“Economic Food Poisoning”: The Bankrupt Delusions Of Donald Trump, The ‘King Of Debt’
According to Donald Trump, at $19 trillion the federal government has too much debt. Or so little debt that we could pay it off in eight years.
He says we could buy back federal debt at a discount by raising interest rates. But if interest rates rise by a couple of percentage points, he said last week that the United States of America would cease to exist.
As for taxes, we need to raise them on the rich. No, we need to lower them. Or raise them.
And American workers? Their wages are too high. No, too many earn nothing because foreign workers make so much less. Then again, maybe the minimum wage is too low.
If all his contradictory comments seem confusing, the fact is that they are. They are also difficult to square with Trump touting his economics degree from an Ivy League school, the University of Pennsylvania, where he claims he was a top student.
What reality-show hosts say is of no consequence. But every public word presidents speak gets scrutinized worldwide. Candidate Trump’s wildly inaccurate and ahistorical statements are of no official consequence, but were he president they would have serious and damaging effects on the United States.
Consider what Trump said on May 5 to CNN’s Wolf Blitzer about the cost of servicing federal debt: “If interest rates go up 1%, that’s devastating. What happens if that interest rate goes up 2, 3, 4 points? We don’t have a country.”
By Trump’s reckoning America should have ceased to be a country long ago. Back in 1982 the 10-year bond paid 14.6%. Uncle Sam’s average interest cost on all federal debt was 6.6% when George W. Bush took office. Last month it was just 2.3% even though the debt is 17 times the level of 34 years ago.
Trump talked about buying back debt at a discount and cited his own success in taking out loans, but not paying them back in full. “I’m the king of debt,” he said, in one of his frequent tangential comments focusing not on how a Trump administration would govern, but reminding us of his self-proclaimed greatness.
When journalists try to parse Trump’s words—no easy task because transcripts show jumbled thoughts galore—his response is to accuse them of misquoting him. So, whom to believe: Trump or that lying videotape?
On CNBC, Trump implied that when he took out some loans, he never intended to repay them in full.
“I’ve borrowed knowing that you can pay back with discounts,” he said on CNBC. “And I’ve done very well with debt. Now, of course, I was swashbuckling, and it did well for me, and it was good for me, and all that. And you know debt was sort of always interesting to me. Now, we are in a different situation with a country, but I would borrow knowing that if the economy crashed you could make a deal.”
That last sentence might send shivers down the spines of those who buy federal debt, as it could be read to say he would crash the economy as president just to make the market price of Treasury debt fall. I read his remarks as another example of his lack of articulation, but others could reasonably read into those remarks a plan to submarine the economy.
When challenged about his words, Trump revised his comments saying he was thinking only in terms of renegotiating the federal debt—88% of which matures in 10 years or less—to longer terms. What Trump didn’t mention is that Treasury bonds with maturities of up to 30 years pay on average 4.5% interest, more than double the average federal interest rate. The contradiction here is obvious: By Trump’s own words switching to longer-term Treasury bonds would result in interest expenses so high that America would cease to exist.
The Politics of Winging It
How and why “we wouldn’t have a country” were interest rates to rise is just one of the many observations that Trump has never been asked to explain.
When Trump’s comments drew widespread criticism as reckless, he turned the tables on those who reported what he said. He claimed that others put words in his mouth and distorted his intent.
So how do we make sense of the following: “If we can buy bonds back at a discount,” he said, “we should do that.” He also said that there would be no reason for holders of federal debt to ask the government to buy their bonds back at a discount. If that is so—and it is—then why say any of this?
The explanation is that Trump is winging it, making it up as he goes along just as he has through his career, which I have covered on and off for 27 years.
To those who understand economics, public finance and taxes, listening to Donald Trump talk about these issues is like listening to Sarah Palin talk about anything. The contradictions, the baseless assumptions, the meandering sentences that veer off into nowhere belong more in the fictional world of “Alice in Wonderland” where, as the Cheshire cat advised, “it really doesn’t matter which way you go” in search of the White Rabbit, but you could ask the Mad Hatter or the equally mad March Hare.
You might think that after decades of planning a run for the White House—after all, he did run in 2000 as a Reform Party candidate—Trump would have developed a clear set of views on economics. You might think he would have devoured policy papers, retained top experts and tested out ideas in speeches heard by few. You might think he would have polished and logical lines by now.
But that would require treating these issues as matters deserving of serious study. Absent such study, it is no surprise that much of what Trump says confounds those who have spent their lives studying economics, public finance, taxes and history.
