Stockman: This Stock Market is Delusional
[Ed. Note: To see exactly what this former Reagan insider has to say about Trump and the fiscal threats from the market facing a massive debt crisis, David Stockman is sending out a copy of his book Trumped! A Nation on the Brink of Ruin… And How to Bring It Back to any American willing to listen – before it is too late. Get your free copy CLICK HERE.]
David Stockman joined Stuart Varney at Fox Business to offer his take on Trump’s corporate tax cut plan and the expectations from the markets surrounding the White House agenda.
When asked about the possibility that a tax cut could pay for itself by the Fox Business host David Stockman responded, “If only that were true. More is better but also, we’re lowering the rate to 15% for business income on a pass through basis. The corporate rate is coming way down. I am for it. Get rid of the thing. It is obsolete and uncollectable.”
“My second point is you’ve got to pay for it with spending cuts or alternative revenues. We’re talking about four or five trillion dollars of revenue lost from the corporate sector, that include the pass through and individual rates – in addition to the spending that the President wants that include defense, the wall, etc. You have to be able to pay for that.”
David Stockman is the best-selling author of Trumped! A Nation on the Brink of Ruin… And How to Bring It Back. Stockman served as a two-term Congressman from Michigan and was also a member of President Ronald Reagan’s administration where he was the Director of the Office of Management and Budget.
When asked on newly appointed Treasury Secretary Mnuchin’s comments indicating that growth would gradually pay for the tax cuts Stockman did not hold back. The economist responded within hesitating on Mnuchin’s comments saying, “He’s delusional. We’re going to get very little growth from cutting the corporate rate – though I agree they need to do it. The corporate rate is an accounting matter for businesses where they offshore accounting income. The United States would get a little bit of that back but when jobs go offshore, factories go offshore, it’s for economics – not tax rates.”
When the Fox Business host prompted on the expectation that the tax proposal would offer massive stimulus for money coming back to the United States economy, Stockman refuted, “First of all, it comes back at a rate of 10%. Second, the total available is between $2-2.5 trillion which makes $250 billion over a few years. That’s a rounding error in a government that is going to collect $40 trillion over the next decade and spend $53 trillion. It is not really stimulus. It is a small amount of revenue reflow which is good to have but won’t make that big of difference.”
When asked about the potential impact on “mom and pop business” operations from a tax stimulus Stockman carried on with a similar tone. He urged, “No, that’s more deficit. Unless you offset it, and we’re already drowning in $10 trillion of built in debt. In addition to another $5 trillion that Trump wants to add on top. We have a debt crisis. There is going to be no tax bill whatsoever. They will end up in the worst fiscal bloodbath and debt ceiling crisis, month after month, that you could ever imagine.”
“The U.S Treasury is down to having less cash on hand than Apple Co. and that will be gone by July. There is no working majority in the Congress to raise the debt ceiling which is now frozen into law. We’re dealing with thirty years of fiscal profligacy. While this is not Trump’s fault, he inherited it, there’s nothing he can do about it when there is no Republican majority that is close to lining up. Look at health care, look at the wall – he can’t get a majority.”
“Washington has basically bankrupted the country. It is now basically impossible to pass a tax cut because we’re borrowing so much money. In the last 12 months, we’ve borrowed $750 billion and the next recession has not even happened.”
When asked why investors should take to the stock market, Stockman did not blink an eye when encouraging, “I think anybody who is investing in this stock market is delusional.” The host then asked where people should invest – to which Stockman continued, “I would say get in cash, get in gold. Wait for the storm to hit. It’s going to be a torrential financial upheaval when it comes.”
The Fox Business host, in opposition, asked, “David, you’ve been saying this, to my knowledge, for ten years. If I had followed your advice ten years ago I would not be able to retire.”
David Stockman with a rebuttal of his analysis noted, “Well, if you had followed my advice in 2000 you wouldn’t have lost 50% of your money. If you had followed my advice in 2007 you wouldn’t have lost 60% of your money. These bubbles are made by the Federal Reserve. They come and go and this one is going to collapse.”
To catch the full interview with David Stockman – CLICK HERE.
Learn how to get your FREE copy of Stockman’s best-selling book Trumped! – CLICK HERE.
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