By David Stockman
It’s actually pretty easy. At an apt moment very soon, Trump should offer Governor Kasich the VP slot and Senator Cruz the vacant Supreme Court seat.
Such a grand bargain would not only clear the primary field and quash any backroom hijacking of the nomination by the Washington GOP establishment; it would also permit each man to play his highest and best role at this great inflection point in the nation’s history.
That is, Donald Trump’s job is to destroy the Republican/Neocon establishment and bring working class America back into a modern version of a McKinley-style Republican Party. Ted Cruz’ task is to spend a lifetime bringing strict constructionism back to the high court, thereby helping to restore constitutional restraints on a leviathan state that fundamentally threatens personal liberty and economic freedom and prosperity in America.
And, yes, there really isn’t much for a washed-out, me-too Republican pol like Kasich to do at all. Except to get out of the way and exercise his apparent talent for preacherly uplift as America’s eulogist-in-chief at foreign state funerals.
Beyond the rightness of it, there’s some pretty potent logic for the politics of the deal, too, There would be lots of of winners all around—–most especially the long-suffering American people.
Mitch McConnell and his rudderless Senate wheels, for example, would not need even a ten minute caucus to hand down to young Ted Cruz a life sentence to the Supreme Court.
At the same time and more importantly, however, the American public would score a twofer——a more faithful high court and one less warmonger on Capitol Hill.
As to the former, Ted Cruz is about as close to the next Antonin Scalia as exists in America today. It goes without saying that he could do far more for the cause of liberty as a Justice than as a gadfly Senator.
But there is an angle even more important. Cruz was a top student and debater at Princeton, a distinguished editor of the Harvard Law Review and a clerk on both the DC Court of Appeals and for the great Justice William Rehnquist on the Supreme Court. During the primary debates, he erudition on constitutional matters towered far above the pack.
He was also described as “off the charts brilliant” by no less an admirer of his own brilliance than Alan Dershowitz. With a prospective long lifetime of service on the high court, Ted Cruz could bring a level of scholarly narrative and intellectual passion and acumen that is sorely needed by the constitutionalist cause.
At the same time, the American people would be spared of another bellicose politician hell-bent on extending Washington’s imperial depredations. Cruz seems to have the Ronald Reagan disease. That is, his belief in small government does not extend to the Pentagon side of the Potomac; and his high regard for liberty does not appear to encompass innocent foreigners dwelling in the vicinity of desert sands he would cause to glow in the dark.
As for Kasich, it is hard to think of a more inapt messenger with a more wrong-headed message. America does not need another compromiser, reconciler and wizened Washington ranch hand who can split the difference.
It needs, instead, a force of nature who can rain shock and awe on the Imperial City. And, so doing, overturn its vast network of prosperous racketeers who feed off the military industrial complex, the health care cartel, the education monopolies, the Wall Street and banking mafias and the legions of other crony capitalist rackets.
Governor Kasich’s specious claim to be a fiscally prudent budget balancer is especially telling. One of the most outrageous Washington wastes is right under his nose. Namely, the Lima Ohio M-1 tank line that he and the Ohio politicians keep open despite 10,000 such lethal machines already in inventory——-and notwithstanding that no other nation has tanks of this advanced capability or, more dispositively, the means to land them on these shores.
Actually, M-1 tanks were originally designed to fight the Red Army on the central front——said army and said front having disappeared from the pages of history 25 years ago.
Since then they have been used for neocon wars of invasion and occupation that did nothing for the safety and security of citizens in Dayton OH or Danbury CT except foster vengeful blowback in the cities and towns they turned into rubble. Even then, the Imperial City’s racketeers offered this folly as proof of the need for more iron and electronic monsters from Lima, while Kasich and his pols lip-synched the sales pitch.
In truth, Kasich is exactly the kind of political lifer that needs to occupy the Joe Biden chair of policy irrelevance during the monumental reckoning ahead. He has indulged in double talk for so many decades that he no longer even knows when his lips are synching or even moving.
