Stockman: We're Borrowing Our Way To Economic Disaster

Tyler Durden's picture

Authored by Craig Wilson via DailyReckoning.com,

David Stockman joined the Fox Business and the show Mornings with Maria to discuss the tax reform highlights for the current White House and GOP platform and what he views as a real threat of economic disaster in the U.S. During the discussion Stockman highlights what to expect from a border adjustment tax possibility, the creation of jobs and the impact on Wall Street in the age of Donald Trump.

Stockman takes to point the cause of tax reform in the current White House. He begins the segment noting,

“I think the border adjustment tax will come out of the retailers margin – and it should. We do need revenue. We need to have a consumption tax, or a value added tax or a border adjustment tax – so that we may reduce taxation on wages and income. We desperately need more jobs in this country. If you keep taxing the payroll at 15.5%, which we’re doing today, you’re not going to encourage the creation of jobs. You’re going to take what jobs there are and impact the take-home pay of those jobs.”

David Stockman was then asked about his read on Donald Trump’s border tax proposals and the possibility of what the President described as a ‘reciprocal tax.’

 “He has no idea what he’s talking about. He’s making it up as he goes along. Donald Trump is a tourist in the Imperial City of Washington D.C. He’s flipping, flopping and making it up as he goes.”

 

“The border adjustment tax, or a value added tax is the way to get at the problem he’s talking about. Every other country in the world has a value added tax. You take it off the exports and put it on the imports. There is a proper way to do it and he ought to allow the republicans on the hill who understand that to move forward. The idea that we can have a multi-trillion dollar tax cut and not pay for it with new revenue or spending cuts is dangerous. We are at $20 trillion in debt and it is headed to $30 trillion.”

When asked about the pragmatic nature of a border adjustment tax, Stockman pressed

“I think it’s basic math. If you want to cut the corporate tax rate to 20%, which I think would be wonderful, you’ve got to raise $2 trillion over the next ten years to pay for it. Where are you going to get the money? Are you going to close loopholes? I doubt that. The lobby effort will kill that. You need a new revenue source. If you don’t do that you’re stuck with the current tax system. You’re stuck with massive deficits that are going to kill this country. We are basically borrowing our way to economic disaster.

The host then pressed the former Reagan insider over what gets done between now and Thanksgiving on the debt limit and tax reform. Stockman said pointed and simply,

Nothing gets done. I am not trying to be a cynic. They will have battle after battle. The debt ceiling will get raised but there will be short term increases.”

 

There will be shutdowns. There will be midnight confrontations and showdowns. It is going to happen over and over. Not just once, but multiple times. The order going into the next two years is government shutdown. It is going to be exactly what Wall Street does not see at all. The fundamental point is get out of the casino – it’s dangerous in there.”

The Fox Business News host then switched focus to discuss health care reform and what to expect from the GOP leadership that has a majority in Congress and control of the White House.

When asked what his take on savings, health care reform and why it is essential to moving onto taxes he remarked,

This is a huge mistake to go again at Obamacare, especially to save money. By the time they find anything that can get a majority vote in the GOP House caucus. Anything that would go through the Senate and to the President’s desk would have zero savings. The last bill started with $4 to $5 billion of savings and by the time they withdrew it on Friday afternoon, there was almost nothing left. That is a complete distraction.”

Secondly, the reason they’re doing it is the reason there will be no tax cut of the kind that Wall Street expects. We are so “deep in the soup” debt wise and have such a massive, and building deficit that you have to have revenue neutral tax cuts. The border adjustment tax is dead. Without that you are not going to reduce the corporate tax rate down to 20% or 15%, etc.”

The Trump reflation fantasy is over. It is all downhill from here. The market it heading down 20 to 30% down, the 1600 on the S&P. We’re going to have negative shock after negative shock. It is about time they sober up. On April 28th the U.S government is going to shut down. That will be spring training on the continuing resolution until we get to MOAD in the summer.”

That’s what the former Reagan Budget Director has identified as the “Mother of All Debt” crises. He goes on to note, “We’re out of cash soon. The debt ceiling is frozen. There is no possible majority in Congress to raise, by trillions of dollars, the debt ceiling. That’s what is coming down the road”

To catch the full interview with David Stockman on what he views as an economic disaster, exactly what the debt ceiling means and more you can find the full Fox Business interview linked – Click here.

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chrsn's picture

The choice was shitty and shittier.

