, too soon and you get a contraction that is called a recession.

None of this has to happen. This dance can be cancelled.

The president can skip the Smoot-Hawley saber-rattling.

The Congress can step up on fiscal responsibility, specifically by improving the costs of core entitlement programs like Medicare and Medicaid.

The Fed has dug a hole. How it climbs out is not clear, but we will leave that to its new chairman, Jerome Powell.

A recession is not inevitable.

But it does seems likely, considering the nature of the players who are calling the tunes and setting the steps to the dance.

Judd Gregg (R) is a former governor and three-term senator from New Hampshire who served as chairman and ranking member of the Senate Budget Committee, and as ranking member of the Senate Appropriations Foreign Operations subcommittee.