His victory speech after the Ohio primary, for example, was laced with pious rhetoric about devolving government back to the states and localities.
C’mon. He took a 90% bribe from Obama to drastically expand Medicaid in Ohio at the expense of taxpayers in Idaho and Texas, whose faithful governors didn’t. Yet he has the nerve to call himself a champion of decentralization?
Kasich’s brand of phony Federalism goes back to Nelson Rockefeller, who wore thin the patience of New York taxpayers with his out-sized building, spending and other notorious appetites. So looking enviously at the untapped citizens of Nebraska and Oregon, Rocky then cooked-up the idea of revenue sharing and sold it to Nixon. It was actually just a form of interstate larceny.
As a young Capitol Hill staffer at the time, I saw how the old-fashioned conservative and legendary ruler of the House Ways and Means Committee, Wilbur Mills, had it killed dead as a doornail. His was virtually the last voice of authority and power in Washington during the past half century who insisted that such tax monies should never leave home in the first place; and that the round-trip through Washington was just an opportunity for sticky fingers to skim the pot and for disingenuous politicians to bring home the pork while pretending it was free money.
If they want to spend it, said Mills, let them tax it first. But sound Federalism was not to be. LBJ’s Great Society had broken the dam and soon Wilbur Mills stumbled into submission on the eve of the 1972 Nixon landslide——perhaps in a foreshadowing of his final stumble two years later into the Tidal Basin with Fanne Foxe.
The rest, as they say, is history. With Mills’ iconic defense of the old order out of the way, the Nixon-Ford White House massively expanded the Federal grant-in-aid system. At length, a whole generation of GOP politicians became house-trained in Kasich style fiscal doublespeak and hypocrisy.That is, in the art of decrying Washington’s fiscal profligacy on the rubber chicken circuit by night while devoting their day jobs to scrapping for hometown pork from Medicaid and thousands of like and similar Federal gravy trains.
I have no idea whether Donald Trump will see through this Kasich style fiscal hypocrisy or not. But I do believe him when he decries our $19 trillion national debt and when he says that he is going after Washington’s fiscal profligacy with hammer and tongs.
In this instance, and much else, Trump’s principal virtue is that his only acquaintanceship with the Imperial City is attendance at an occasional Kennedy Center gala. Accordingly, Trump is unschooled in the self-serving rationalizations that keep the rackets going, even as he is endowed with such ample self-confidence that he is sure to go charging into the nation’s fiscal mess like a bull in a china shop.
And that’s much to be welcomed after years of a bipartisan conspiracy of silence and Washington’s perfidiously orchestrated regime of fiscal can-kicking. Broken furniture and bombastic challenges are exactly what the fiscal doctor ordered. Indeed, what a President Trump could actually do is prove that the way to shutdown Washington’s budgetary rackets is by means of an insurrectionist-in-chief inside the White House, not furtive threats to close the Washington Monument lobbed down Pennsylvania Avenue from Capitol Hill.
Say what you will about Trump’s controversial business history, the four bankruptcies and the rest. Yet it is absolutely certain that he knows at least this much: You don’t stop a flood of budgetary red ink with a 25-year plan to get to a balanced budget by 2038!
That’s Speaker Paul Ryan’s particular contribution to the GOP establishments’ noxious form of fiscal duplicity and doublespeak. Like in the movie “Dave”, The Donald is likely to dive into the budget himself and then there will be fear and trembling all around the Imperial City.
Big Pharma and the health insurance cartel are already in Trump’s gun sights, but once he gets to 1600 Pennsylvania Avenue he will quickly discover the target rich environment on the Pentagon side of the Potomac, too. The hideously expensive, technically plagued and completely unneeded trillion dollar F-35 fighter would be the ideal place for him to start.
