March 2019 - In the early 1980's, David Stockman was viewed by conservatives as the movement's financial "whiz kid", a young Congressman from rural Michigan who became Ronald Reagan's first Director of the Office of Management and Budget. In that role, Mr. Stockman helped formulate, promote, and implement "Reaganomics" during the 1980's.

Although he was a proponent of what now is the orthodox Republican principle of lowering taxes on the already wealthy, Mr. Stockman is not a fan of the Trump administration's economic policies. Interviewed last month on Yahoo Finance's The Ticker, he discussed his new book, Peak Trump: The Undrainable Swamp And The Fantasy Of MAGA, and argued that Mr. Trump is engaging in four economic policy wars, each of which is being waged in ways that are harmful to the American economy:

(Stockman (r) testifying to Congress with Treasury Secretary Regan in the 1980's - image from csmonitor.com)

The War on Trade

The arbitrary tariffs that Mr. Trump has imposed on China and many of our western Allies have resulted in what Mr. Stockman characterizes as a tax on the American consumer. This tax may not hurt the people that Mr. Trump hob-nobs with at his Mar-a-Lago resort, but it does affect the rest of us. Most economists also believe that a continuation of this type of across-the-board tariff will bake inflation into our economic system and will likely slow economic growth, much as the Smoot-Hawley tariff did under President Herbert Hoover.

The War on Our Nation's Solvency

The large tax cuts advocated by Mr. Trump and passed by the Republican Congress are adding dramatically to our national debt at a time when America should be paying down that debt.

{As a reminder, the federal debt was going down during Bill Clinton's Presidency and continued falling until George Bush Jr., like Mr. Trump, cut taxes for the rich, which caused the federal debt to start rising again. A second reminder: a few years after the Democrats pulled us out of the Bush/GOP Great Recession, the budget deficit began falling again, at least until Mr. Trump's tax cuts for the rich were enacted.}

Mr. Stockman believes that we are nearing the end of the current business cycle, with a downturn likely within the next year or two. He argues that the current "out-of-control" national debt, along with the retirement wave coming from the baby-boom generation, will result in the 2020's becoming a non-stop economic crisis.

The War on Immigrant Labor

Mr. Stockman notes that, with a shrinking labor force in the United States, immigrant labor is a necessity if we are to continue the growing, low-inflation economy we have experienced over the past 8-10 years. He believes the Trump administration has espoused and condoned virulent anti-immigrant rhetoric purely for political purposes: it assists the Trump team in creating a non-existent border crisis in order to justify Mr. Trump's campaign claim that a Mexican-paid-for border wall is a necessity.

{See our article, "Even Fox Calls Out Trump's Lies About the Mexican Border Wall", for reporting from Fox News (of all places) that demonstrates there is no Mexican border crisis.}

The War on the Federal Reserve

The bullying tactics that Donald Trump is pursuing against the Federal Reserve's policy of normalizing interest rates also concerns Mr. Stockman. After a decade of keeping interest rates artificially low in order to help the nation recover from the GOP's Great Recession, the Federal Reserve has been raising those rates in recent years. Mr. Trump's thinking seems to be: keep "printing money", as he once advocated to his chief economic advisor, Gary Cohn. While the results may be a short-term "goosing" of the US economy, artificially low interest rates are likely to have more dire consequences in the long-term.

(Stockman today - image from twitter.com)

In summary, Mr. Stockman said that "Everything he {Trump} is doing is wrong. The trade war is wrong. The massive deficits are wrong. Beating up on the Fed when it's trying to go in the right direction is wrong….We have a delusional, unhinged madman in the Oval Office, and anything is possible….He's conducting four wars on the American economy, and it's not going to make it great again."

Strong words from a consistently conservative voice who has experience in the trenches. Although we suspect that Mr. Stockman's policy prescriptions to address these four issues would be different than ours (for example, we prefer Ohio Democratic Senator Sherrod Brown's trade approach over the totally free trade position of most Republicans), we do agree with Mr. Stockman that the Trump economic policies are not heading us in the right direction and will hurt our economy down the road.

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