Orange Man Gone
David Stockman's Contra Corner
January 23, 2021
The everlasting irony of Donald J. Trump’s presidency is this: He had all the right enemies, but virtually without exception made all the wrong decisions during his hapless four-year sojourn in the Oval Office.
The list of his enemies is enough to make any right-thinking supporter of peace, prosperity and liberty proud. That starts with the TV networks and print organs of the mainstream stenographers club, who peddle the state’s propaganda and call it news. This most especially includes the masters of mendacity at CNN, the New York Times, and the Washington Post.
It also includes the bipartisan national security mafia, the climate change howlers, the race card hondlers, the Russophobes, the Neocon War Brigades, the NATO/IMF/UN acolytes, the Washington nomenclatura, the careerist racketeers of Capitol Hill, the beltway shills of the Lincoln Project, the Silicon Valley thought police and the celebrity scolds of entertainment and media, among others.
With so many worthy enemies it is amazing that the he managed to do
so little good and so very much wrong. But there is really no mystery to
it when you cut to the essence of Donald J. Trump, the POTUS Poseur.
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That is, the Donald was a principle-free Caesarian Nationalist whose overriding objective was his own personal power and glorification. His route thereto was inflaming a superficial nationalism that allowed him to pose as the defender of the flag, the military, the borders, guns, domestic jobs, policemen and firemen, law and order, religion, middle-class probity (sic!), the right to watch politics-free football games and, above all, to stand tall in the face of foreign malefactors and plunderers of America’s wealth.
Alas, as much merit as might lie among this pastiche of groups, things, purposes and symbols, the Donald’s form of bombastic knee-jerk advocacy added up to nothing that was coherent, urgent or ameliorative of what really ailed the nation, and which had caused the desperate citizens of Flyover America to cast a 63 million-vote Hail Mary during the 2016 election.
Above all, the economy was failing the working and middle classes because millions of well paying jobs had been off-shored and because corporate America has eschewed the hard work of business building to pursue the insider self-enrichment of financial engineering.
But the Donald’s brand of protectionist nationalism had nothing to offer by why of rectifying these ailments. At the same time, his unremitting pressure for even easier money and even lower interest rates only exacerbated the actual problem. That’s because the Fed’s Keynesian money-pumping and mindless 2.00% inflation targeting had been the real cause of the hollowing-out of the main street economy over the past several decades.
We will address this matter in depth in Part 2, but suffice it here to say that “bad trade deals” instituted by his predecessors and nefarious trade practices by foreign suppliers were not the problem. Nor did the Donald’s punitive tariffs on aluminum, steel, appliances, solar panels and China produce an improved outcome.
On that score, the proof is in the pudding. The US trade deficits in goods (red line) have been worsening for decades, but no amount of double-talk and excuse making can say that this downward trend was reversed or even arrested after December 2016.
In fact, the $64 billion trade deficit that month has essentially staggered ever larger since then, ending at an all-time record of $86 billion in November 2020.
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In this instance, there is a distinct reason why the modest reduction in the trade deficit which began to materialize during 2019 has now reversed, causing the negative balance to plunge to heretofore unimaginable depths.
To wit, the Donald’s signature policies over the last four years were fiscal promiscuity like never before, coupled with a demand that the Fed recklessly monetize the Trump administration’s massive debt issuance in order to keep interest rates at economically ludicrous rock-bottom levels.
So exactly how did the Trump Administration fight the Covid-Lockdown recession?
Why, by massive spending, borrowing and monetization of the debt, which trillions of proceeds were dropped far and wide on the American public. The latter, in turn, spent its stimmy checks and unemployment insurance top-ups on imported goods via Amazon because services like restaurants, bars, gyms, movies, sporting events etc. were shutdown by orders of the Trump-enabled Virus Patrol.
In fact, the disastrous trade impact of the post-March 2020 Everything Bailouts and $3.6 trillion of money-pumping by the Fed provide a concentrated demonstration writ large of what has been wrong for decades.
That is to say, the massive growth of the Welfare State on the fiscal front and the drastic financial repression and over-issuance of the dollar at the Fed have on the margin sucked-in imports from low wage economies and sent US jobs and middle class incomes to these venues in return.
In the present instance, the Trump Administration just triple-pumped this infernal prosperity wrecking-machine during the last 11 months. Not surprisingly, the US goods deficit has now plunged by 45% from the pre-Covid February level of $59.7 billion.