And that goes to the larger point. All the swells in the mainstream media are furiously cackling about The Donald’s answer on morning TV about the identity of his top foreign policy advisors. Yet the apparent fact that he has none and is doing his own thinking is why the think tanks and neocon lobbies are in full frontal panic:
I’m speaking with myself No. 1 because I have a very good brain and I’ve said a lot of things,” he said in an interview on MSNBC. “I talk to a lot of people and at the appropriate time I’ll tell you who the people are.”
Actually, there is more, and it has to do with one of the many character flaws that self-evidently afflict the man. We speak of his monumental capacity to carry a grudge and seek revenge upon those who personally offend him.
Here’s the thing. Mitt Romney’s viscous public attack on Trump is only the beard. It is merely the censored for-family-TV-version of what the entire neocon establishment and War Party is saying every day in the corridors of Imperial Washington.
Needless to say, the Donald is taking names and will not be reluctant to do far more than kick offending posteriors. He will make it his business to hound, denounce, denigrate and dispatch the entire passel of neocon power brokers who have declared war on his candidacy.
And, yes, an Imperial City purged of Bill Kristol and his gang of bloodthirsty provocateurs would already be on the road to redemption.
Indeed, if America’s foreign policy could be seized from the grasp of the Washington War Party and its AIPAC subsidiary, the fiscal equation would be instantly transformed. Over and again, Trump seems to grasp that the real security of the homeland has nothing to do with being the world’s policeman and defense sugar-daddy.
In fact, that’s pretty obvious to anyone who hasn’t been mis-educated by globe-trotting harpies of war like Senators Lindsay Graham and John McCain. Trump has had no trouble figuring out that Ukraine, for example, was always part of the greater Russian sphere of influence and geographic propinquity.
If he had time for an honest briefing, he surely would have no problem at all seeing that it was the meddling, incompetent apparatchiks of the State Department, CIA and National Endowment for Democracy which fostered, funded and facilitated the coup against the constitutionally elected government of Ukraine in the first place.
Or that Crimea was the equivalent of a Gadsden Purchase which had been unwound by Kruschev in the midst of post-Stalin politburo maneuvers and intrigues; and that its re-annexation by Moscow after the illegal putsch in Kiev was accomplished far more peacefully and consensually than had been the territorial rearrangement of Kosovo by the US Air Force 15 years earlier.
But whether he has had all the true facts or not, Trump has had no trouble seeing that the solution to the conflict between Ukraine’s Russian speaking minority in the east and the rest of the country was a negotiated deal with Putin, not the demonization of this leader of a country that has no beef with America and a GDP the size of the NYC metropolitan area.
You can go from that insight straight to a $200 billion cut in the nation’s bloated $600 billion defense budget. When the US economy slides into recession, as it surely will, before the next White House inaugural ceremony has commenced, the Federal deficit will soar back above the $1 trillion mark; it has only been in temporary hibernation, not permanent remission.
So The Donald will need massive spending cuts in Washington at the very same time that desperate socialist governments in Europe will face a global recession induced outbreak of red ink in their own fiscal accounts. That will be the Donald’s moment——the opening to disband NATO, slash defense spending across both continents and negotiate the kind of global disarmament deals that Eisenhower unsuccessfully sought and Warren G. Harding actually achieved.
And that brings us to the supreme irony of this fraught political season. The Washington and New York chattering class has been nearly busting a spleen over the prospect of Trump’s (alleged) stubby fingers on the nuclear button. I haven’t heard such full-throated hysteria since they worked up a similar campaign against Ronald Reagan in the fall of 1980.
The man did go on to help end the cold war and remove the nuclear sword of Damocles that hung over the planet, even if it was the inherent contradictions and impossibilities of totalitarian socialism that finally brought down the Soviet regime.
Likewise, in a world heading into the fiscal dumpster, Donald Trump is more likely to negotiate an end to today’s monumental waste on arms and thereby win the Nobel Peace Prize than he is to start a war.
