David Stockman joined Neil Cavuto on Fox Business to discuss the defense spending measures that are currently being suggested by the White House and leaders in Washington. Stockman offers specifics on what the current bill floating around in Washington could mean for the U.S economy. During the discussion he dives into the overall threat of Russia and took a close quantitative look at the numbers behind defense spending.
When Cavuto began to press on the defense budget and the spending that has limited government accountability Stockman fired away, “I think it is ridiculous. The Russian defense budget is $50 billion. Sitting here in New York in your studio with you, I can see Russia from here. The GDP of New York is $1.6 trillion, the GDP of Russia is $1.3 trillion. That’s 7% of the U.S economy.”
“It is is a pip-squeak backward economy that threatens us in no way whatsoever. We’re spending now twelve times more than Russia, that can’t really threaten us.”
When asked whether even under President Reagan the budget went too far for defense he urged, “Yes we did. I fought it tooth and nail. They lied at the time. The neo-cons said that the Soviet Union was on the verge of first strike capacity. They built up the top-line budget by hundreds of billions of dollars.”
David Stockman in a best-selling author of the book Trumped! A Nation on the Brink of Ruin… And How to Bring it Back. He worked as the Budget Director under President Ronald Reagan and also served as a two-term Congressman from the state of Michigan.
Russian Economy vs. Rosy Scenario Budget in Washington
He then fired, “In 1981 the Soviet Union was on death’s door. If only we had more confidence in Washington… in the fact that the red ponzi in China will sooner or later collapse on its own weight. If they want to build sand-castles in the South China Sea, let them.”
When asked by Cavuto whether the nuclear threat from the USSR when he was in leadership was real he narrowed in, “Star Wars was a joke. Nobody believed it. The Russians came to negotiate because they were going bankrupt. They were economically collapsing.”
Star Wars was a strategic defense initiative that was established to offer protection and military deterrence from the Soviet reach. “Back then we had a surplus. We could cut taxes and even raise defense.”
“Today, we’ve got $10 trillion built in. There’s $53 trillion built in for the next decade. There’s only $43 trillion of revenue under current law. I am all for tax cuts but you have to pay for them.”
When asked by the Fox Business host about how the U.S government could generate more revenue by cuts he responded, “If dogs could whistle, the world would be a chorus. In other words, the issue is not real growth. It is nominal growth. That drives revenue. If you tried to send your taxes in based on inflation adjusted income you’d be in jail real quick.”
“What counts is nominal growth. There’s already built into the forecast 30% more nominal growth per year. That’s nominal GDP and nominal wages, than we’ve had in the last ten years. When the White House and the Treasury says they will add another percent, that’s 70% more. In other words, 5% growth of nominal GDP.”
“We’ve got rosy scenario in spades.”
To catch the full interview with David Stockman covering the budget proposal in Washington on Fox Business find it here.
The post Stockman: No Economic Case for Imperial Washington appeared first on Daily Reckoning.
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