Oldwood's picture

Everything will be fucking fine! All we need to do is borrow a little bit more, just a smidge, and it will be easy street from there on out. We just got to prove to the rest of the world that WE, Americans, have the bestest credit in the world and nobody can borrow more. Stand DOWN second rate fiddlers of the world. We are GREAT again!

Boris Alatovkrap's picture

In government speak, you are not "borrow", but you are "invest". So,… "we are INVEST our way to economic disaster" is more correct.

There, is fix!

2_legs_bahhhhhd's picture

IBG YBG

I'll be gone, you'll be gone.

Our representatives don't give a fuck.

HockeyFool's picture

I have been reading Stockman for the last 3 years, and it has been the same story: "The market is going to crash! The economy is going to crash! Everyone (but me) is an idiot!. They don't know what they're doing!"

I mean seriously, Davey. Its like you're crying wolf. Over and over and over and over. I'm bored. When is it really gonna crash?

Anon2017's picture

I wonder how his investment newsletter is doing?

LittleMaestro's picture

Stockman is right. We do have too much debt. And it is a serious problem. I'm new to ZH and people say "fuck" here... so I will say it: "we are fucked". But the imminent collapse wolf cry is a little tiresome. We are at 100% Debt/GDP. Japan is at 300%. Somehow they keep printing money and muddling through. We will do the same.

It all sounds more than hypocritical coming  from one of the original masters of Voodoo Economics.

BennyBoy's picture

 

Davey boy, we have a debt based money system, remember from your days at Treasury? 

Moar debt = Moar prosperity.

No debt (public or private) = No money.

$40 T in debt = Good times for everyone!!!

$100 T in debt = Great mutha fukken times!!!

Now go pretend you're a policy wonkass bitch.

OpenThePodBayDoorHAL's picture

Ding ding ding we have a winner. Look at the Chinks: shadow borrowing with no end in sight, the PBOC couldn't tighten of they wanted to. The BOJ balance sheet at 90% of their GDP. The "Murkans need to get with the program: MOAR debt. If you're at a party and it's 3 AM do you wander home with a splitting headache so your wife can yell at you??? HELL NO you pour a few more gallons of 101 Wild Turkey into the punchbowl and get some serious grabass while the getting's good

Giant Meteor's picture

Looks like you and I may have traveled in the same circles !

Oldwood's picture

I have NO idea what you all are talking about.....NONE!

Doña K's picture

And the idea of all this debt is the faster you spend it the more you get out of it.

Based on that, as soon as I have money available after mortgage and food I spend it on gold coins. 

therover's picture

You aren't spending it on gold coins...you are SAVING it in gold coins ! 

I'm with you on that front. 

Twee Surgeon's picture

Who is this WE guy people keep talking about ? I haven't borrowed any money from any Bank ever.

I borrowed some Cash from little sister a few times and payed it back and then some.

If the Author is Implying that I am Part of WE, It just ain't the case.

As far as I can see the US government just does what it wants regardless of Popular Demand and a Constitutional Republic with a Constitution as foundational Law of the land that they choose to Utterly Ignore.

I paid my Taxes like a good boy and all I got was fucked, No opportunity to vote for Anything other than 'Pick your Scumbag'.

There is no WE in a Nation of Free Men except by Contract.

I have signed no such Contract and the WE shit is for your own amusement. WE. Fuck off with your WE.

 

HockeyFool's picture

I think they actually meant "Twee." Not "We."

Twee Surgeon's picture

Whatever they mean, they can get fucked. I did not subscribe to the We program. Will gladly pay a Tax to a Sane Government but I will not make payments on Liquor stores and Houses for Immigrants, Legal or otherwise. Fuck that. My version of WE has Children playing in the streets with no worries.

Lemonade stands run by 6 year olds and every dude on the block can run a serious defensive weapon if needs be. WE my ass.

ME and THEE I can understand but do not include ME in any Contract or Supposition or Implied Consent. That is Fraud. I have a right to abide upon the Earth under the protection of my Creators Laws, Rules and Regulations and if I break said Laws I get Punished. Common Law, God's Law, Constitutional Law, it is the same thing.

Koba the Dread's picture

If you borrow money without any intention of ever paying it back, can you really call it "borrowing" at all?

zagzigga's picture

WE didn't borrow anything but WE get fucked for the bankers' debt fueled orgies. 

WhackoWarner's picture

You are the exception.  MOST of USA USA HAS HOCKED the future of generations into the future.

So imagine you felt entitled to live and rule?  And had many guns and ammo.  And were greedy and insane.