Stated differently, Trump can lead the world back to the 1991 status quo ante for one salient reason. He never got the War Party memo that proclaimed an American Imperium that has now failed horribly; and he will relish doing unstinting battle against it Imperial City architects——the Clintons and the neocons.
Still, redemption for the US economy and the nation’s wage and salary earning households will require more than the recovery of fiscal rectitude, as crucial as that is to avoiding a calamitous national bankruptcy during the next decade.
What is actually needed is a modern rendition of President William McKinley’s “full dinner pail” economics of circa 1900. McKinley was a hard money Republican who impaled William Jennings Bryan twice on his own cross of anti-gold populism by selling the gospel of free enterprise and mild protectionism to the laboring classes of America’s flourishing interior.
Donald Trump is on to that. But what he needs to better understand is that it was the gold standard and free enterprise elements of the McKinley formula that carried the day, not the moderately protectionist tariffs. The latter had actually been designed a decade earlier by McKinley himself as an Ohio industrial belt Congressman to insure wage equivalence with the principal industrial centers of England and Europe.
In fact, it was the honest money discipline of the gold standard that kept transatlantic industrial wages in equilibrium, consumer goods inflation non-existent and real living standards steadily rising. Stumping for the protectionist tariff was just the McKinley GOP’s way of emphasizing its solidarity with the wage earning producers of the day.
To be sure, free trade is always better for real living standards and societal wealth than the deadweight cost of tariffs, but in truth the McKinley tariff was as much a revenue tariff as it was an modern style instrument of statist protectionism. After all, it was not until 1913 that the nation even had an income tax on individuals and corporations.
And that gets us to a segue to The Donald’s well-intended but incomplete stance on global trade, the massive loss of full-pay productive jobs in America during recent decades and his claim that we are “losing” $500 billion a year to China, $59 billion to Mexico and so forth.
He is right. But it’s not just, or even mainly, due to bad trade deals negotiated by stupid bureaucrats in the state department and the USTR office.
It’s mainly owing to bad money created by stupid Keynesians at the Federal Reserve. They have enabled the rise of a virulent form of export mercantilism and currency manipulation throughout the entirety of East Asia and much of the EM world which drafts in its economic wake.
Stated differently, the two decade long regime of central bank driven free money has destroyed the possibility of free trade. What passes for “free trade” today has nothing to do with the real thing.
So-called free trade arrangements like NAFTA and the pending TPP are essentially statist deals negotiated among corporate, labor, environmentalist and other interest groups. If they actually result in increased global trade, the impact is marginal and largely incidental.
The whole trade calamity that Trump is declaiming goes back four and one-half decades; and can be laid at the doorstep of Milton Friedman and his acolytes in the White House who convinced Nixon to default on America’s obligation to redeem unwanted dollars for gold, and to instead float the dollar at Camp David in August 1971.
What the well-intended but hopelessly naïve free market professor failed to reckon with is that once the Fed was freed of the shackles of even the flawed Bretton Woods gold exchange standard, it would only be a matter of time before statist professors and Washington policy apparatchiks would open the monetary floodgates in the name of taming the business cycle or achieving the mythical Keynesian nirvana of full-employment.
Worse still, Friedman was clueless about the probability that this monetary profligacy would prove to be virulently contagious, especially among the developing economies of East Asia where free market capitalism had never really existed. What happened is a relentless, long-lasting and destructive “dirty float” that continues to this day.
The recipients of the Fed’s flood of dollar liabilities after Greenspan took the helm in 1987 engaged in massive currency intervention and manipulation in order to promote their export industries, and avoid what would have otherwise happened under Friedman’s theoretical fiat money regime. To wit, the dollar would have collapsed and Asian exporter exchange rates would have soared, halting America’s 25 year borrowing spree before it really got started.
