Trump’s Failed Promises on Debt and Manufacturing | Steve Rattner on Morning Joe

[00:00:00]President Trump vowed to improve the nation's economy when he took office for the second time. But now 18 months later, Americans continue to say they are not seeing the benefits.

[00:00:10]Former Treasury official and Morning Joe economic analyst Steve Rattner joins us now with charts. Yes, you see them. The charts are here and he'll be fact-checking the promises that Trump has made about the economy starting with the national debt. Good morning, Steve.

[00:00:25]Take it away.

[00:00:26]>> Good morning, Jonathan. Yeah, you could call you could call the segment promises made, promises not kept. And there are many to talk about on the economy, things like inflation, he promised to get gas prices down to $2 and so forth.

[00:00:38]But I want to talk about it just a couple of those today and really start with the budget deficit and the the national debt. So Trump, of course, promised that he would cut the deficit sharply during his term. That actually hasn't happened. If you look at the deficit, actually we can go back all the way to Obama. He left the country with less than a trillion dollar deficit.

[00:00:57]That's a little sounds almost a little bit quaint today. We obviously had COVID. But here's Trump. And so he came in and the budget deficit was $1.8 trillion the year before he arrived. Now it's $1.9 trillion.

[00:01:09]It's going to stay at $1.9 trillion. And the Congressional Budget Office projects it will go up to $2.5 trillion. How did this happen? Why did this happen?

[00:01:19]A lot of it is the one big beautiful bill. You'll remember the tax cuts that Trump put in place which he said were going to juice the economy and get growth going and that they would in fact pay for themselves. None of that has really happened. You can see that in the national debt. When you start to add these numbers to our debt, obviously the debt goes up. We just crossed 100% national debt relative to the size of the economy. That's a psychological figure, but nonetheless something people pay attention to. We are on track to hit 106% debt to GDP, which would actually surpass the World War record. And that is going to come actually two years sooner than we thought it was going to come because the Trump deficits actually are going up instead of down. And then by 2036, it could reach 120% of GDP.

[00:02:07]>> So, Steve, your second chart analyzes the savings promised through the now-defunct Department of Government Efficiency, DOGE, as well as sweeping tariffs. So, let's let's take a look now at some of the claims made by DOGE head Elon Musk and President Trump.

[00:02:25]>> But we set up DOGE.

[00:02:26]>> Yes.

[00:02:27]>> How much do we you think we can rip out of this wasted $6.5 trillion Harris-Biden budget?

[00:02:36]>> Well, I I think we can we can do at least 2 trillion.

[00:02:38]>> Yeah!

[00:02:40]>> [cheering] >> Yes.

[00:02:41]>> 2 trillion.

[00:02:43]>> I mean, at the end of the day, you're being taxed. You're being taxed.

[00:02:48]All government spending is taxation. So, whether it's it's direct taxation or or government spending, it's either becomes inflation or it's it's direct taxation.

[00:02:56]Your money is being wasted and the Department of Government Efficiency is going to fix that.

[00:03:04]>> As you know, we we're taking in uh trillions of dollars from tariffs and they've been so incredible for our country, so incredible. We're keeping our companies happy. We're keeping them solid and sane. And uh they're very very thrilled at what's happened. They can't even Actually, they can't even believe it. And we've never seen investment like this. Without the tariffs, we would have just a fraction of that.

[00:03:32]And we're really the only one that can do tariffs. Nobody else is able to do them.

[00:03:38]>> So, Steve, were they right about any of that?

[00:03:42]>> [laughter] >> Uh well, they were right in their goals, but not right in the execution. It's actually pretty funny to listen to it.

[00:03:49]So, yeah, part of again what I said before of how they were going to deal with the deficit was cut taxes but also cut spending and you heard Elon Musk talk about two trillion dollars they were going to cut over some unspecified period of time.

[00:04:03]By their own claims, the stuff they have put out, they claim a number of 215 billion dollars. However, they put up what was called a wall of receipts. They put up sort of a list of all the cuts that they had thought they had achieved and when you actually add them up, it comes to 35 billion dollars plus or minus and a bunch of private experts have tried to look at this number as well, got in the same place. So they didn't really cut spending at all in any material way and of course other kinds of spending continue to go up. I love the fact that Trump was talking about trillions of dollars of tariff revenue.

[00:04:36]You'll see at the peak month it only hit 32 billion dollars and so it this would have to go on for many, many, many months. I can't even calculate the number in my head to get to to trillions of dollars. But then the Supreme Court ruled and so what was becoming income to the federal government helping with the deficit suddenly has now become returning money to the people who paid those tariffs, companies and that is actually obviously a negative for the deficit. So in fact, tariffs are on their way from not even being a positive but potentially being a negative and helping that 1.9 trillion dollar deficit.

[00:05:13]>> Elon Musk feels like a character for another lifetime there but I suspect we'll see him in a lot of Democratic ads this fall. So Steve, your final chart addresses Trump's claims about his ability to boost America's manufacturing industry. Let's take a look at what the president told small business owners this past May.

[00:05:31]>> One of the strongest effects of our tax cuts and tariffs is the Trump manufacturing boom is what they're calling it because that's what we have.

[00:05:40]We have never had anything like what's happening now and when I talk about again the 18 trillion dollars that's coming in and building places.

[00:05:50]>> So Steve, a lot of bravado there, but where do you things actually stand among manufacturing jobs right now?

[00:05:56]>> Yeah, again, it's kind of incredible to hear the president describe himself as the manufacturing president and I I applaud his ambitions, but let's just talk about what the reality is. The reality is that manufacturing, obviously you had COVID and all the stuff going on, but it got us high as 12.9 million jobs back here. And then it started to decline and then simply continued to decline under Trump. So in fact, rather than gaining any manufacturing jobs, we've lost 75,000 manufacturing jobs since Trump arrived. He also likes to talk about the building boom. I think on the show yesterday he talked about 19 trillion dollars of new investment in America. Uh that is obviously a crazy number. But in any event, when you look at something like factory building, you can see that the the fact factory building uh went up sharply under Biden.

[00:06:43]A lot of this had to do with the CHIPS Act, the Inflation Reduction Act, incentives for clean energy. Companies were out building stuff. Then they Then it peaked and now it has just been going down under Trump, down to 175 billion dollar rate from a peak of 250 billion.

[00:06:58]Trump also likes to talk about data centers and how much they're going to uh uh uh help this manufacturing boom, so to speak. And in fact, you can see data center uh construction has gone up a bit. It's up to 43 billion dollars, but not nearly enough to compensate for how much actual factory loss has been uh achieved. And of course, data centers employ not so many people. Factories employ a lot of people. So again, no manufacturing boom, no manufacturing renaissance evident in any of the numbers. And tariffs played a role in this. They have They raised cost of steel and aluminum and discouraged businesses from building manufacturing facilities here.

[00:07:37]>> Morning, Joe. Economic analyst Steve Rattner with a banger set of charts this morning, Steve. Thank you so much.