David Stockman: The Undrainable Swamp & The Inevitable Recession

adam-taggart-2 · March 6, 2019, 9:10am

Love it or hate it, the potency of the Trump Administration is on the wane, soon to be stuck in the mire of the Swamp it has deepend instead of drained, while the economy falls into one hell of a recession -- so claims former Regan-era Cabinet member and Congressman David Stockman.

In his new book Peak Trump, Stockman notes how the wide divergence between Trump the campaigner and Trump the president appears to be proving to be his undoing.

Rather than fight to dismantle the institutions he railed against as a candidate -- most notably the Deep State and the Federal Reserve -- Trump has embraced them.

Now, when this latest asset bubble bursts (and Stockman believes the markets saw their peak back in Fall 2018), Trump will 'own' that. Having chosen to tie his administration's success to the rising price of the S&P 500 since taking office, he won't be able to foist the blame of a market crash on his predecessors.

Similarly, the Deep State -- especially the military industrial complex -- is experiencing a bonanza under the Trump administration. As a result, the Swamp is deeper than it has ever been:

I learned a long time ago as Budget Director and even before that as a member of Congress that the real deep end of the Washington swamp is on the Pentagon side of the Potomac. What Trump has done is basically taking a defense budget at $600 billion that was already swollen with waste and extending it far beyond anything you need for a homeland defense.

I have a whole section in the book about how a homeland of defense wouldn’t cost $600 billion that he inherited or now the $700 billion that we have. $720 billion actually, that after two huge Trump increases. But you can do an honest, effective, and safe homeland defense for $250 billion. By putting all of these funds into the DOD and into an even larger intelligence budget which is already $75 billion and triggered in the entire Russian military budget for everything... He has actually fed the monster.

Remember, the walking around dollars that create the prosperity in Washington and all of the lobbies, NGOs, think tanks, and all the rest of it comes out of the DOD, National Security, State Department, Intelligence Community budget. It becomes a self-perpetuating lobby for its own, ultimately if you add everything up, $800 billion per year fleecing of the tax papers. Domestically, yeah. We have this huge amount of waste and the domestic budget as well. But most of it’s entitlements and so, it’s cash flowing out of all the places across America. Those entitlements need to be reformed.

But the impact on governance and what he rightly called the swamp, comes from the National Security side. The warfare state, not the welfare state. He’s obviously... It was a nice phrase but unfortunately he has embraced policies that go into the opposite direction and made the swamp even far deeper than it already was on the warfare state side of the equation.

Click the play button below to listen to Chris' interview with David Stockman (55m:51s).

This is a companion discussion topic for the original entry at https://peakprosperity.com/david-stockman-the-undrainable-swamp-the-inevitable-recession/

newsbuoy · March 6, 2019, 3:48am

https://www.canada.ca/en/services/immigration-citizenship.html

pyranablade · March 7, 2019, 7:20pm

That was so much better than what we usually get out of the mainstream media. One of the MSMs biggest faults is that they always have people from one party criticize the other. Instead, here we have a dissenting Republican telling us what the current administration is doing wrong (or not doing at all). For Stockman, candidate Turmp made some good promises but didn’t follow through with them once he got inaugurated. It made a lot of sense and seems a shame that I hadn’t heard it elsewhere by this point.
It got me thinking that Mr. Obama’s best critics were also from his own party. (Like the ones who pointed out that Eric Holder should have held Wall Street accountable.) I’ve been hating the two major US parties …but, after thinking about this interview, I have to consider that both parties actually do stand for some good things. The MS media gives us too much of a left vs. right “He said - She said” and I think it stirs up more partisanship than we need.
Maybe the nightly news has simply become infotainment with our so-called leaders talking at each other like the wrestlers of WWE. The mainstream media aren’t going to tackle issues of substance, just personalities clashing, because that is easy enough for people halfway paying attention to understand.

cmartenson · March 8, 2019, 1:56pm

Well, the concensus number for the February payrolls was 180,000, with whisper numbers a lot higher based off of the ludicrously strong December and January data.
The actual number reported minutes ago by the BLS?
20,000
As David Stockman says, when C-suite types encounter the end of a credit bubble they can reel in their plans with lightening speed.

There isn’t much to add here. The unemployment rate can change one of two ways; (1) either more or fewer people have to be employed or (2) the pool of people looking for work goes up or down. It’s got both a numerator and a denominator.
Thus, with low employment gains and a declining rate of unemployment this means a bunch of people had to give up looking for work and therefore remove themselves from the equation.
This next stat is one I am tracking closely - part-time employed for economic reasons - it fell sharply:

As said, this may be a fluke of the government shutdown. So back to track mode we go.
Ultimately, I really don’t trust these numbers even slightly. They are usually window ressing for whatever policy needs bolstering most. Looks to me like the Fed really wanted and needed air cover to stop raising rate, and maybe even set the psychological stage for considering a rate cut.
That all may backfire because it may also suggest that the recession monster is barrelling in!

dabenham · March 8, 2019, 6:44pm

Powell to appear on 60 Minutes with Yellen & Bernanke? Going full on Dovish?
Back to more QE or what?
https://thehill.com/policy/finance/433138-powell-to-appear-on-60-minutes…
David

shastatodd · March 11, 2019, 7:54pm

it was interesting to hear all this hangwringing about the actions of the federal reserve, with no mention that the only way to keep unsustainable, growth based, ponzi system operating is by increasing deficits and manipulating the markets.
either that or allow the (inevitable) shitshow to collapse?
rock, meet hard place.