The truth is, had Alan Greenspan and his successors maintained even a modicum of monetary restraint and permitted money and capital markets to clear under the laws of supply and demand, nominal US interest rates would have remained unusually high in the face of deep negative US trade balances stemming from the post-1994 mobilization of cheap labor in China and East Asia.
American households would not have lived high on the hog by borrowing from foreigners in order to consume more than they produced. Under honest money in the 1990s and thereafter, wages and productivity in the US would have sweated themselves back to competitive levels as they did during the McKinley era of full dinner pail economics.
Needless to say, that is all water over the dam now in 2016. American labor is hopelessly over-priced and the American standard of living teeters precariously on a debt-swollen economy that has no capacity to grow or create what used to be called middle class jobs.
I call them breadwinner jobs and there have been no net new ones formed in America since the turn of the century. The new jobs heralded on bubblevision every month are mainly born-again from the last cyclical downturn or low pay, part-time jobs in bars, restaurants, theme parks, nursing homes, home health outfits, temp agencies and student loan dependent for-profit tuition mills.
Yet Trump’s relentless harping on trade might provide an avenue to reset a hopelessly impaired domestic labor market. In brief, the prospective GOP nominee should embrace Ted Cruz’s business flat tax as he sends its author on his way to the Supreme Court.
But rather than replacing the income tax, which over half of US households do not pay anyway, the Cruz flat tax should be calibrated at a rate which will permit elimination of the payroll tax entirely. Lifting the roughly 16% employer/employee wedge off the cost of labor in America—–a burden of some $1.4 trillion annually—- would do more to restore full dinner pail economics to main street than any other conceivable measure.
In truth, the Cruz business flat tax is just a gussied up value added tax (VAT). And that’s exactly what America needs—notwithstanding decades of caterwauling against it by the Washington business lobbies and their GOP bag carriers—–because it taxes consumption, not labor and enterprise.
Better still, it would fully tax the $2.4 trillion of goods imports which come into the country every year while being rebated on the $1.7 trillion of US exports which fight for foreign markets with their arm tied behind their back—-owing to systematic foreign protectionism and the blatant currency pegging and manipulation that Donald Trump has rightly called out.
Indeed, a Trump administration would not need to start any trade war at all. It only needs to fire Janet Yellen and her merry band of money printers and replace them with sound money proponents who will stop pegging interest rates and allow the money and capital markets to clear at free market levels.
In no time the dollar would strengthen and China’s $30 trillion house of cards would come crashing back to earth. The comrades in Beijing would have no choice except to shutdown the Peoples Printing Press of China in order to prevent an outward stampede of flight capital like the world has never seen.
Even then, a Trump VAT could be calibrated to bring the one sided trade flows of the world back into more favorable balance. It would simply involve a surtax on the basic VAT rate for the goods of any country that continued to abuse its access to US markets via state export subsidies and exchange rate manipulations designed to artificially lower the price of its exports.
To be sure, in an ideal world the US should welcome the foolishness of any foreign government which subsidizes its exports. That is actually a form of foreign aid to American consumers.
But like the mild McKinley tariff, the harm from taxing foreign goods would be far outweighed by the good that would come from relieving the existing payroll tax burden on domestic labor and enterprise. Likewise, the urgent necessity to close the nation’s disastrous fiscal gap would be far better accomplished by raising whatever revenues are required—– after a thorough fiscal housecleaning on both sides of the Potomac—–by taxing consumption, not production.
Call it a revenue tariff, if need be. It brought full dinner pail economics to the McKinley era and could again.
It also brought the laboring classes to the Republican party and that’s essential. There is no hope for capitalism, fiscal solvency and constitutional governance and liberty in America if the Republican party remains in thrall to the War Party and the crony capitalist racketeers who occupy its commanding heights in the Imperial City.
No wonder they will stop at nothing to stop Trump.
But they won’t succeed. The American public is finished with the corruptions and destructions of the Imperial City. The Grand Old Party Is done.
So just maybe the door is open for The Donald to usher in a Grand New Bargain.