Whatever Trump may have learned in college, his flip-flopping and wavering suggest that Trump saw no need to prepare to be president. It’s as if a chef decided he didn’t need to learn how to cook before pulling off a White House State Dinner.
Trump just tosses concepts into a pot. He starts with made-up numbers (our China trade deficit is $338 billion, not Trump’s $500 billion); adds some brazen conspiracy theories (Obama was not born an American citizen); mixes them with irreconcilable vagaries (taxes should go down, but so should budget deficits); tosses in some populist myths (thousands in North Jersey celebrated as the Twin Towers burned) and rotten ideas (the President telling Carrier, Ford and Nabisco where to build factories)—and finishes it all off with a bucket of rhetorical nonsense.
Trump is superb at one aspect of this. His economic stew would induce economic food poisoning, but he sells it with an appealing name: Make America Great Again.
By: David Cay Johnston, The Daily Beast, May 10, 2016
“Did He Pay Anything At All?”: Donald Trump Says He Won’t Release Tax Returns
Months after he said he would release his tax returns, Republican frontrunner Donald Trump has decided that the American public doesn’t need to see how much (or little) he has paid in taxes until after the November elections, marking a shift in the vague promises he previously made to release the records to the public.
He solidified his position in an interview published by the Associated Press today, in which he said that “there’s nothing to learn from them.” Trump has also claimed that he is in the process of being audited by the IRS, and that releasing his returns for the year under audit would be imprudent, despite the agency confirming that being audited doesn’t legally interfere at all with the ability to release one’s tax records.
As far back as October 2015, Trump promised to release his tax documents. “I’m not going to say it, but at some point I’ll release it,” he said at the time. In that same interview, he also said, “I pay as little as possible, I’m very proud to tell you.”
In January, Trump said again that he would release his taxes soon. “We’re working on that now. I have big returns, as you know, and I have everything all approved and very beautiful and we’ll be working that over in the next period of time,” he said. Months later, they still haven’t been released.
Then again on May 8, just days before his announcement that he wouldn’t release his returns, he said, “Sure. If the auditors finish. I’ll do it as fast as the auditors finish.You don’t learn much from tax returns. But I would love to give the tax returns. But I can’t do it until I’m finished with the audit.”
But how little does Trump actually pay in taxes? David Cay Johnston, who spent three decades covering Trump as he moved from one business venture to another, noted that in 1978 and 1979 the businessman had paid exactly $0 in taxes.
He further explained how wealthy Americans like Trump use the tax code to their advantage, writing:
It’s all about tax rules that require you to depreciate, or reduce, the value of buildings over time, even if the market value of the structures is going up. If your depreciation is greater than your traditional income from work and businesses, Congress lets you report negative income. If these paper losses are just a dollar more than traditional income, it wipes out your income taxes for the year.
If Trump’s returns show he has paid no income taxes in some years, that could be a reason he has not yet released details.
Congress says most Americans can deduct no more than $25,000 of real estate depreciation against their income. But if you work two days a week managing real estate and own enough that the depreciation exceeds your salary and other income, Congress lets you live income-tax-free. And for as long as you keep buying buildings and depreciating them, the tax does not come due.
There are numerous reasons why Trump wouldn’t want to release his taxes. First, he has amassed his fortune partly by using tax loopholes that allowed him to effectively pay no income tax for years — possibly up to the present day. More recently, he changed his tune, saying, “I am willing to pay more, and you know what, the wealthy are willing to pay more.” America should be thankful Trump wants to pay more than… whatever he’s currently paying. It could be nothing at all.
Second, the tax returns could show that he has far less money than he claims. This possibility was seized upon by anti-Trump Republicans who have tried to coerce Trump into releasing his returns. During the opening shots of the fight against the racist billionaire’s takeover of the party, Mitt Romney raised the possibility, saying, “Either he’s not anywhere near as wealthy as he says he is, or he hasn’t been paying the kind of taxes we would expect him to pay.”
There is evidence to back up Romney’s claim. Forbes calculated Trump’s worth to be $4.5 billion at most. “Trump has filed statements claiming he’s worth at least $10 billion or, as he put in a press release, TEN BILLION DOLLARS (capitalization his). After interviewing more than 80 sources and devoting unprecedented resources to valuing a single fortune, we’re going with a figure less than half that–$4.5 billion, albeit still the highest figure we’ve ever had for him.”
