Trump In Trouble: It’s The Economy, Stupid – Not Crime and Terrorists
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We don’t get that exercised about President’s Trump’s fondness for alternate facts – especially when they elicit coronaries among the rows of talking heads on CNN. But we do draw the line at alternate reality, as when our new President told the sheriffs’ posse visiting the White House Tuesday that the US murder rate is
"…..the highest it’s been in, I guess, 45-47 years."
Actually, it’s still near a 45 year low!
In fact, it’s less than half the 1970 rate and two-thirds the rate during the Reagan era. The slight uptick in the national murder rate during 2015-16 (not shown below) was mostly attributable to seven urban areas – Baltimore, Chicago, Cleveland,Houston, Milwaukee, Nashville and Washington DC. Even then, only 25 of the nation’s largest 100 cities saw a recent increase in violent crime, according to FBI statistics.
But our purpose is not to quibble with the Donald’s errant facts. The problem is his worldview. When he said at the Republican convention is July that the nation is faced with "a moment of crisis" caused by "violence in our streets and chaos in our communities", he was talking alternate reality.
The truth is, the vast majority of American communities are safer today than they have been in decades and that violent crime rates have literally plunged. Thus, compared to about 750 reported violent crimes per 100,000 population in 1992, the rated in 2014 was only 375.
Likewise, when he rushed pell-mell to issue the travel ban during the first week in office, he claimed an urgency about terrorists lurking among refugees and visa-holders from the seven named countries that absolutely does not exist.
Indeed, the US has admitted upwards of 900,000 refugees since the turn of the century and there has not been a terrorist incident from among them; nor have there been any terrorist acts on US soil attributable to visa-holders from the travel ban countries.
So if it were just a more strenuous vetting process that the White House wanted, it could have taken a few months to redesign the procedures in an even more stringent direction than already exists and made them applicable to dozens of countries – including non-Muslim majority nations – where local terrorism has been a factor.
It could have also spent this time insuring that the new vetting procedures had been properly vetted among the relevant Federal agencies and that Capitol Hill – which is crawling with tough on terror types anyway – had been giving a thorough heads up.
After all, there was no emergency and not a shred of evidence that the currently approved pipeline of visa-holders and approved refugee applicants presented any more heightened risk than the nonexistent risk evident in the record. And we are especially confident of the latter assertion because this particular White House crew would have been screaming like banshees if they had any evidence at all that bad guys had slipped through the process under Obama.
But then again, the lickety-split travel ban was a Steve Bannon special. It had nothing to do with facts on the ground or risks to American communities. Instead, it was the opening salvo in an alt-Right campaign to drastically intensify public fear of immigrants and terrorists and thereby mobilize a political majority based on nationalism, law and order and closing down the nation’s borders.
And that’s the alternate reality of which we speak. America doesn’t need a Super-Sheriff in the White House leading a crackdown on domestic criminals and terrorists.
Instead, it needs an economic statesman with the good sense to see that Washington is drifting toward a fiscal catastrophe and that the Fed’s 30-year regime of Bubble Finance has sucked the economic lifeblood out of Flyover America – even as it showered the 1% and the bicoastal elites with egregious windfalls of unearned prosperity.
Unfortunately, the Donald’s penchant for tough-guy bluster is playing straight into the hands of the alt-Right vanguard ensconced at the very center of the White House. This was evident at yesterday’s sheriff’s convocation when Trump went straight for the bait on civil forfeiture carried out by law enforcement.
There is probably no greater abuse of constitutional liberties in America today than that posed by the soaring seizure of money and property from citizens accused but not yet convicted, or even indicted, for acts of crime or terrorism by law enforcement.
Proceeds from civil seizure have become a major revenue source at all levels of government – with the annual haul now exceeding $5 billion or 5X more than a decade ago. And Washington has gotten fully in on the act through drug war driven seizures where "assets" in just one fund have increased nine-fold since 2005.
In fact, substantially more money is seized by law enforcement annually than is stolen by robbers and thieves. Indeed, since a high share of forfeiture proceeds are from unconvicted citizens, it is fair to say that the police are stealing more than the burglars.
Needless to say, advocates of civil forfeiture argue that it allows law enforcement to effectively combat terrorism and the drug trade, and that is apparently good enough for the Donald – civil liberties be damned.
So at yesterday’s meeting Trump piled on after hearing one of the attending sheriffs complain about the possible curtailment of the practice in Texas:
“On asset forfeiture, we’ve got a state senator in Texas that was talking about introducing legislation to require conviction before we could receive that forfeiture money,” Eavenson said.
“Can you believe that?” Trump interjected.
“And I told him that the cartel would build a monument to him in Mexico if he could get that legislation passed,” the Texas sheriff continued.
“Who is the state senator? Do you want to give his name? We’ll destroy his career,” Trump replied, presumably suggesting that the lawmaker would suffer for holding a position contrary to the president’s.
Well, let’s see now about where Trump stands on the great economic and fiscal challenges facing the nation while he bloviates about a state senator who apparently believes in the U.S. Constitution’s 4th Amendment protections.
