David Stockman on the Red Drizzle And What Comes Next—MAGA Or Return To The GOP’s 1980 Platform?

by David Stockman

If the Republicans couldn’t capitalize on the nation’s current travails, we are hard pressed to imagine what might actually stir the vaunted Red Tide, which most definitely materialized as a mere drizzle last week.

After all, at every kitchen table in America it was recognized that we have:

• The worst inflation in four decades, with the cost of food, fuel and other necessities now rising at double-digit rates;
• 19 straight months of declining real wages, meaning that the answer to Ronald Reagan’s famous “are you better off” question was a ringing, “no!”
• An unprecedented Federal spending and borrowing spree that has taken the public debt to $31 trillion and 126% of GDP;
• An out-of-control central bank that has printed $5 trillion out of thin air since March 2020 alone, thereby fostering rampant financial speculation and unspeakable windfalls to the rich, while crushing workers, savers, retirees and most other main street Americans;
• An unhinged Green New Deal crusade against the lifeblood of prosperity—cheap and abundant fossil fuels—in the name of a Climate Crisis Hysteria that is utterly unwarranted;
• A dictatorial Virus Patrol that unconstitutionally shutdown schools, businesses, churches, malls and countless other social venues based on junk science and a raw statist will-to power;
• Yet another “forever war”, this time against Russia by proxy, that has caused global food, energy and other commodity prices to soar in the name of a Washington foreign policy adventure thousands of miles away that has nothing to do with America’s homeland security;
• An outbreak of crime and lawlessness especially in the larger cities that is undoubtedly the worst since the 1960s;
• And, not least, the least popular incumbent president since Harry Truman and actually, had there been polling in earlier times, since Herbert Hoover in November 1932.

Yet with all that wind at their backs, what did the GOP come up with? Barely a dozen seats and the tiniest of majorities in the US House and a hung jury in the Senate, awaiting still another run-off race in Georgia.

What saved the night from complete ignominy, of course, was Governor Ron DeSantis’ landslide, electorate-realigning victory in Florida. His convincing margins in the heretofore Democratic strongholds of Miami-Dade County and among Florida’s large Hispanic population was not merely a November 8th bright spot; hopefully, it was a defining event for the 2024 presidential election, as well.

That is to say, DeSantis’ victory by all rights should be the death knell for MAGA-Republicanism. It should provide the compelling alternative to the would be candidate who brought Trumpism to life and who until Tuesday seemed destined to drag the GOP even deeper into the muck of its dog’s breakfast of protectionism, nationalism, nativism and resentment.

To be clear, we are not venting against the Donald’s attacks on the ruling elites of Washington, Wall Street, the mainstream media and the Fortune 100. Indeed, his one abiding virtue is that he had all the right enemies—the very people who’s policies and ideologies threaten the future of constitutional democracy and capitalist prosperity in America.

But while Trump had the right enemies, he was hopelessly wrong on policy. Especially with respect to the GOP’s core mission in American democracy of standing up for fiscal rectitude and sound money, the Donald was an abysmal joke.

For want of doubt, compare the constant dollar growth rate of Federal spending during his four years in the Oval Office with that of his recent predecessors. The Donald was in a big spending league all of his own.

In constant 2021 dollars, for instance, the Federal budget grew by $366 billion per annum on the Donald’s watch, a level 4.3X higher than the big spending years of Barrack Obama, and nearly 11X higher than the 1992-2000 period under Bill Clinton.

The same story holds for the annual growth rate of inflation-adjusted Federal spending. At 6.92% per annum during Trump’s sojourn in the Oval Office it was 2X to 4X higher than under all of his recent predecessors.

At the end of the day, the historical litmus test of GOP policy was restraint on government spending growth, and therefore the relentless expansion of the Leviathan on the Potomac. But when it comes to that standard, MAGA has absolutely nothing to offer.

Federal Spending: Constant 2021 Dollar Increase Per Year:

• Trump, 2016-2020: +$366 billion per annum;
• Obama, 2008-2016: +$86 billion per annum;
• George Bush the Younger:+$136 billion per annum;
• Bill Clinton, 1992-2000:+$34 billion per annum;
• George Bush the Elder: +$97 billion per annum;
• Ronald Reagan, 1980-1988: +$64 billion per annum;
• Jimmy Carter, 1976-1980: +$62 billion per annum;

Federal Spending: Annual Real Growth Rate:

• Trump, 2016-2020:92%;
• Obama, 2008-2016: 1.96%;
• George Bush the Younger: 3.95%;
• Bill Clinton, 1992-2000: 1.19%;
• George Bush the Elder: 3.90%;
• Ronald Reagan, 1980-1988: 3.15%;
• Jimmy Carter, 1976-1980: 3.72%

Moreover, when it comes to ballooning the public debt, Donald Trump earned his sobriquet as the King of Debt and then some.

Again, in inflation-adjusted terms (constant 2021 dollars), the Donald’s $2.04 trillion per annum add-on to the public debt amounted to double the fiscal profligacy of the Obama years, and orders of magnitude more than the debt additions of earlier occupants of the Oval.

