TRANSCRIPT:
[clip starts]
TRUMP: “We have the worst revival of an economy since the great Depression, and believe me, we’re in a bubble right now, and the only thing that looks good is the stock market, but if you raise interest rates even a little bit, that’s going to come crashing down. We’re in a big fat ugly bubble. We better be awfully careful.”
[clip ends]
BRZEZINSKI: “Despite that warning from Donald Trump during the first presidential debate back in September of 2016, he has consistently taken personal credit for the market’s gains during his first two years in office. Joining us now, former Republican congressman from Michigan and director of the office of management and budget, under president Ronald Reagan, best-selling author, David Stockman. In his new book, ‘Peak Trump, the undrainable swam and the fantasy of Maga,’ he called the most rookie mistake in the history of the American presidency. That’s quite a way of putting it, David. Welcome back to the show.”
STOCKMAN: “Thank you.”
BRZEZINSKI: “You say we’re heading towards an economic crisis. Are we careening toward it? What does it look like? What are you basing this on?”
STOCKMAN: “There’s the biggest stock market bubble in history. It’s been going on for ten years. We’re at month 119, the longest bull market ever. This market is way overvalued. He never should have embraced the stock market. I call it peak trump because it peaked, you know, at 2940 on September 20th and it’s all downhill from here. Secondly, he keeps bragging about the greatest economy ever. We’re near the end of a week-long expansion cycle that’s headed for the next recession. If you take out the temporary blip that we had last summer from the exports, pulled forward by his trade policy or the extra spending that occurred because people took down their savings rara in order to spend the tax cut. If you take that away and look at the trend in the first seven quarters, GDP or final sales grew at 2.65% under trump, in the last 11 quarters under Obama, it was 2.25%. No difference. There’s been no boom. There’s a recession coming. He’s made it worse with the worst tax cut in modern history and a fiscal policy that is truly an abomination. We’re at year ten, as I said, of a recovery. You don’t increase the deficit to $1.2 trillion. He has. We’re at a time when the fed has to normalize. Which means they’re shrinking their balance sheet and dropping bonds into the market. They’re not buying them. They’re selling them. And the point I really think needs to B B made is the bond pits are going to have to absorb $1.8 trillion of government debt, new debt from the treasury, existing debt, that the fed is dumping, and it’s going to cause a tremendous cataclysm in the financial we’re heading for real trouble in the year ahead and I just reach all the way back to my days when I started Capitol Hill in 1973. Nixon was riding high when he won in ‘73. The market dropped by 37% during the next 18 months. In August 1974, they put him on the memorial helicopter and sent him out of town. I think that’s where things are heading.”
BRZEZINSKI: “Out of town?”
STOCKMAN: “Out of town.”
BRZEZINSKI: “Out of town, okay. So but until then, he says we’re doing very well. The president touts all of his successes. He would probably disagree with your opinion on his tax cuts. He’s V vy proud of them. Is there anything the president can do to ward off this recession or anybody in the administration qualified to deal with this in any way?”
STOCKMAN: “No, because he doesn’t take the fiscal problem seriously. And we have an immense fiscal problem. A deficit of this magnitude in a business cycle is unheard of. Even the 1960s or ‘70s never would have embraced something like this. So there is a, you know, freight train coming down the road. It’s going to hit in March when the debt ceiling expires. If you think the government shutdown is bad, wait until they grapple with the debt ceiling after March. So I think we’ve been through kind of a two-year vacation here. But now the rubber’s going to hit the road very hard. Beyond that — beyond that, trump tried to do the right thick with America first. He’s been stymied at every turn of the road. He was right. They wouldn’t let him do it. He was right. NATO is obsolete. We should get rid of it. Everybody went after him for he’s trying to do the right thing in Korea and yet they keep coming after him on the basis of the status quo, which has been wrong for last 60 years. So on the one hand, his economic policy is a failure. On the other hand, his effort to rein in the empires I call it and get to something we can afford is being stymied. And then he’s filled the swamp with $100 billion more for the Pentagon that is doesn’t need. That’s the deep end of the swamp.”
BRZEZINSKI: “David, David, hold on a second, hold on, hold on. You did a lot.”
STOCKMAN: “Yes.”
BRZEZINSKI: “I just want to like hone in on one — are you saying we should pull out of NATO?” [crosstalk]
STOCKMAN: “Sure. NATO is obsolete.”
BRZEZINSKI: “What?”
STOCKMAN: “NATO is obsolete. It was only set up to stop the Soviet Union and 50,000 tanks on the Warsaw front. That ended 25 years ago. We don’t need NATO. Europe can take care of itself. Russia’s a pint-sized economy, 7 percent of size of U.S. economy. NATO, U.S. GDP combined is $36 trillion, Russia’s $1.5 trillion. You think the Europeans can’t handle it? Germany spends 1 percent only of GDP on defense. If they really thought that the Russians were heading through the Brandenburg Gate, they would be providing for their own defense. They’re not passivists. It seems to me we’re heading for the worst possible outcome. A budget that’s out of control. An entitlement state that no one wants to reform. A welfare state now with a trillion dollars a year of spending we can’t afford. The economy’s now going into recession just as the baby boom retires, and we have a massive increase in the number of social Security and Medicare beneficiaries. This isn’t a pretty picture that lies ahead. I think trump just made a huge mistake by not doing what Reagan did. He blamed Carter and the Democrats for the mess he inherited. When the thing got cleared, he could take credit for the recovery. That’s not happening now. Trump made a huge mistake, embracing the bubble and the aging business expansion that he inherited.”
BRZEZINSKI: “Understood. David Stockman, we’ll have you back to discuss NATO. I think there might be a few people that want to debate you in that. Thank you so much for being on. The book is ‘Peak Trump, the undrainable swamp and the fantasy of Maga,’ out now. David Stockman, thank you.”