By Rebecca Heilweil
David Stockman, President Reagan’s former head of the Office of Management of Budget, may have Trump beat when it comes to biting insults for his political foes. In Stockman’s words, Treasury Secretary Steve Mnuchin is a “political weakling who gives yes-men a bad name,” and Bob Lighthizer, the current U.S. Trade Representative, is a “lifelong swamp creature.”
The commander-in-chief doesn’t get off easy, either. On Tuesday, the former Reagan official, who also served in Congress, told Cheddar that Trump is a “hopeless, mercantilist protectionist,” a “bombastic gasbag,” and the “worst big spender we’ve ever had in the Oval Office on the Republican side.”
Stockman’s criticisms come after Monday saw the worst fall in the markets since January 3, following China’s announcement that, beginning June 1, Beijing would retaliate against increased American tariffs on Chinese goods ー announced by Trump last week ー with higher tariffs of its own.
“Yesterday was a wake-up call. I don’t think the trade war is going to end anytime soon. You got two fundamentally incompatible economies. You got a policy being driven by a guy who lost his lunch, I think. Trump has no clue what he’s doing,” said Stockman. “He doesn’t really know what he wants, and he has no clue how this is going to unfold.” Stockman, known as the "Father of Reaganomics," the economic policies that favored small government, a free market, and lowering taxes, has long advocated for lowering the national debt, and cautioned against optimism in the current economy.
Still, the tech-heavy Cheddar 50 Index, which measures the performance of Cheddar's 50 top companies ー from Apple ($AAPL) to GM ($GM) ー began the day slightly up. The index was led by Beyond Meat ($BYND) and Cronos ($CRON), both up more than six percent. T-Mobile trailed behind and was up just .15 percent by the late morning. Meanwhile, major indexes are slowly rebounding from Monday’s tumble. The Dow Industrial Index was up 330 points by the late morning after a more than 600 point fall yesterday. The S&P 500 was up 1.5 percent, and the Nasdaq was up 1.4 percent.
While there's some hope that ongoing trade negotiations could produce a comprehensive deal, Stockman believes Trump lacks the advisers to succeed. “We’re going to face the music in a weaker position with a man in the Oval Office who is home alone,” he said. According to the former politician, Peter Navarro, the director of trade and manufacturing policy, wrongly seeks aggressive tactics against China, and Lighthizer’s trade goals are too focused on big spending.
“It’s really for big business, it’s not for jobs and the economy,” said Stockman.
Stockman has regularly expressed concern that recent positive quarters have been mistaken for a boom. “The peak is behind us,” he said, pointing to several headwinds he believes could soon trouble the economy. “What we have is an aging business cycle that’s coming to the end of the road, and we’ve done nothing to get prepared.”
He notes that the total debt in the U.S. now tops more than $72 trillion ー $20 trillion more than it was during the 2008 recession ー according to data from the Federal Reserve. Meanwhile, over the next 10 years, annual federal deficits are expected to average $1.2 trillion .
Stockman also criticized Trump’s frequent calls for the Federal Reserve to lower interest rates, which don't seem at the moment to be moving up or down. Stockman believes that the Federal Reserve “waited way too long to tighten and now doesn’t know what to do.”
China’s debt is also concerning, Stockman added, and he’s worried that Europe could be headed toward a recession. The former politician warns that “there’s a huge risk some kind of black swan, or orange swan ー as the case may be ー is likely to upset the whole apple cart."
“You have to assume that recessions haven’t been outlawed,” he said.
Stockman has been a regular critic of Trump and believes that the president’s policies run in stark contrast to those promulgated by President Reagan, whose economic policies have been frequently cited by GOP members. But current Republicans have been wary of criticizing the current president. Stockman’s explanation: they don’t want to criticize the administration while the economy still appears positive.
However, the former OMB official doesn’t favor a challenger to the sitting president yet.
For full interview click here.