Stockman Predicts Debt Ceiling Won’t Be Raised, ‘There Will Be a Shutdown’ this Summer
RUSH EXCERPT:
ANCHOR: "What does that say to you about the conversation of the budget in Washington today? We had Larry Summers calling it ludicrously optimistic. There were those who momentarily chaired the fact that there was not a 10-year target here. You heard from both Republicans and Democrats saying that this is something unpalatable to them."
STOCKMAN: "It is basically fantasyland. They have been kicking the can so long that the magnitude of the problem is almost insuperable. They imagine mixes that have no chance of happening. Not only does this budget project gdp that can't happen, but they also have what they laid out is $7.5 trillion, doubling the standard deduction all the rest of it, and yet they say they are going to pay for it with 100% offsets so there's no revenue loss."
ANCHOR: "If the double count?"
STOCKMAN: "It is a double count. I'm all for lower rates, as that's what Reagan did in 1986, but how are you going to come up with $7.5 trillion of offsets when you have K street lobbyists lined up from one end of the swamp to the other? The big dollars or really be on reach. The biggest loophole that you can close is the health exclusion. The House Republicans chickened out on that during the Obama care repeal. The next biggest one is $180 billion, which is pensions and iras. The third one is capital gains and dividends treated on a preferential basis. When you put all the Wall Street lobbyist and the rest of them on the case, they are not going to repeal that either. My point is that they pretend to have a tax cut they have not paid for that reduces gdp out of this world beyond what is feasible. They end up with budget numbers that are so unrealistic, such complete fantasy that they might as well not even bother. Then they pretend you can raise the fed, veterans, a $12 billion infrastructure program, Medicare , and essentially take $500 billion of a $4 trillion budget and cut the hell out of that little corner and leave the last to either grow or the same and think it adds up to anything."
ANCHOR: "We had Mick Mulvaney saying that the data of the cbo's relevance is over with. To sympathize -- do sympathize with him?"
STOCKMAN: "No, I think the CBO is totally necessary. I think they are too optimistic. We had much hurt before, but even the cbo projects growth of nominal gdp and which is over the next 10 years that are far beyond what we have had. In the face of a world economy, now if you think that China is just going to sell off into the sunset the next 10 years without a hiccup, more power to you. If you think the socialist economies of Europe are not in , more power to you. If you look at what the fed is doing here, what we have had in last 10 years is that no way is any of this going to materialize. They are in fantasyland and they are going to end up in the ditch. Here's the important point. Within 70 days, when the debt ceiling kicks in, it's already in place and they run out of cash come a draining very rapidly, they're down to less than $150 billion. What investors are totally ignoring is that there will not be a debt ceiling increase. I think there will be a shutdown in August or September. There will be the danger that they actually have to prorate revenue -- prorate spending to the incoming revenue. It will be such a shock to the system that what we saw Friday, that little hiccup with the banks, would be nothing to the fiscal paying that hits in August."
