The Donald’s $8 Trillion Simulacrum of MAGA, Part 2

David Stockman

Sorry. Donald Trump is a dope. He’s being played by nearly every multinational CEO and petro-sheik that gets near him—all of them claiming to be making huge multi-billion investments purportedly because Trump is making the US economy Great Again.

Actually, the Donald’s CEO posse is just up to the same old, same old: Selling used cars twice to an Oval Office grandstander who doesn’t know the difference.

As is his wont, of course, the Donald has not hesitated to congratulate himself with superlatives in response to these CEO announcements. For instance, amidst the Saudi extravaganza, he claimed to have mobilized in three months $8 trillion of capital investments or eight times more than Biden did in four years:

We have a total of close to $8 trillion all told,” the president said. “And there’s never been anything like that in this country; we’ve never had anything close. I would say, if you looked at the last administration, probably for four years, they did maybe less than $1 [trillion], and we’ve done almost $8 [trillion].”

Well, sorry again. In the first place, it’s not the president’s job to have “done almost $8 trillion” on the capital allocation front. In communist and statist regimes, of course, officialdom superintends and allocates capital and everything else. But the reason we adhere to free market capitalism, where businessmen and entrepreneurs manage capital investment in response to market forces, is that state control—including cheer-leading and promotion by elected politicians—doesn’t work. Over the longer-haul it results in far less prosperity and way less economic freedom.

As dense as most of them are, in fact, the UniParty politicians on the banks of the Potomac mostly know this. Even the “Joe Biden” entity did not slip onto the POTUS teleprompter screen boasts about how much private capital was being raised on the Biden watch.

But more importantly, the numbers Trump throws around are actually from la la land. In most case they are vast aspirational swags designed by their authors to gratify the Donald’s immense ego, but even then they are not all they are cracked up to be when viewed in the broader context.

For instance, the run rate of current business CapEx in the US is $4.2 trillion per annum and most of these “investment” announcements and claims are with reference to multi-year projects and commitments. Thus, assuming a normal economic environment over the four years of the Donald’s term, total nonresidential fixed investment in the US is likely to approach about $20 trillion.

Needless to say, that represents a giant everyday flow of investment that can easily be cherry-picked by corporate leaders wishing to score points with Washington. The art of it, in fact, is outlined in the opening chapter of the Crony Capitalist’s Handbook.

So, yes, the CEOs and big time investors fluttering around the presidential party in Riyadh, including your editor’s long ago business partners Steve Schwarzman and Larry Fink, are tossing up some big-sized numbers. But in the scheme of things these figures are actually just plucked from the everyday course of business as usual; and they are actually little more than rounding errors after you squeeze out the Kentucky windage.

For instance, the White House claimed that Qatar was not only gifting the Donald with a new Air Force One, but that it would also be purchasing 210 commercial airplanes from Boeing at a price tag of $96 billion, thereby adding meaningfully to the Donald $8 trillion figure.

Then again, during the last 10 years (2015 to 2024) Qatar purchased 83 planes from Boeing at a list price of $20.3 billion and 68 planes from Airbus at $12.9 billion. In all, these purchases over the span of a decade totaled 151 planes at a combined price of $33.2 billion, which averaged out to about $220 million per plane.

In turn, this latter figure reflected a mix of wide-body planes in the $300 million per unit range and narrow-body planes (Boeing 737s and Airbus 321s) in the $130 million range. And to round out the picture, it also needs be remembered that no airline in the world has ever paid anything close to list price for bulk multi-year orders.

According to Grok 3, in fact, the discount from list price on Qatar’s aircraft purchases during the last decade was in the range of 40%. So at the end of the day, Qatar purchased 151 planes on roughly a 50/50 basis from Boeing and Airbus for about $20 billion over the most recent decade. That’s an average of about $132 million per plane on a discounted transaction basis.

But we now have a purported new order exclusively for Boeing for 210 planes worth $96 billion. That amounts to nearly $460 million per plane or about 3.5X more per plane than Qatar actually paid during the last decade.

So, obviously, there is no small amount of old-fashioned Kentucky windage here. We seriously doubt that Qatar intends to by-pass Europe’s state-owned commercial aircraft manufacturer entirely for a full decade. Nor do we think that Qatar Airlines will be getting a zero discount from list or that it will be buying exclusively top of the line wide-body 777-300s, which even then do not list at the aforementioned $460 million per plane.

So you get the picture. If over the next decade Qatar buys 175 planes from Boeing (leaving some room for Airbus) in a 70/30 mix of wide and narrow body planes at an average of $275 million list price per plane and a 20% Donald Trump special discount, the total purchase cost would be $38 billion. And that’s not even half of today’s ballyhooed $96 billion.

