David Stockman: Market Is "Delusional," "Fiscal Bloodbath" Coming Under President Trump

Is Trumponomics Reaganomics 2.0? While still a supply-side guy, former OMB director David Stockman believes Trump can't cut taxes, build-up the military, and have six percent budget deficits like Reagan did back in the 1980s.

DAVE STOCKMAN: This isn't he second coming of Ronald Reagan. I wish him well, but the world today is night-and-day different from what it was then.

We had $930 billion of debt. Not much. A clean balance sheet at the federal level...30 percent of GDP. Today, it's $20 trillion and 106 percent of GDP.

As we looked out four or five years then, we had a big surplus. As we look out today, by CBO's [estimate] we have $10 trillion more of debt on top of the $20 [trillion] we already have.

Beyond that, in 1981, taxes were 19.5 percent of GDP, we had high inflation, and we were not indexed. So taxes were headed to 24 percent of GDP. We could cut the prospective increase and it would have been good for the economy. Last year, taxes were 17.8 percent of GDP, there's no inflation, they're indexed, and they're going nowhere.

So, the idea that we're going to have some big Trump fiscal stimulus is so wrong. The market is so delusional. We're going to have a fiscal bloodbath because there's no room for a huge tax cut funded by borrowing like we had in the mid-1980s. This is a different world.