David Stockman: Trump Sitting On Ticking Fiscal Time Bomb

David Stockman joined Fox Business and Maria Bartiromo on the morning flagship show Mornings with Maria to discuss the growing battle over the U.S national debt.

The conversation started with testimonial hearing notes from Congressman Mick Mulvaney, a Republican from South Carolina, who is currently the nominated to be the incoming White House Director for the Office of Management and Budget.

Mulvaney

Rep. Mulvaney told the confirmation committee hearing, “If you were an ordinary American family the equivalent to you of a $20 trillion debt is a credit card bill of $260,000. American families know what that would mean to them. It is time that this government learns what this means to us.”

In order to expand on Rep. Mulvaney’s insights former OMB director under Ronald Reagan, David Stockman unleashed his debt and budgetary analysis.  Stockman began by saying, “We are a society with baby boomers that are now 35 years older. We are heading into an absolute fiscal bloodbath. As the Congressional Budget Office (CBO) put out, there is $10 trillion more debt built in over the next decade. Even before one dime of tax cuts from Trump, infrastructure spending or an increase in defense takes place.”

David Stockman worked in the Reagan Administration where he oversaw the budget for four years. He is a former two term Congressman who also worked at various Wall Street institutions.  Stockman is the current bestselling author of Trumped! A Nation on the Brink of Ruin… And How to Bring It Back.

[Ed. Note: To learn how to score your own FREE copy of Trumped! And have it sent directly to your door CLICK HERE. In it, you will learn the 10 Great Deals Donald Trump must make… and much more. All from Reagan’s former budget confidant.]

“So what I suggest is that we have an even more absurd fiscal proposition from Donald Trump today than we did back in 1981 when we tried to cut taxes, increase defense substantially and balance the budget. They are going to be in crisis within weeks. The debt ceiling was suspended arbitrarily until March 15. When it comes back into effect, there will be $20 trillion of debt.”

“Before they can do anything with all of this stimulus they are talking about they are going to have to raise the debt ceiling. Where are the votes going to come from? It is going to make 2011, and the debt ceiling crisis then, look like a Sunday school picnic.”

When pressed on entitlement spending and the incoming administration, “I think he is clueless about the fiscal mess he is inheriting… We can’t keep drifting toward this wall. When he says we are not going to cut social security or medicare, that is $1.6 trillion per year in spending. When he says we are going to add to Veteran care that is $185 billion. When he says we need much more defense to get strong again, which is not true – we have more defense than we need, that is already $650 billion.”

David Stockman Debt Showdown

“What I am telling you is, he is going to increase everything, cut none of the entitlements, argue that he is going to reduce taxes, add a trillion of infrastructure as well. This does not add up. This is worse than what the Reagan administration proposed in 1981. Even then is was called a “riverboat gamble.”

“This is the most irresponsible fiscal equation ever presented to Washington. We have the markets today celebrating 20,000 because they think it is going to be a great stimulus. This is ‘rosy scenario’ all over again.”

“The CBO said $10 trillion in spending over the next decade to be spent if we never have another recession. Think about that. The last one was in 2009, through 2027 they are saying no recession. That is 220 months without a recession. That has never happened in human history.”

To catch the full interview with David Stockman on Fox Business click here.

Thanks for reading,

Craig Wilson, @craig_wilson7
for the Daily Reckoning

The Daily Reckoning