David Stockman: If It Doesn't Cut To The Bone, DOGE Won't Succeed

**David Stockman** (0:00)
If you don't go to the muscle and to the bone of the federal budget, you're not going to even have a remote chance of closing the gap. I think it's going to get extremely, the waters are going to get extremely turgid, extremely rough, and the problem is it's going to go on month after month after month. There's no fix to this, because there's not enough votes.

**Adam Taggart** (0:33)
Welcome to Thoughtful Money. I'm its founder and your host, Adam Taggart. To better understand the odds for success of the economic policies of the new Trump administration, it helps to talk to someone with firsthand experience managing the federal budget. Today's guest has been a true insider in both Washington DC and Wall Street for his extremely long and accomplished career. We're fortunate today to speak with former congressman, economic policymaker and financier, David Stockman, who served as the Director of the Office of Management and Budget under President Ronald Reagan. He's also the author of the new book, How to Cut $2 Trillion, a blueprint from Ronald Reagan's budget cutter to Musk, Ramaswamy and the Doge team. We'll hear his advice for bringing the runaway fiscal deficit under control and whether he thinks the administration is indeed up to the task. David, thanks so much for joining us today.

**David Stockman** (1:26)
Glad to be with you. And are they up to the task? Probably not, but they're giving it a try, so I would give them a little credit for that.

**Adam Taggart** (1:34)
Okay. Well, like I said there, you're one of the guys that's actually been there before. And granted, it was a number of decades ago, but I know that you've kept a lot of tabs on what's going on there. Also, you've got the whole Wall Street perspective.
But few people, I think, have the insider's view you do to what these guys are trying to get done. So I do want to get into the details of that in just a moment. But if we can, just to kick things off and set the stage for the context with which you're viewing all this, what's your current assessment of the global economy and financial markets?

**David Stockman** (2:11)
Well, I think in brief, we're in the calm before the storm. I think the first month or two of honeymoon with Trump is not reflective of where the world economy, the domestic economy or policy or even the Fed in Wall Street will be going over the course of this year. Why do I say that? Well, one, I think we've got a huge trade war bomb coming. Second, I think we have a debt bomb, by that I mean public debt bomb coming in the sense the debt ceiling is going to expire and they're going to be in the muck, almost monthly, trying to grapple with that, and government shutdowns, and all kinds of turmoil around financing the federal debt and the federal government. And then finally, I think these things are going to have such negative impacts on the perceived economic climate and environment that the third bomb I see coming is the MAGA bomb, which is at this tenuous big tent they have around Trump. The Republicans have around Trump in Washington today is likely to come on stock to fall apart as they begin to turn on each other as the economy and these crises unfold. So the market's had a run from the election. It's already retreating pretty severely in the last few weeks.
But I think we're now about ready to pivot into a much more sort of difficult, pressure-filled, turmoil-ridden environment because of all of these things that I've mentioned that are coming to the fore.

**Adam Taggart** (4:16)
All right. Well, look, let's just roll up our sleeves and dig into all this. As we talk about this, it would be helpful if at some point you can try to differentiate between, it sounds like you expect some, what do you want to say, some disappointment coming forward, at least for the folks that are the supporters.

**David Stockman** (4:40)
Drinking the Kool-Aid.

**Adam Taggart** (4:42)
Yeah, who were drinking the Kool-Aid.
There may be some rough sledding here and you think there might be some fracturing of people's level of support during that time. As we discuss this, if you can differentiate between fractures that are being caused by the current administration and its policies, versus fractures that are more due to sins of the past, because as you and I have been talking over the years, David, there's a lot of unsustainability that is catching up with the economy here. So if you can do your best as we talk about this to say, hey, this is something that just anybody who got elected in November would have to deal with versus these are specifically attributable to the administration. But let's roll up our sleeves here. So high level, we're what, 45 days or so into the new administration. They've announced all these policies. What's your general assessment of their playbook and how they're doing so far?