U.S. Goods Deficit, 1992-2020
Likewise, the Donald’s form of bombastic nationalism and the genuine Taftian concept of an America First foreign policy turn out to be not the same thing at all.
To be sure, the Donald’s instincts about the obsolescence of NATO,
the folly of the Forever Wars, the pointless neocon attacks on Russia,
the abject failure of regime change interventions were all correct. But
he ended up making no difference at all on the actual policy front
because of his knee-jerk affinity for nationalist bombast and
militaristic grandeur.
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What he utterly failed to grasp is that the vast military/industrial/intelligence/think tank/NGO complex about which President Eisenhower famously warned in his 1961 farewell address is the fiscal equivalent of a self-licking ice cream cone.
There is so much loose change to fund self-serving policy research and advocacy – tens upon tens of billions worth – in today’s $820 billion national defense and international affairs and security budgets that what Congressman and executive branch officials are served up in their hearings and briefings is a massively one-sided case in favor of perpetuating the imperial status quo.
Needless to say, the Donald’s massive and utterly unneeded defense spending increases have only made this self-licking ice cream cone far more potent because the loose change has gotten far more ample.
In dollar terms, the national security budget (consisting of the defense and international affairs budget functions) was already massively bloated at $675 billion in FY 2016. The evidence for that lies in the stark contrast with the FY 1962 national security budget that Ike left in place upon leaving office.
In dollars of the day, it totaled $58 billion, but adjusted by the GDP deflator for the cumulative inflation during the interim 54 years that figure is equal to $360 billion of purchasing power in 2016 dollars.
So here’s the thing. The greatest general to ever occupy the Oval Office, and at the peak of the Cold War when the Soviet Union’s industrial might had not yet been euthanized by socialist central planning, believed that $360 billion was more than enough meet the national security needs of the United States.
Of course, 54 years later the Soviet Union had slithered off the pages of history; China couldn’t and dare not attack Europe or the US because without their export markets its economy would collapse overnight and its communist rulers would be strung from this highest towers of Beijing; and the rest of the world consisted of pipsqueak powers like Iran with a defense budget of $18 billion that did not even figure in the calculus of real threats to homeland security.
So in the real world the $675 billion national security budget the Donald inherited could have been cut back by nearly 50% to Eisenhower’s $360 billion benchmark. In turn, that would have required force levels and conventional weaponry to be shrunk back to what was needed for a Taftian homeland defense – sans the foreign bases, power projection and war-fighting capabilities needed for Washington’s failed wars of invasion and occupation all around the planet.
But instead of recognizing that the defense budget problem was one of
bloated commitments and improper missions, not inadequate dollar
resources, the Donald bought hook, line and sinker the “hollow” military
scam that the Pentagon has been peddling ever since Eisenhower’s time.
That is, when the great general said nothing doing upon taking office
and promptly cut the defense budget by 38% in real terms over the next
several years.
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In short, American servicemen needed to be brought home – the 62,000 in Germany and Europe, the 27,000 in South Korea, the 54,000 in Japan, the 13,000 in Afghanistan, and the tens of thousands more in the middle east and North Africa. Instead, the Donald gave them modest raises, shiny new weapons, more dollars for pointless patrols and training missions and Washington parades and airshows, too.
The net of it was nearly a $150 billion or 21% increase of the national security budget to $820 billion (FY 2020), including tens of billions more for contractors and think tanks hired to prove why no missions should change and no budgets should be cut.
So the Donald ended-up boasting about the greatest military in history and national military power like never before. So doing, he left America First entombed with the ghost of Senator Robert Taft and General Eisenhower himself.
In further installments we will take on the myths of the Donald’s alleged Greatest Ever Economy; the fact that national energy independence was the work of Mr. Market, not the Donald; the folly of Trump’s trade protectionism and anti-immigrant border policies; and the small government based axiom that the solution to civil unrest and local crime outbreaks is Federalism, not a bombastic law and order sheriff in the Oval Office.
In the larger context, the Donald failed because he aspired to be America’s Caesar, not just because he was an uncouth, narcissistic lout.
PEAK TRUMP, IMPENDING CRISES, ESSENTIAL INFO & ACTION
Reprinted with permission from David Stockman’s Contra Corner.
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