Trump’s ship of state will be beset by a relentless barrage of torpodoes.
Donald Trump took on the Clinton machine and the Democratic party, his own party’s insiders, and the mainstream media. His personal appearances, tweets, uninhibitedness, and ability to articulate widespread frustrations inspired voters whose enthusiasm dwarfed his opponent’s rote support. She massively outspent, out-polled, out-focus-grouped, and out-endorsement-received Trump, but he outsmarted her. Her team was flattened by arrogance, overconfidence, and underestimating Trump. However, his supporters make a similar mistake if they now dismiss them as political roadkill.
The bodies on the highway are cartoon corpses; they spring, Roger Rabbit-like, back to life. Giving Trump his best case—that he’s motivated by a steadfast mixture of idealism and animosity towards the powers that be, and deeply concerned about the state of America—the problems he confronts are enormous and virtually intractable. They fall into three categories: trenches, human nature, and numbers.
THE PRIME DECEIT IS THAT
THEY CARE ABOUT YOU
The cartoon corpses have already taken to the earthworks for a war of attrition. The federal government, its thousands of contractors, and state and local governments have tens of millions of employees and beneficiaries. Most of them are mediocrities or worse who have little to offer private enterprise and are hostile to any change that shrinks the government’s power or funding.
At least 95 percent of what the federal government does will escape the purview of the Trump team. The small slice that draws their focus will run smack into committees, paralysis by analysis, endless consultations, inaction, obstruction, back-door appeals to friendly legislators, unfavorable media stories and editorials, demonstrations, lawsuits, and every other stratagem ever devised for stopping change in its tracks. Political parasites battling for their power and perks fight with the same ferocity as dug-in platoons.
As trench-mates they’ll have the media, whose already vicious attacks will only intensify. In his 2002 book Bias, former CBS journalist Bernard Goldberg noted that media coverage of homelessness came and went with Republican and Democratic administrations. We’ll soon see a jump in articles on homelessness and every other suddenly pressing socioeconomic problem imaginable. Those problems worsened during Obama’s tenure, but the media refused to take notice. Trump won’t even get a honeymoon before they’re “rediscovered.”
Good news will be distorted or ignored. December’s unemployment numbers will be the last major economic statistic to receive favorable spin. Any stats positive to Trump will be discounted as Obama residuals (if his blame of Bush is any indication, he’ll be taking credit for good numbers for at least four years), or the mainstream media will “discover” statistical flaws bloggers have been talking about for years.
How long before this war takes its toll on Trump and team? Human nature is human nature. Even if Trump is a rock, many of his team will go native in Washington. Why bear the slings and arrows, risking reputation and career for an amorphous cause like “Drain the Swamp,” when its so much easier and remunerative to play the power game? Washington and the media love nothing more than principled foes who turn into “pragmatic” friends. Ask David Brock.
What principles will anchor Trump’s presidency? Social mood carries presidents and stock markets on its ebbs and flows. What happens when the ebullience ebbs, the stock market heads south, and the economy falters? Does Trump increase or decrease the government’s intervention? Borrow more money? Raise or lower taxes? Who or what does he scapegoat if a wall, tariffs, promises of renewed corporate investment in the US, and infrastructure spending don’t cure what ails the economy? Does he divert attention with a new war somewhere? Does he live with the inevitable criticism and dissent, or does he use the government’s vast powers against his critics? Who knows? Human nature is human nature, and Trump is certainly human.
The numbers guarantee the ebb will come. Stocks fluctuate. Presidents are usually better off politically taking office when markets are down. Roosevelt assumed the helm the year after a major market low in 1932. Reagan took office a year a half before before another major low and thereafter was the beneficiary of positive social mood and a strong bull market. President Obama came to power just before the March 2009 low. Nixon, on the other hand, won a landslide in 1972 and was out of office two years later, after stocks tanked over 40 percent from their January 1973 peak. His fate is a caution to Trump supporters touting the current rally.
Stock market averages are unpredictable. More predictable are the consequences of two sets of hard numbers: debt and demographics. The national debt increased 88 percent during Obama’s eight years, to $19.976 trillion. A similar jump during the next eight years would take the debt to $37.554 trillion.
The government paid $432.64 billion in interest during 2016, at an average rate of 2.20 percent. Say historically low yields have bottomed and the trend is now up. If they return to the 4.785 percent the government paid when Obama took office, debt service on existing debt would be $955 billion and $1.797 trillion on that $37.554 trillion. Nothing says a bull market in yields (a bear market in bonds) stops at 4.785 percent. The debt itself is not static, growing at close to 10 percent a year the last eight years, far faster than the US economy has ever grown. We’re not going to grow our way out of this one. During the Obama administration real annual GDP growth never hit 3 percent.
Ugly demographics are kicking in. Baby Boomers are retiring. Birth rates having declined, fewer workers will be paying the taxes necessary to fund Boomers’ old age and medical payments. Those entitlements follow the Ponzi model: promised payments are made from current contributions. Payments are not invested for the long-term and benefits do not come from investment returns (which the government requires for programs in the private sector). Payouts are already greater than pay-ins and the difference will only increase in the coming years.
Most of the developed world is facing the same debt and demographics issues. Total global debt tops 325 percent of global GDP. The nature of debt—one entity’s debt is another entity’s asset—and its dispersion throughout the world means that debt collapse and deflation will be global.
Debt will define the Trump presidency. Commendably, he has prompted a long overdue skepticism and perhaps rejection of the politics and governance that have brought the nation and the world to the edge of financial ruin. Some of the right questions are finally being asked. Trump may not be the right answer, but Washington is so far gone that there are no politically right—meaning acceptable to the electorate—answers. Spending will be cut, promises broken, and revenue raised as the government tries to bridge the ever-widening fiscal chasm. A soft default on government debt via hyperinflation or an actual default are strong possibilities.
Most of us who loathe and oppose the government and what it represents would take it as a victory if, at the end of Trump’s presidency, the blob is slightly smaller, its tax receipts a little lower, it’s marginally less powerful, and it’s managing to live within its means. In a profoundly distressing way, as the government descends ever further into corruption and evil, it takes standards of acceptability, including those of its most ardent critics, with it.
WHEN STANDARDS WERE MUCH HIGHER