 

Then tranpose to Washout DC,

ReasonForLife's picture

Yup, Diarrhea or Constipation.  Pick one.

ZeroLounger's picture

I guess Stockman's paywall website must not be doing so well. Also,  I think his ego keeps him writing these rants, versus a strong desire to inform the public.

I mean, we get it , Dave.  Preaching to the choir, and all that.

Bigly's picture

Past tense is warranted. We already did borrow into oblivion. Nothing can stop that now....

Oldwood's picture

I always wondered what Oblivion looked like.

bobbbny's picture

10 to 20 in 8 years.

20 to 40 in the next 8.

Bigly's picture

Dude, we have an E-ticket there...

:)

Giant Meteor's picture

Meh, oblivion isn't so bad, once you get used to it ...

biker's picture
biker (not verified) Apr 18, 2017 4:31 PM

Cancel the military budget and get rid of the executive branch of govenment

http://naturedocumentaries.org/5031/crows-mobbing-bald-eagle/

Defense/Attack political policies
are destructive
and a severe threat
to natural growth
consuming all
economic resources
available
ruining the future
of this country
for its children.

BennyBoy's picture

 

Zero out all the spy shit agencies. All 15 or more.

Fully fund the VA hospitals.

Cut Dept of Offense by 80%.

HRH Feant's picture
HRH Feant (not verified) BennyBoy Apr 18, 2017 8:27 PM

Shut down all of the VA hospitals except for Walter Reed.

Shut them all down and sell them. Fire all of the fucking Federal dot.gov tit suckers, now.

Jeezus do you realize there are fucking VA hospitals that have 9-hole golf courses? Maintained at US Taxpayer expense? And housing is provided to some Federal bureau-rats / roaches (at no cost to the fucking employee) while the old domilcilliarys have been shut down? The only people getting decent medical care, or housing, at the fucking VA are the EMPLOYEES.

Move all veterans to Medicare and pay their premiums and co-pays if they qualify (single and make less than $50K year). Easy fix. What do we do with all of the unemployed VA titsuckers? I don't give a damn.

Oldwood's picture

I don't know about that. I have spent a fair amount of money on guns and ammo and seem to be still doing fine. Everything is about balance....the toughest thing in the world.

silverserfer's picture

did he not read creature from Jekyll Island? That is the DESIGN!

besnook's picture

allowed in the old testament but rejected by the new testament. one of those judeochristian values that is judeo but not christian.

Bigly's picture

ENOUGH OF ALL THIS SHIT.

I AM READY TO START MY OWN COUNTRY!!!!

 

meditate_vigorously's picture

Nobody should be allowed usury. It is the root of wars and social instability. Eliminate usury and most all other problems would become negligible.

Colonel Klink's picture

Maybe David (((Stockman))) should talk to the rest of the (((parasites))) who've been sucking the lifeblood out of this nation (and others throughout history).

Anon2017's picture

Did you read the Discrimination notice at the bottom of the website, Colonel Klink?

meditate_vigorously's picture

The Goyim are on to us! Time to shut down free speech!

meditate_vigorously's picture

(((Stockman))) has advocated for ending the 2nd Amendment. (((parasite))) indeed.

Son of Captain Nemo's picture

Correction David.

We borrowed our way into oblivion after 1991 when we won the "Cold War" contest by "YES" (YOU GUESSED IT)... "out spending" the Soviet Union for 40 years... And then post 1990?...

Instead of making good on the "PEACE" we "DOUBLED DOWN ON THE "WAR" DIVIDEND and bankrupted ourselves PERMANENTLY by destroying Yugoslavia as soon as the Berlin Wall fell and then went after the Middle East in it's ENTIRETY and made $2 trillion in debt $24 trillion in less than 28 years!!!

NOW WE HAVE MONEY THAT IS "WORTH-LE$$"... "NO" ENERGY... AND PERPETUAL WARS IN A VAIN ATTEMPT TO FORCE SOVEREIGN NATION(S) THAT "DO HAVE ENERGY" TO SELL IN ONLY OUR "WORTH-LE$$" 'SHIT PAPER' THAT NOBODY ELSE WANTS ANYMORE???!!!

NOWHERE TO GO BUT "DOWN" FROM "HERE"!!!

Consuelo's picture

 

 

 Not until the $USD comes under pressure from outside and which cannot be fiddled by the moneychangers here, will there be any crisis to speak of.   Poor sap really doesn't have any more 'red lines' to cross in his bag of doom.  

