The Trump administration released its 2018 budget proposal Tuesday. Entitled “A New Foundation for American Greatness,” the $4.1 trillion dollar budget basically reads like the financial blueprint for Trump’s bankrupt casino empire in Atlantic City. But on steroids.
How Trump crashed his casino empire
Last year, the New York Times and USA Today reported on extensive investigations into Trump’s failed casino empire in Atlantic City. He built them with other people’s money, so he never lost anything when they crashed. It was essentially a Ponzi scheme, but with real estate. As the Times reported, “Mr. Trump assembled his casino empire by borrowing money at such high-interest rates — after telling regulators he would not — that the businesses had almost no chance to succeed.”
Trump promised “The Taj is going to be one of the greatest successes ever,” when pitching his plan to investors for the Taj Mahal casino in Atlantic city. But to build it, he leveraged one debt-ridden property to prop up another, sometimes issuing junk bonds, at 14% interest. In mid-1990, between his Atlantic City casino and New York real estate projects, he was carrying $3.4 billion in debt. Meanwhile, he was intentionally misleading investors by cooking the books to look like his ventures were profiting.
It’s little wonder that while just about every other casino was thriving in Atlantic City, Trump’s went to bankruptcy court four times because they couldn’t pay their debts. Each time, he convinced bondholders to accept lower payments on their investments. One time his dad made an illegal loan by buying $3.3 million in chips from The Castle casino to cover that month’s interest payments. He didn’t pay his bills to hundreds, perhaps thousands, of individuals and small businesses, driving many to bankruptcy themselves. At one point, his lenders even put him on a monthly allowance. In the end, investors lost more than $1.5 billion as the casinos failed, all while Trump paid himself generous million-dollar bonuses that may have been illegal.
How did he get away with it? He promised everyone that each casino would make massive profits. Huge returns. So huge and massive that they were impossible from the start. He even got an analyst fired for predicting his empire would crash for that very reason.
But Trump didn’t care. On Squawk Box last year, he told host Andrew Ross Sorkin, “I’ve done very well with debt. Now of course I was swashbuckling, and it did well for me, and it was good for me and all of that.” And in that Times interview, he described Atlantic City as “a very good cash cow…for a very long time.”
The 2018 budget
Now we have a new blueprint for another massive and tremendous empire, the “New Foundation for American Greatness.” By some miracle, that greatness will come by taking the axe to just about every program in existence.
We’ve been asked to swoon over a 10% increase in military spending, holding Social Security and Medicare steady, and the promise of 6 weeks of paid family leave. That comes at the expense of you and me funding “the wall,” despite an entire campaign built on the promise that we would not pay one penny for it. He has also promised massive tax cuts, which don’t benefit the poor at all since they already pay $0, but help the ultra-rich and multinational comportations to the tune of hundreds of billions of dollars.
Of course, tax cuts are always matched with the promise that they will stimulate the economy. WRONG. Republicans’ own research (which they censured, by the way) proves that lower taxes on the rich does not stimulate the economy, increase economic growth, or make everyone else better off. Lower taxes on the rich make them richer, leaving less for the rest of us. Period.
Then come the spending cuts. Like $800 million for Medicaid, $192 billion from food assistance, and another $272 billion from welfare programs. It levels a 10.6% cut on all domestic programs other than military and homeland security. It cuts $72 billion from disability benefits. It eliminates loan programs that subsidize college education for the poor, or those who take up jobs in the public sector. In other words, it’s the people who need help the most who get hurt the most.
As for those domestic programs, just consider the huge cuts to the Department of Energy. The budget essentially kills energy innovation and research, affecting 17 national labs and even the department that protects the safety of our nuclear power plants. As the New York Times put it, the budget will “neuter most of the [Department of Energy]’s critical energy programs.” Just to be clear, that will cause massive job loss, and myopically ignores the fact that every federal $1 invested in research and development pays back many fold. Spending, not austerity, is what stimulates the economy. That’s not fake news or alternative facts, by the way. That’s historical fact.
But the real kicker is where all the revenue will come from to support the increased spending: a totally impossible promise of 3 percent economic growth every year. What’s more, the budget will take billions of dollars in energy revenue that used to go to the states and send it back to Washington. Whoops. Sorry states. The budget also asks for us to sell off half of our strategic oil reserve, as well as major energy resources and infrastructure. Feeling screwed yet?
It’s the failed casino empire all over again.
To summarize Atlantic City, the demise of each casino was a foregone conclusion to everyone but Trump. The blueprints were based on broken promises and lies, with massive spending justified by the assurance of impossible profit and taking on of massive debt. And don’t forget a complete disregard for the people whose lives it ruined.
Replete with broken campaign promises and lies, the 2018 budget sounds all too familiar. Those huge increases in unnecessary spending and massive tax cuts aren’t even remotely offset by the staggering cuts in necessary spending. The massive deficit is justified by the assurance of impossible profit that will doubtlessly end up as massive debt. By the way, you and I are the investors who are fronting, and will lose, all this money. And of course, the entire budget smacks of a complete disregard for the people whose lives it will ruin. Last but certainly not least, just like each casino was a windfall of cash for Trump, this vision of the economy will be a cash cow for the ultra-rich.
American Greatness sure seems to really mean “a great American oligarchy.” Trump promised he made the best deals. He just never said they would be for all Americans. And now we’re all feeling it. Ouch.
Featured image from YouTube.