Constant 2021 Dollar Additions To The Public Debt Per Annum:

• Donald Trump: $2.043 trillion;
• Barrack Obama: $1.061 trillion;
• George W. Bush: $0.694 trillion;
• Bill Clinton: $0.168 trillion;
• George H. W. Bush: $0.609 trillion;
• Ronald Reagan: $0.384 trillion;
• Jimmy Carter: -$0.096 trillion.

Ultimately, excessive, relentless public borrowing is the poison that will kill capitalist prosperity and displace limited constitutional government with unchained statist encroachment on the liberties of the people. So, again, who needs MAGA?

Of course, the great enabler of the Donald’s reckless fiscal escapades was the Federal Reserve, which increased its balance sheet by nearly $3 trillion or 66% during the Donald’s four year term. That amounted to balance sheet expansion (i.e. money-printing) equal to $750 billion per annum—compared to gains of $300 billion and $150 billion per annum during the Barrack Obama and George W. Bush tenures, respectively.

Still, the Donald wasn’t satisfied with this insane level of monetary expansion, and never did stop hectoring the Fed for being too stingy with the printing press and for keeping interest rates higher than the King of Debt in his wisdom deemed to be the correct level.

In short, given the economic circumstances during his tenure and the unprecedented stimulus emanating from the Keynesian Fed, Donald Trump’s constant demands for still easier money made even Richard Nixon look like a paragon of financial sobriety. The truth is, no US president has ever been as reckless on monetary matters as Donald Trump.

That’s why it’s especially rich that the die-hard MAGA fans at the likes of Fox News are forever gumming that there was no material inflation on the Donald’s watch; it’s allegedly all the fault of Joe Biden during the last 22 months.

Then again, it helps if you actually know what causes inflation, which once upon a time Republicans and conservatives actually clearly understood.

To wit, the cause of CPI “inflation” is prior monetary inflation. That is, excessive expansion of Fed credit snatched from thin air, which expansion sooner or latter works its way through the domestic and global economy, the financial markets and eventually the goods and services price indexes.

So here we are in political clover with respect to a deadly runaway inflation. The Fed’s folly finally did manifest itself in 8%+ annual inflation—the highest in four decades—and yet where were the GOP Fed bashers in the run-up to November 8th, aside from the redoubtable Rand Paul?

In a word, they have been Trumpified. After years of the Donald insisting that even more fiat money should be pumped into the economy, the GOP politicians gave the Fed a free hall pass during the 2022 campaign; and did so during an inflation-besot election season that was tailor-made for a hammer-and-tongs attack on the inflationary money-printers.

Needless to say, once upon a time GOP politicians knew better. Certainly Ronald Reagan did amidst the double digit inflation of 1980.

The Gipper did not hesitate to say that Big Government, deficit-spending and monetary profligacy were the cause of the nation’s economic ills. He was right, and he won the election in a landslide.

Indeed, your editor and friends even persuaded him to include a gold standard plank in the 1980 GOP platform:

The inflation policies of the Carter Administration have been inconsistent, counterproductive, and tragically inept. Mr. Carter has blamed everyone from OPEC to the American people themselves for this crisis of inflation—everyone, that is, but his own Administration and its policies which have been the true cause of inflation.

Inflation is too much money chasing too few goods. Much can be done to increase the growth of real output. But ultimately price stability requires a non-inflationary rate of growth of the money supply in line with the real growth of the economy. If the supply of dollars rapidly outstrips the quantity of goods, year in, year out, inflation is inevitable.

Ultimately, inflation is a decline in the value of the dollar, the monetary standard, in terms of the goods it can buy. Until the decade of the 1970s, monetary policy was automatically linked to the overriding objective of maintaining a stable dollar value. The severing of the dollar’s link with real commodities in the 1960s and 1970s, in order to pursue economic goals other than dollar stability, has unleashed hyper-inflationary forces at home and monetary disorder abroad, without bringing any of the desired economic benefits. One of the most urgent tasks in the period ahead will be the restoration of a dependable monetary standard—that is, an end to inflation.

By contrast, consult the videos or transcripts of a hundred MAGA rallies. Did anything remotely resembling this Reagenesque take on inflation ever flow from the Donald’s bombastic vocal chords?

Of course not. That’s because Trump is not an economic conservative in any way, shape or form. He’s simply an opportunistic demagogue who chanced to stumble upon the violent illegal alien theme (murders and rapists) on his way down the elevator to the announcement of his candidacy in June of 2015, which theme he then paired with his life-long adherence to a primitive form of trade protectionism.

The essence of this couplet was the misbegotten notion that America’s problems are caused by foreigners lurking off-shore, when in reality the nation’s ills stem from bad policy ideas deeply embedded inside the Washington beltway.

Since then has emerged a toxic formulation of MAGA that amounts to stopping the alleged hordes of illegal aliens at the border and the flow of foreign goods at US ports. That was and remains the heart of the Donald’s domestic program.

Unfortunately, it is the wrong answer to the nation’s economic, social and political ills, and will never be a winning platform like the Gipper rode into office under similar circumstances in 1980.

Here is the multi-trillion dollar question. To wit, while the Reagan platform was never fully pursued and implemented as intended, its politics were right and its policy answers were correct.

As it happened 42 years later, the only winner on election night, Governor Ron DeSantis, did manage to find the right electoral strategy in the political microcosm of Florida. The question now is his platform for 2024—a “me too” form of MAGA or a return to Reaganism in its best form.

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