Son of Captain Nemo's picture

"Not until the $USD comes under pressure from outside and which cannot be fiddled by the moneychangers here, will there be any crisis to speak of."

Let me guess?...

You're on crack. And lost your day job in order support your habit and now are a hardcore user and "distributor"?!!!

Gotta love the American way!!!

TrustbutVerify's picture

I enjoy and appreciate Stockman and the various "doomsayers" that, to my mind, have a good handle on the reality of our economic conundrum but...but what does he think Trump can do about it? We're decades down the rabbit hole in regard to debt and the addiction to entitlements and the false, foolish assumption they will be there when we all become eligible. Maybe reduce spending in some form or fashion. Trump could hope and jawbone to keep interest rates from going up. But Stockman might agree with certain arguments for the continued increase of interest rates. Instead of whining about this and that in a vague way Stockman should offer 10 bullet points in how to get our asses out of this. And he should list these bullet points even when he's interviewed and not just have them listed obscurely in one of his books. Make the discussion public. Let's all get real about it.

OCnStiggs's picture

Agreed.

I heard there is a move to change Social Security from an "entitement" program to a "welfare" program and minimize the payout for those 20 years out and farther. Still no good details but that is felt to be the only way to touch the third rail and survive.

Social Security serves as the purest example of how criminal Washington is. Got this recently... I know the Libs vehemently deny its accuracy.

Franklin Roosevelt, a Democrat, introduced the Social
Security (FICA) Program. He promised:
??
1.) That participation in the Program would be
Completely voluntary,
No longer Voluntary
??
2.) That the participants would only have to pay
1% of the first $1,400 of their annual
Incomes into the Program,
Now 7.65%
on the first $90,000
??
3.) That the money the participants elected to put
into the Program would be deductible from
their income for tax purposes each year,
No longer tax deductible
??
4.) That the money the participants put into the
independent 'Trust Fund' rather than into the
general operating fund, and therefore, would
only be used to fund the Social Security
Retirement Program, and no other
Government program, and,
Under Johnson the money was moved to
The General Fund and Spent
??
5.) That the annuity payments to the retirees would never
be taxed as income.
??
Under Clinton & Gore
Up to 85% of your Social Security can be Taxed
??
Since many of us have paid into FICA for years and are
now receiving a Social Security check every month --
and then finding that we are getting taxed on 85% of
the money we paid to the Federal government to 'put
away' -- you may be interested in the following:
??
------------ --------- --------- --------- --------- --------- ----
??
Q: Which Political Party took Social Security from the
independent 'Trust Fund' and put it into the
general fund so that Congress could spend it?
A: It was Lyndon Johnson and the democratically
controlled House and Senate.
??
------------ --------- --------- --------- --------- --------- --------- --
??
Q: Which Political Party eliminated the income tax
deduction for Social Security (FICA) withholding?
A: The Democratic Party.
??
------------ --------- --------- --------- --------- --------- --------- -----
??
Q: Which Political Party started taxing Social
Security annuities?
A: The Democratic Party, with Al Gore casting
the
'tie-breaking' deciding vote as President of the
Senate, while he was Vice President of the US
??
------------ --------- --------- --------- --------- --------- --------- -
??
Q: Which Political Party decided to start
giving annuity payments to immigrants?
??
AND MY FAVORITE:
A: That's right!
Jimmy Carter and the Democratic Party.
Immigrants moved into this country, and at age 65,
began to receive Social Security payments! The
Democratic Party gave these payments to them,
even though they never paid a dime into it!
??
------------ -- ------------ --------- ----- ------------ --------- ---------
??
Then, after violating the original contract (FICA),
the Democrats turn around and tell you that the Republicans
want to take your Social Security away!
And the worst part about it is uninformed citizens believe it!

 

Anon2017's picture

Before Social Security becomes a welfare program like EBT or Medicaid, it will be means tested and gradually the screws will be tightened on the middle class. If you can afford to do so, retire at 62 and file for benefits. Then you won't feel like such a chump when the program is means tested and your benefits are reduced or stopped entirely. 

You are off on item 2. The maximum taxable wage base for 2017 is $127,200.

Pigeon's picture

Exactly. And there is that pesky 7.65% share that the employer also pays up to that amount. Or does the self-employed person 15.3

Anon2017's picture

The self-employed person pays 15.3% (which includes the Medicare tax). The Medicare tax is paid on all earned income. Then there are the taxes related to Obamacare which I won't get into here.