Having warned that “everything will grind to a halt on March 5th” due to the under-appreciated debt-ceiling debacle that looms over Washington, and exclaiming that “what is going on today is complete insanity,” former Reagan Budget Director David Stockman is rapidly losing faith that anything can be done…
“I've thrown in the towel because he’s not paying attention and he’s not learning anything and he’s making ridiculous statements.”
Reflecting on Trump's address to Congress, and what we know of The White House agenda, Stockman told Fox Business' Neil Cavuto:
“We don’t need a $54 billion increase in defense when the budget already is ten times bigger than that of Russia. We don’t need $6 trillion of defense spending over the next decade because China is going nowhere except trying to keep their Ponzi scheme together.”
Stockman rejected Trump's dynamic scoring hope…
“Trump is so deep in fiscal la-la-land, he won't even find the wrong envelope… he is saying crazy things.”
And wasn’t sold on Speaker Ryan’s Obamacare plan.
“If you look at the Ryan draft that came out over the weekend, it’s basically Obamacare-like. It’s not really repealing anything,” he said.
“It’s basically reneging and turning the Medicaid expansion into a block grant, turning the exchanges into tax credits [and] it’s still going to cost trillions of dollars.”
Last week, Trump’s Treasury Secretary Steven Mnuchin, told FOX Business the administration is “focused on an aggressive timeline” to produce a tax reform plan by August Opens a New Window. , but in Stockman’s opinion, tax reform won’t happen this year.
He also warned that the administration’s run up against the debt ceiling this summer could lead to a debt crisis.
“I don’t think we will see the tax cuts this year at all,” he said.
“There is going to be a debt ceiling crisis like never before this summer and that’s what people don’t realize. They’ve burned up all the cash that Obama left on the balance sheet for whatever reason.”
Stockman added that “…by the time we get to June or July, we are going to see a debt ceiling crisis like never before.”
As a reminder, Stockman warned last week:
“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 Obama Care 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 predicts very positive price moves for gold and silver as a result of the coming budget calamity.