Even harder to explain is the jump in Trump’s cash-on-hand. The National Review wrote that his organization showed documentation for cash and cash equivalents of $307 million in 2014. This year, that number jumped up to $793 million, sans documentation, making it difficult to believe that he actually has that much money. “I’m running for President,” said Trump in an interview with Forbes. “I’m worth much more than you have me down [for]. I don’t look good, to be honest. I mean, I look better if I’m worth $10 billion than if I’m worth $4 billion.”
Trump’s obstruction has not only served his purposes, but that of his likely rival, Hillary Clinton. During the Democratic debate in Brooklyn last month, she responded to a question about her speech transcripts with a criticism of other presidential candidates, namely Trump, who didn’t release their tax returns.
“There are certain expectations when you run for president,” said Clinton. “This is a new one but I will tell you this, there is a longstanding expectation that everybody running release their tax returns.”
By: Saif Alnuweiri, The National Memo, May 11, 2016
“What Has Happened To Our Election?”: No Candidate Has Ever Lied As Frequently, Blatantly, And Blithely As Trump
“When a man’s fancy gets astride on his reason,
imagination is at cuffs with the senses,
and common understanding as well as common
sense is kicked out of doors, the first proselyte he
makes is himself.”
–Jonathan Swift, “A Tale of a Tub,” 1704
For a man with a satirical turn of mind, presidential election years can be trying. Apparently your humble, obedient servant here isn’t angry enough to participate fully in the festivities. This is interesting, because I’ve rarely been mistaken for Mr. Sunshine. I’d be a total failure as a game show host.
Everywhere you turn, people are shaking their fists in each other’s faces. On television and online, that is. Most days, it’d be a good idea to don a crash helmet before opening Facebook. And the summer bickering season has hardly begun. These are mostly Republicans and Democrats fighting among themselves. The main event has yet to come.
Elsewhere, people go about their normal daily activities with seeming equanimity — although there’s been a marked increase in convenience store parking space shootings, actually. Maybe an armed society’s not such a polite society after all. How surprising would it be to see gunfire erupt at a presidential campaign event?
But I digress, and ominously.
Chez Pazienza recently described a mob of Bernie Sanders backers who disrupted a recent Clinton campaign event in Los Angeles. According to one witness, “[t]hey were cussing at people, calling women whores, and telling people to kill themselves. They were shouting in children’s faces, blowing sirens in their ears, and making them cry.”
Such antics would be hard to believe, had Pazienza not posted video clips. Asked by Rachel Maddow to disavow such behavior, Sanders basically ducked the question. And this is the Hippie Party. On college campuses, Clinton supporters complain they’re called “evil,” poor things.
Do you suppose they require “trigger warnings”?
At such times I’m reminded of Jonathan Swift’s timeless satire of the root causes of political fanaticism. Writing roughly 300 years ago in the wake of the English Civil War, Swift concocted an imaginary religious sect called “Aeolists.” (Aeolus was the Roman god of wind.) His target was anybody who claimed to be “inspired,” or as he saw it, filled with hot air.
“Words are but wind,” Aeolists believed, “and learning is nothing but words; ergo, learning is nothing but wind.” Swift depicted true believers “linked together in a circular chain, with every man a pair of bellows applied to his neighbour, by which they blew up each other to the shape and size of a [barrel]…. When, by these and the like performances, they were grown sufficiently replete, they would immediately depart, and disembogue for the public good a plentiful share of their acquirements into their disciples’ chaps.”
Has a more apt description of candidate Trump’s cult of personality ever appeared? Is there nothing the man could say that would give his enraptured supporters pause? As Paul Waldman notes in the American Prospect, he’s a one man tidal wave of disinformation.
“First, there’s the sheer breadth and character of his falsehoods. Absurd exaggerations, mischaracterizations of his own past, distortions about his opponents, descriptions of events that never occurred, inventions personal and political, foreign and domestic, Trump does it all…There has simply never been a candidate who has lied as frequently, as blatantly, and as blithely as Trump.”
Trump outdid even himself on Meet the Press last Sunday, disemboguing a couple of thunderous falsehoods in our collective faces. First he allowed as how he means to stop undocumented immigrants from voting in U.S. elections.
Informed by Chuck Todd that they’re already prevented by law from doing so, Trump allowed as how “You have places where people just walk in and vote.”
If he could document even one such polling place, that would be newsworthy. But of course Trump cannot, so instead he doubled down.
“We’re the highest-taxed nation in the world,” he claimed. That one the interviewer unaccountably let go.
Actually, U.S. tax revenue ranks near the bottom of the developed world as a percentage of GDP — just above Korea, Chile and Mexico. Corporate tax rates are theoretically high, but as most people know, loopholes are so plentiful that few companies pay them.
