Trump’s Economic Plan Makes No Sense

Trying to makes sense of Trump’s budget and spending strategies is a fool’s errand.  With military malfeasance and over spending, the US is not moving closer to economic solvency.

April 2, 2018

By: Bobby Casey, Managing Director GWP

trump economic omnibus spendingThe more I read about Trump’s budget and spending policies, the less any of it makes sense. The aggressive nature of each of his economic policies, however, has me thinking this might all just come to a head.

Three major promises he made while on the campaign trail that had people losing their minds with excitement was the repeal of Obamacare, the building of a wall, and the elimination of the debt.

There were many other promises, but those were the big ones that stoked the hope of the conservative base.

Since then it’s become rather clear that Trump did not think his promises through. The first chance the Republican congress had to repeal Obamacare, and they failed.

We’ll build a wall spanning the entire US border! And we’ll have Mexico pay for it!

It was absurd on its face, but now the strategy is to have the Pentagon pay for it! For the record: I’m not for a wall; nor do I think the Pentagon can’t afford it. They can.   In fact, if the argument for the wall is national security, then it would make the MOST sense to have it come out of that budget.

The New York Times estimates that the wall would cost roughly $70 Billion to build and approximately $150 million annually to maintain. I figure the NYT would at least be good about giving us the grimmest picture in terms of cost to set some worst-case expectations.

Trump signed over $700 billion more per year to the Defense Department’s budget only a few months ago. What’s 10% among cronies? If I won the state lottery jackpot of several hundred million, I’d be kicking over 30% or more in various taxes back to governments at all levels. This is what government does. Every federal employee receives their paychecks from the federal government, and then still pays them back over 15% in income taxes.

If you think about it, Trump is promising $700 billion per year, but they have to give back 10% of one of those years to buy his precious wall.

While I certainly take issue with a border wall, I would hardly sympathize with the DoD having to pay for it.

The real problem with asking the DoD to pay for anything is that they have demonstrated time and again that they are incapable of managing their funds with any modicum of transparency, responsibility, or accountability. It’s the only department that can operate in such a blatantly unsustainable way, and still manage to get MORE of the lion’s share of funding.

As we wrote about earlier, the Pentagon will be undergoing its first ever audit. Last to the party, but the most anticipated guest, the expectation based on other financial evaluations is that something in the neighborhood of $125 billion per year will be found.

MEANWHILE… the Airforce will likely cut about 38% of its F-35s purchases over the next ten years because it can’t afford the upkeep and maintenance. That comes to around 590 planes per year. The cost of the actual plane isn’t the issue (which tells you how much money they are playing with). The development and production of a F-35 fleet of 2,456 planes is estimated at about $406 billion. However, according to recent estimates out of the Pentagon’s independent cost unit, “It may cost as much as $1.1 trillion to keep the F-35s flying and maintained through 2070”.

The Air Force needs to be cutting its spending over the next ten years by $3.8 billion annually, but operation and support costs are expensive: program management, depot maintenance, part repair, software maintenance, and engineering. None of that is cheap. And all of that is handled by Lockheed Martin. Half the operation and support costs go to Lockheed Martin.

So if the military is already in over its head when it’s not busy “losing” trillions of dollars at a time, how are they paying for this ridiculous wall?

More importantly, how does Trump ever expect to make a dent in the deficit when the department with the greatest allocation of the budget, has a serious problem controlling its expenditures? How does Trump expect to even broach the debt when he just passed a $1.3 trillion Omnibus bill? A bill, by the way, that “shut down” the government over what would happen to the DACA immigrants and the wall.

The DACA immigrants were sold out by their Democratic base. And Trump got some drop in the bucket for his wall.

It includes:

  • $380 Million for Election Security
  • $4 Billion to help fix the “Opioid Crisis”
  • $630 million more to Head Start progams
  • An increase in the daily pay for federal jury duty from $40 to $50
  • An expansion of the low-income housing tax credit
  • $2.3 billion for school safety
  • $1.57 billion for border security, including barriers and technology

 

One particular thing that stood out was the amount of financial attention New York and New Jersey expect to receive in infrastructure funding.

It’s called the Gateway Project which is meant to help with the infrastructure between New York and New Jersey.

“New York and New Jersey’s Gateway tunnel project — a collection of upgrades along a 10-mile span including the Hudson Tunnel — includes building a new rail tunnel under the Hudson River and rebuilding the existing deteriorating North River Tunnel that carries Amtrak trains every day between New Jersey and Penn Station.”

The omnibus includes:

  • $650 million for Amtrak’s account that could be used for Gateway projects
  • $153 million in funding for New Jersey and New York that also could be used for the project.
  • $2.645 billion for a grant program the Gateway project would be eligible to compete for
  • $250 million for a federal-state partnership program Gateway could also apply for
  • $592.5 million in rail infrastructure and safety improvement grants Gateway could utilize.

 

Seems like an awful lot for an 11 mile strip of the United States.

Between the malfeasances of the military, the tax cuts and tariff hikes, and the $1.3 trillion Omnibus bill how does this actually move the US toward economic solvency?

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Comments

  1. Very one – sided article blaming Trump for “breaking” his promises.
    You forgot to mention that both Dems and Republicans have been blocking Trump’s initiatives which is exactly what he promised prior to elections.
    Trump is the only President in the last 30 Yrs. Or so who has been trying to drain the swamp.
    Your cheap shot at him do not do any justice to your subscribers.
    Did Obama or Bushes or Clinton ever tried to drain the swamp? No ! It was politically inconvenient for all of them.
    Trump now has to deal with 30 yrs of problems( immigration, deficit, government corruption, etc.) that have been handed to him by his multiple predecessors. And you criticize him while offering no valuable , practical solutions. It is a shame.
    Alex( paid subscriber).

    • Kelly Diamond says:

      When Trump succeeds we’ll give him all the praise and when he fails we’ll blame Congress? Or can we explore the fact that he can’t lead because he’s divisive and has a really discombobulated plan?

      Either the POTUS matters or he doesn’t. If he doesn’t then he’s just titular and toothless. The president of Iran is like that. He’s something like 14th in command and basically picks the national soccer team.

      Or we say he’s the leader. The CEO of the US with a clear plan to fix the US that people can get behind.

      His large tax cuts are to be lauded and we have praised them. But no economist thinks tax cuts alone will stimulate the economy enough to sustain the spending. It was highly irresponsible to not insist on major austerity measures to offset the tax cuts. And even worse to sign this omnibus bill.

      Every president has inherited their predecessors mess. But he wanted that. He spent months convincing Americans he wanted this. So it’s not a valid excuse to blame predecessors when he ostensibly knew what he was stepping into.

      His plan — such as it is — to clean it up is only furthering the mess not the clean up.

      Draining the swamp takes major reforms not in just staff but in Washington culture. Special interests and cronyism is at the root of all this. And he’s shown no aversion to cronyism… that IS the swamp.

      Thus far the freshest wellspring is his staff! His turn over rate is the highest since Reagan. And while Reagan talked a good game his spending was terrible (a tradition Americans can’t afford to continue).

      Trump can’t rally his own side. He can’t get republicans to do something as simple as repeal Obamacare? He is fixated on a wall while bridges are collapsing? And he’s making the same desperate plays as Obama with all his executive orders.

      If you search the archives there’s plenty of criticism toward Obama and Congress and bureaucrats to go around.

      But this is about Trumps lack of leadership.

      We have no horse in this and remain critical of the economically unsound policies that ultimately lead many Americans to my services.

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