The short answer is that he is nowhere. The White House has already become so distracted by co-President Bannon’s alt-Right agenda, and the mounting backlash from it, that it doesn’t even have an economic team on the field.
That’s right. Nearly three weeks after the Inauguration the three key posts – Treasury Secretary, OMB Director and CEA head – have not been confirmed.
We know from experience that an empty economic bench at this crucial time is a far larger problem than might be apparent to most observers. That’s because we also recall that Ronald Reagan got his sweeping tax cuts and fiscal reforms through by Labor Day of his first year only by a hair – and only then because his full team was in place before the inauguration.
In fact, we had a half dozen economic and budget briefing during the first 20 days of January, and virtually every day after the swearing in. Accordingly, by February 7th President Reagan had reviewed and approved hundreds of spending cuts and signed off on the details of his sweeping tax reduction plan.
By February 14th – the equivalent of a week from today – all decisions had been locked down, the numbers had been crunched on what amounted to a multi-trillion five-year economic recovery plan, and a 100-page outline of that plan was on its way to the government printing office for Reagan’s February 18th address to Congress.
By contrast, what Trump has in place at the White House economic council is his very own plenipotentiary from Goldman Sachs, Gary Cohn, who has made his first order of business gutting Dodd-Frank. He also has a billionaire LBO artist at the Commerce Department, who wants to make America Great again by saving Boeing’s corporate welfare at the Ex-Im Bank and erecting protectionist barriers to foreign imports.
To be clear, we don’t have any brief for Dodd-Frank and think it should be repealed in its entirety, nor do we object to wealthy businessmen "giving back" to their country. But Wilbur Ross and Gary Cohn have been lifelong beneficiaries of the Wall Street/Washington debt and money printing regime, and are not about to support the number one action needed to actually restore capitalist prosperity in America.
We are referring to the need for a complete housing-cleaning at the Fed and the replacement of its cabal of Keynesian monetary central planners with advocates of sound money and restoration of free market price discovery in the financial markets.
To that end, Trump urgently needs to demand the immediate resignations of Janet Yellen and Stanley Fischer. That would precipitate a political firestorm about the so-called "independence" of the Fed, and also a thundering crash of the current egregiously bloated bubbles in the stock market, which are going to implode soon under their own weight, anyway.
But by acting preemptively, Trump could take a page from Ronald Reagan’s playbook and get the crisis over early, while blaming it – and properly so – on the policies he inherited from Obama and the Eccles Building.
Unfortunately, the Donald has gotten enamored with playing National Sheriff and following the playbook of CO-President Bannon. Before he knows it, however, the White House will be so impaled in pointless judicial and political battles over the travel ban, the exaggerated threat of domestic terrorism, the stupidity of his Wall with Mexico and what is already the busted attempt to repeal and replace Obamacare, that he will not see the swirling fiscal and economic crisis coming straight at him.
Yet any day now the casino gamblers will realize that the Trump Stimulus was always a giant delusion, and that the big earnings-boosting corporate tax cut and the vaunted trillion dollar infrastructure stimulus are dead on arrival.
That’s all to the good because a nation with $20 trillion of debt and $10 trillion more built-in over the next decade under current policy can’t afford more Keynesian fiscal stimulus – let along the trillions Trump promised during the campaign. But it also means that the resulting stock market crash will precipitate a recession – as the stock price and options obsessed C-suites of corporate America desperately liquidate hoarded inventories and labor just like they did in the fall of 2008.
In short, the Trump Administration is only weeks away from descending into an economic and fiscal nightmare. That will include a debt ceiling crisis by mid-summer and government shutdowns over increasing the soon to be frozen borrowing limit by trillions. It will be exacerbated by the need to extend expiring continuing resolutions – a rolling crisis that will last throughout 2017 and behind.
It will also include a bitter Congressional battle over lifting the defense caps, as demanded by Trump’s posse of generals and hawks, while keeping the caps on domestic appropriations in place; and a swelling deficit that will quickly bust through the $1 trillion per year level and shatter what remains of the GOP’s fragile majorities.
In the meanwhile, the Donald is huffing and puffing at an unnamed Texas state senator.
He will soon wish, however, that he hadn’t gotten distracted by the alternate reality of the alt-Right.
P.S. I’d like to send you a free copy of my latest book, Trumped! Click here for the full details of how to claim your copy. Justin Raimondo said my book is “[T]he single best treatment of [Trump and Trumpism] that I have seen." If you claim your copy according to the terms I’ve arranged, I’ll even make sure your copy is autographed.
David Stockman was a two-term Congressman from Michigan. He was also the Director of the Office of Management and Budget under President Ronald Reagan. After leaving the White House, Stockman had a 20-year career on Wall Street. He’s the author of three books, The Triumph of Politics: Why the Reagan Revolution Failed, The Great Deformation: The Corruption of Capitalism in America and TRUMPED! A Nation on the Brink of Ruin… And How to Bring It Back. He also is founder of David Stockman’s Contra Corner and David Stockman’s Bubble Finance Trader.
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