Stockman, left, with Reagan, Image source: Reagan Library
WASHINGTON – The United States is on the brink of a “fiscal bloodbath” that will cause the government to run out of cash, according to former Reagan budget director David Stockman.
Stockman served as the director of the Office of Management and Budget under Reagan and believes debt will bring the United States to its knees.
“I think we are likely to have more of a fiscal bloodbath rather than fiscal stimulus,” Stockman told USAWatchdog.com. “Unfortunately for Donald Trump, not only did the public vote the establishment out, they left on his doorstep the inheritance of 30 years of debt build-up and a fiscal policy that’s been really reckless in the extreme.
“People would like to think he’s the second coming of Ronald Reagan and we are going to have morning in America. Unfortunately, I don’t think it looks that promising because Trump is inheriting a mess that pales in significance what we had to deal with in January of 1981 when I joined the Reagan White House as budget director.”
Stockman’s belief is that the national debt is so high it will be impossible for America to pay it off.
“I think what people are missing is this date, March 15th, 2017. That’s the day that this debt ceiling holiday that Obama and Boehner put together right before the last election in October of 2015. That holiday expires. The debt ceiling will freeze in at $20 trillion. It will then be law. It will be a hard stop. The Treasury will have roughly $200 billion in cash. We are burning cash at a $75-billion-a-month rate.
“By summer, they will be out of cash. Then we will be in the mother of all debt-ceiling crises. Everything will grind to a halt. I think we will have a government shutdown. There will not be Obamacare repeal and replace. There will be no tax cut. There will be no infrastructure stimulus. There will be just one giant fiscal bloodbath over a debt ceiling that has to be increased and no one wants to vote for.”
Stockman also believes the stock market rally is the “greatest suckers’ rally of all time.”
“It is based on pure hopium and not any analysis at all as what it will take to push through a big tax cut,” he said. “Donald Trump is in a trap. Today the debt is $20 trillion. It’s 106 percent of GDP. … Trump is inheriting a built-in deficit of $10 trillion over the next decade under current policies that are built-in.
“Yet, he wants more defense spending, not less. He wants drastic sweeping tax cuts for corporations and individuals. He wants to spend more money on border security and law enforcement. He’s going to do more for the veterans. He wants this big trillion-dollar infrastructure program. You put all that together and it’s madness. It doesn’t even begin to add up, and it won’t happen when you are struggling with the $10 trillion of debt that’s coming down the pike and the $20 trillion that’s already on the books.”
Stockman served as a U.S. Representative from Michigan from 1977 to 1981 and director of OMB from 1981 to 1985. Stockman predicted a Trump victory last year in his book, “Trumped! A Nation on the Brink of Ruin.”
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