Still, our point is not merely to quibble with the preposterous $460 million per plane figure embedded in the White House press release or to suggest that a more realistic figure would be around $220 million per plane. Actually, the underlying point in all of this is that the Donald’s Riyadh extravaganza was an exercise in White House show business, not real world transactional economics.

Of course, all American politicians—including the top dog White House occupant among them–will have their photo ops and PR stunts. But the larger point here is that these White House road shows are not remotely the substance of policy and do not tell you anything at all about where the actual day-to-day policies of a sitting president are taking the American economy.

And that’s where the big slip between the cup and the lip is happening. The Donald believes his own bullshit. He thinks all these vastly exaggerated CEO commitment numbers are the real thing and that they represent incremental gains, when, in fact, they are just a gussied up version of business as usual.

Indeed, as Zero Hedge pointed out Wednesday afternoon, the total Trump White House claim of $1.2 trillion of “exchange” including weapons purchases and other commercial deals with the tiny sheikdom of Qatar is downright ludicrous. The latter has 750 oil wells, 150,000 camels, 2.7 million people and a GDP of $200 billion.

So, apparently, the Donald has done “deals” with Qatar equal to $8 million per camel, $500,000 per capita and six times GDP.

Then again, no one ever said that the Donald lacked a flare for the Brobdingnagian. Everything he touches, according to the Donald, is a case of sui generis—something like never before. That especially applies to his self-appointed role of chief arms merchant:

“Nobody makes military equipment like us; the best military equipment, the best missiles, the best rockets, the best everything. Best submarines — by the way, most lethal weapon in the world.”

Here’s the thing. Long after the dust settles on the Saudi roadshow and the Kentucky windage is squeezed out of the numbers, what’s really going to impact the American economy is not arms sales or Boeing aircraft deliveries that would have happened in the ordinary course, anyway, but the counter-productive statist economic policies emanating from Trumpified Washington.

To wit, first and foremost America’s mountain of public and private debt is going to be monkey-hammered by rising interest rates from Federal deficits that are heading toward $3 trillion per year. That’s more or less baked into the cake based on $2.5 trillion of baseline deficits and the upwards of $500 billion more per year certain to be added by the GOP’s red ink-laden big, beautiful Reconciliation bill now emerging in the US House.

Still, at $102 trillion (red line) and a near record 345% of GDP (blue line), total public and private debt hangs over the US economy like the proverbial Sword of Damocles. In fact, this figure is fully $37 trillion higher than it was the first time the Donald entered the White House in 2017.

Even a 1% increase in average interest rates, therefore, now costs more than $1.0 trillion per year to service. And yet the Donald is too busy selling F-35s, HIMARS and Patriot Missile systems to even focus on the hemorrhaging Federal budget.

Total Public and Private Debt and % of GDP

Moreover, this time the Fed will be in no position to rescue the bond markets via a flood of new bond buying (QE) in order to force interest rates far lower than they would be on the free market. To the contrary, inflation as measured by the 16% trimmed mean CPI is still north of 3% on a trend basis, meaning that the US Treasury’s sharp elbows in the bond pits will indeed push yields steadily higher than today’s 4.5% 10-year UST, as borrowing requirements under Trump-O-Nomics push north of $3 trillion per year.

To be sure, the Donald is likely to huff and puff loudly in the direction of the Eccles Building, but we are quite certain that even the Keynesian money-printers domiciled there are not likely to switch on the Fed’s printing presses. Not when the consumer’s dollar is still depreciating by nearly 30% every decade.

Y/Y Change In 16% Trimmed Mean CPI, 2012 to 2025

Indeed, can you say stagflation?

That’s exactly what is coming down the pike—the Donald’s investment showboating to the contrary notwithstanding. In the very best outcome on the trade front, the weighted average US tariff may get down to 25% for China and 15% on an overall global basis, if we are lucky. Yet the latter is fully 1200 basis points above the tariff levels in place at the end of 2024 (3.05%), meaning costs to business and household consumers will rise by upwards of $500 billion per year.

At the same time, the supply side of the US economy will be hit hard by a triple whammy consisting of—

Millions of missing workers suddenly lost to the Donald’s deportation drive.
Radically disrupted supply chains as import supplies are rocked by art of the deal fostered chaos in foriegn trade markets.
Real world business CapEx levels stunted by rising interest rates.
At the end of the day, that’s the essence of Trump-O-Nomics, and its about as anti-supply side, un-Reganomics and hair-brained statist as it comes.

So don’t count on the promised Golden Era of Prosperity like Never Before. What’s actually been germinating down in the bowels of Trump-O-Nomics after barely 100 days in play is a Stagflation Shock that will wipe-out the GOP majorities in 2026 and set up America’s self-appointed arms, planes and investment merchant-in-chief for a third, and likely fatal, go at the impeachment gauntlet.

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https://www.davidstockmanscontracorner.com/the-donalds-8-trillion-simulacrum-of-maga-part-2/