U.S. tax revenue per capita ranks nearer the middle of industrialized nations. As conservatives never tire of pointing out in other contexts, most countries in the European Union pay twice as much as Americans.
But then why bother? One could devote whole columns as Washington Post fact-checker Glenn Kessler recently did, to debunking Trump’s epic falsehoods. Some of them are downright funny.
No, Vladimir Putin never called Trump a “genius.” He called him “flamboyant.” Only Trump, of course, would seek the Russian strongman’s approval.
But do such considerations matter to the man’s encircled supporters, each with a bellows discreetly inserted?
I don’t believe that they do.
By: Gene Lyons, The National Memo, May 11, 2016
“The Making Of An Ignoramus”: Making America Great Again Means Running The Country Like A Failing Casino
Truly, Donald Trump knows nothing. He is more ignorant about policy than you can possibly imagine, even when you take into account the fact that he is more ignorant than you can possibly imagine. But his ignorance isn’t as unique as it may seem: In many ways, he’s just doing a clumsy job of channeling nonsense widely popular in his party, and to some extent in the chattering classes more generally.
Last week the presumptive Republican presidential nominee — hard to believe, but there it is — finally revealed his plan to make America great again. Basically, it involves running the country like a failing casino: he could, he asserted, “make a deal” with creditors that would reduce the debt burden if his outlandish promises of economic growth don’t work out.
The reaction from everyone who knows anything about finance or economics was a mix of amazed horror and horrified amazement. One does not casually suggest throwing away America’s carefully cultivated reputation as the world’s most scrupulous debtor — a reputation that dates all the way back to Alexander Hamilton.
The Trump solution would, among other things, deprive the world economy of its most crucial safe asset, U.S. debt, at a time when safe assets are already in short supply.
Of course, we can be sure that Mr. Trump knows none of this, and nobody in his entourage is likely to tell him. But before we simply ridicule him — or, actually, at the same time that we’re ridiculing him — let’s ask where his bad ideas really come from.
First of all, Mr. Trump obviously believes that America could easily find itself facing a debt crisis. But why? After all, investors, who are willing to lend to America at incredibly low interest rates, are evidently not worried by our debt. And there’s good reason for their calmness: federal interest payments are only 1.3 percent of G.D.P., or 6 percent of total outlays.
These numbers mean both that the burden of the debt is fairly small and that even complete repudiation of that debt would have only a minor impact on the government’s cash flow.
So why is Mr. Trump even talking about this subject? Well, one possible answer is that lots of supposedly serious people have been hyping the alleged threat posed by federal debt for years. For example, Paul Ryan, the speaker of the House, has warned repeatedly about a “looming debt crisis.” Indeed, until not long ago the whole Beltway elite seemed to be in the grip of BowlesSimpsonism, with its assertion that debt was the greatest threat facing the nation.
A lot of this debt hysteria was really about trying to bully us into cutting Social Security and Medicare, which is why so many self-proclaimed fiscal hawks were also eager to cut taxes on the rich. But Mr. Trump apparently wasn’t in on that particular con, and takes the phony debt scare seriously. Sad!
Still, even if he misunderstands the fiscal situation, how can he imagine that it would be O.K. for America to default? One answer is that he’s extrapolating from his own business career, in which he has done very well by running up debts, then walking away from them.
But it’s also true that much of the Republican Party shares his insouciance about default. Remember, the party’s congressional wing deliberately set about extracting concessions from President Obama, using the threat of gratuitous default via a refusal to raise the debt ceiling.
And quite a few Republican lawmakers defended that strategy of extortion by arguing that default wouldn’t be that bad, that even with its access to funds cut off the U.S. government could “prioritize” payments, and that the financial disruption would be no big deal.
Given that history, it’s not too hard to understand why candidate Trump thinks not paying debts in full makes sense.
The important thing to realize, then, is that when Mr. Trump talks nonsense, he’s usually just offering a bombastic version of a position that’s widespread in his party. In fact, it’s remarkable how many ridiculous Trumpisms were previously espoused by Mitt Romney in 2012, from his claim that the true unemployment rate vastly exceeds official figures to his claim that he can bring prosperity by starting a trade war with China.
None of this should be taken as an excuse for Mr. Trump. He really is frighteningly uninformed; worse, he doesn’t appear to know what he doesn’t know. The point, instead, is that his blithe lack of knowledge largely follows from the know-nothing attitudes of the party he now leads.
Oh, and just for the record: No, it’s not the same on the other side of the aisle. You may dislike Hillary Clinton, you may disagree sharply with her policies, but she and the people around her do know their facts. Nobody has a monopoly on wisdom, but in this election, one party has largely cornered the market in raw ignorance.
