‘Is Nobody Gonna Tell Him?’ MAGA And The Pedal To The Metal Economy

“Is nobody gonna tell him?”

How many times do you think Trump’s cabinet, aides and various advisors have implicitly asked each other that without saying it out loud over the course of the last year?

I mean, you’ve got to know that every single meeting – whether it’s on national security, or foreign policy or the economy – always has at least one moment where everyone is looking at each other wondering if anyone in the room has the balls to try and explain to that retarded monkey why what he’s suggesting won’t work.

But apparently everyone around Trump is short on balls because they just keep letting him do whatever he wants and you know, maybe part of that is strategic. Maybe some of these people are actually hoping that eventually, if he’s just allowed to run around doing whatever he feels like doing and saying whatever pops into his head, one day he’ll do something so stupid that Congress will have no choice but to impeach him. I mean after all, this is the same guy who once said this:

So you know, maybe he’ll overdose on his own delusions of grandeur one day and do something unequivocally dumb enough to warrant immediate removal from office.

In the meantime, the rest of us have just said “fuck it.” I mean there’s really no point in bothering with this moron’s tweets anymore and there’s no point in reading what comes out of the Right-wing echo chamber. Everybody knows it’s a joke so about the best anyone can do is try and analyze the likely near-term implications of his policy decisions while we wait around on Robert Mueller to pull the plug on this circus once and for all.

Well out of the myriad policy blunders he’s made, you’d be hard pressed to find one that’s more potentially ruinous than his economic “strategy.”

Literally everyone thinks it’s stupid whether they say so or not. Republicans don’t like it because he’s forced them to abandon fiscal discipline. Democrats don’t like it because he’s ballooning the deficit to pay for a tax cut that disproportionately benefits corporations and the wealthy. And economists are simply dumbfounded by the sheer insanity inherent in piling this much fiscal stimulus atop an overheating economy.

All of this absurdity came together this week in one glorious moment that found White House budget director and notorious deficit hawk Mick Mulvaney being forced to try and rationalize spending $30 million on a goddamn military parade at a time when everyone is lampooning the administration for its lack of fiscal rectitude.

As we wrote over at Dealbreaker, you really should take a minute to try and appreciate how truly hilarious it is that Mick, who in 2010 famously proclaimed “we really believe you can’t spend money you don’t have,” had to say this on Wednesday:

I’ve seen various different cost estimates from between, I think, $10 million and $30 million, depending on the size of the parade, the scope of it, the length of it, those types of things. Obviously, an hour parade is different than a five-hour parade, in terms of the cost and the equipment.

The look on his face as he explained that says it all:

Yeah. That’s what it looks like when Mr. deficit hawk has run fresh out of explanations when it comes to rationalizing what in God’s name his boss is thinking.

Of course if this were anyone but Trump, the Right-wing blogs (especially the ostensibly finance-focused ones) would be all over this boondoggle. But they’re so pot-committed to Trump for reasons they can’t and won’t explain even to their own writers that they’re going to stand by and watch as these policies accelerate the end of cycle and force the Fed’s hand.

To be clear, analysts know what’s going to happen here. Albert Edwards released a truly scathing critique of Trump’s economic policies this week and just to pull another one out the hat at random, Credit Suisse called Trump’s stimulus “poorly timed” on the way to upping their Fed hike forecast for 2018 to four.

Well just to drive the point home, we wanted to highlight a couple of other excerpts from some recent analyst commentary, starting with this from BofAML who, while reserving judgement on the Fed hikes (presumably in a nod to the idea that Powell would rather fall behind the curve than risk hiking the economy into a recession), is still unequivocal about the relative wisdom of these policies:

The economy is getting pumped with stimulus this year. First came tax reform, next came an increase in budget caps and now there is talk of greater infrastructure spending. The obvious consequence is a ballooning budget deficit which should create a short-term jolt to economic growth.

What does this mean for the budget deficit outlook? Looking at the Congressional Budget Office’s (CBO) pace of spend in FY2018 and the estimated outlay impact from the cap increase for the next two years, we think the budget deficit will widen by roughly $72bn and $120bn in FY18 and FY19, respectively, on the back of the discretionary cap increases, which is $22bn and $40bn more than what we had previously penciled in Pre-2018 BBA. Adding in the funds for disaster relief and “tax extenders” and combining it with the dynamic cost of the Tax Cuts and Jobs Act, we now expect the budget deficit to widen to $820bn in FY18 and $1075bn in FY19, translating to 4.1% and 5.1% of GDP respectively (Table 2).

So there’s that. And here’s Barclays who, unlike BofAML, isn’t waiting around when it comes to upping their Fed hike forecast:

Last week, Congress passed the Bipartisan Budget Act of 2018, which lifts the spending caps on federal spending that had played an important role in restraining the growth of public sector spending since their introduction in 2013 as part of the deal to avoid the “fiscal cliff.” The Act provides for a significant increase in the authorized spending caps in fiscal years 2018 and 2019, though outlays will likely extend past that horizon. Nonetheless, along with the Tax Cut and Jobs Act, the Bipartisan Budget Act of 2018 is the second piece of noteworthy fiscal stimulus enacted recently. The additional fiscal stimulus increases our conviction that the US economy will remain in an above-trend growth path this year and next, pushing the unemployment rate lower and supporting a return of inflation to the Fed’s target. As a result, we now look for four rate hikes in 2018 and four more in 2019, an increase of one hike in 2019 relative to our previous outlook. Risks of a hard landing, in our view, continue to move higher.

Note that last bolded bit. Trump is doing the economic equivalent of that famous picture he took pretending to drive the big rig. He’s mashing on the accelerator and screaming at the top of his lungs as he barrels the economy forward at a pace that everyone damn wells knows is completely unsustainable and will ultimately have to be reined in by the Fed lest inflation should spin out of control.

And in case you were wondering why he’s doing this, you should note that while part of it is down to stupidity, most of it is attributable to that goddamn silly slogan of his that’s emblazoned on those red trucker hats he sells for $19.99. To wit, from another post we did for Dealbreaker this week:

The problem here is glaringly obvious. Steady-as-she-goes growth is not only notacceptable under MAGA, it’s explicitly forbidden. There is nothing “great again” about growth that’s less spectacular than it’s been in the past. Growth that’s lower than yesteryear is the exact opposite of “great again” if you equate “great” with growth.

So there you go. Pedal to the metal, dammit. In the service of a nebulous campaign promise that could mean anything he wants it to mean depending on what it is he wants to do.

“YOU WILL RIDE ETERNAL, TACKY AND GOLD LEAF”…