By: Paul Krugman, Op-Ed Columnist, The New York Times, May 9, 2016
“Trump Needs Billionaires, And They Know It”: Selling The American People To The Highest Bidder
Did you hear the shocking news? Unlikely presidential candidate Donald Trump announced last week that he would be fundraising in a big way to pay for the rest of his campaign.
Trump’s new finance committee, chaired by CEO of Dune Capital Management Steven Mnuchin and including, recently, Anthony Scaramucci of SkyBridge Capital, will work with and reach out to the same hedge fund manager types that Trump used to call “paper pushers” who are “getting away with murder.”
Who could have guessed: Trump’s claims that he would self-fund his campaign, in order to avoid the corruptive influence of big donors, were complete lies.
Scaramucci, to be fair, is a little more Trump’s speed than your average paper pusher: in addition to managing a hedge fund, he hosts a show on Fox Business and wrote the book Goodbye Gordon Gekko: How to Find Your Fortune Without Losing Your Soul, which I assume Trump thought was ironic.
Mnuchin, for his part, is known in Hollywood for quietly taking $50 million out of Relativity, a failing entertainment company, right before it went bankrupt.
Trump deserves credit, at least, for finding fundraisers in his own image.
The campaign also established a joint fundraising agreement with the Republican Party, so that Trump can fundraise for them — he likely won’t, given his distaste for helping others — and they can funnel him money from their large network of billionaire donors, all of whom are focused on making sure Donald doesn’t repeat the mistake he made on Sunday, when he let slip that rich people should pay more taxes.
By Monday, New Trump had it all figured out: he didn’t mean that the rich would pay more — that would be unthinkable for a Republican nominee with his kind of fundraising operation. Rather, he would simply bump the top marginal rate on his own plan up a few points, still a dramatic tax cut.
“Well, sure it’s a change. I’m allowed to change,” he told George Stephanopolous. “You need flexibility, George, whether it’s a tax plan where you’re going to — where you know you’re going to negotiate. But we’re going to come up with something.”
Trump’s tax plan, which would add trillions upon trillions of dollars to the debt with a huge tax break for the rich, has largely flown under the radar since he proposed it last September, aside from the usual mainstream economists saying it was insane.
But Trump’s off-hand comments about the rich were a mistake Mnuchin and Scaramucci likely knew they couldn’t let stand, if Trump wanted the support of the billionaires that used to constitute the GOP’s ideological base, until he reminded rank-and-file voters that America’s trade policies had screwed them.
And we’re only talking about taxes, an issue that even the most, ahem, inexperienced presidential nominee can fake. If billionaire pressure can reverse Trump’s tax rhetoric in 24 hours, what will billionaire GOP kingmaker Sheldon Adelson’s money do to Trump’s pledge to be “sort of a neutral guy,” in the Israeli-Palestinian peace process?
Hint: Last Wednesday, Trump announced suddenly that Israelis “have to keep moving forward” building illegal settlements in the Palestinian-controlled West Bank, a huge obstacle to any kind of negotiations, if you ask Palestinians.
The next day, Adelson — who Trump had previously accused of trying to “mold” Marco Rubio into “his perfect little puppet” — said Trump would be “good for Israel.”
Now, the billionaires are lining up around the block, trying to impress upon Donald the urgency of their pet causes while he’s still gullible enough to simply give them what they want.
Who’s the puppet now?
This election season’s refreshing discussion of money in politics, however coarse it has been, has brought back a saying from the ‘60s, sometimes attributed to Texas Democrat Sam Rayburn and sometimes to Lyndon Johnson. It’s about lobbyists:
“If you can’t eat their food, drink their booze, screw their women, take their money and then vote against them you’ve got no business being up here.”
Bernie Sanders doesn’t want big donors’ help.
Hillary Clinton — like most candidates for office — does want their help, and claims she can still vote against them.
Donald Trump, building up a fundraising infrastructure on-the-fly, is plainly asking for their help in exchange for his vote.
In fact, if you want a rare glimpse at how money can change politicians’ stances on the issues — especially politicians without much experience on the issues — now is a great time to start tracking how and when Trump changes his mind about things.
It won’t be pretty. But Donald is desperate: he needs hundreds of millions of dollars, probably more, to become a viable presidential candidate. And for him, this is all one big deal. As long as he comes out on top, he’ll sell the American people to the highest bidder.
By: Matt Shuham, The National Memo, May 10, 2016
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