Donald Trump stock bubble proves Wall Street learned nothing

If you’re looking for the best argument for keeping the modest Wall Street reforms passed during the Obama administration, check out the Dow Jones Industrial Average. The leading stock market index hit a new all-time high just after President Trump announced he would withdraw the United States from the Paris Agreement to combat climate change.

Never mind that the business community insists withdrawal from the non-binding pact is an unforced tragedy that will melt U.S. global leadership and competitiveness. As with almost everything Trump says or does, Wall Street decided it was a good reason to celebrate.

Let's be generous. Maybe bullish stockholders were responding to a lie Trump tossed out as he gave a “middle finger” to the world during an announcement that Germany’s Der Spiegel called a “Triumph of Stupidity.”

"Our tax bill is moving along in Congress, and I believe it's doing very well,” he said during the unsigning ceremony in the White House Rose Garden. “I think a lot of people will be very pleasantly surprised.”

People might be surprised… because no actual bill exists.

But wealthy investors are acting the opposite of surprised. Tax payments suggest the Americans who benefited most from the over 3,000-point bounce in the Dow since November have been taking Trump’s vows to cut their tax rates both seriously and literally. Reports find that tax payments have dried up so dramatically in anticipation of the promised tax breaks that the U.S. Treasury is now likely to run into the debt limit imposed by Congress sooner than anticipated, rendering the government unable to pay all its bills without legislative action.

While visions of tax breaks dance in millionaires' heads, Wall Street also seems to be ignoring that the Trump administration may be inviting a debt limit crisis unlike any before — and not just because it would be the first time a president couldn’t convince a Congress of his own party to raise the debt limit. Trump’s budget director has suggested the Treasury could miss payments to people who receive Social Security and veterans’ benefits, as bondholders are prioritized.

This is the opposite of the plan to stiff creditors that Trump teased during the campaign. It’s also a tacit acknowledgement that defaulting on our debt would almost definitely spark a global financial meltdown.

Billions of dollars of direct financial stimulus would be sucked away from tens of millions of citizens who expect and rely on those payments. How would the U.S. economy react to such an unprecedented shock?

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We have no idea because it’s never happened before.

America has had presidents who’ve tried to run government like a business, but that business was never a failing casino.

Let’s be extremely generous and suggest that maybe the stock market is responding to the good job news, as the unemployment rate is now at a 16-year low of 4.3%. That’s way better than the 26-year high of 10.2% we saw during Barack Obama’s first year in office.

Trump has definitively proven that he’s better at inheriting things than Obama, but even these positive job numbers contain some reason for alarm as job growth has been slowing since the new president took office.

Still, stock buyers can be cheered to know that the last time the unemployment rate was this low was in 2001, right as another rich fortunate son with no foreign policy experience was taking office vowing to reduce the tax burden on America’s top earners.

How’d that turn out?

Less than eight years later we faced the greatest financial crisis since the Great Depression. And as America clawed its way out of the flaming stinkhole the Republican president left us in, Congress passed the Dodd-Frank financial reforms, designed to make sure overly leveraged and under-regulated banks could not explode and take the economy out with them.

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So what does the GOP Congress want to do — before it even avoids the voluntary financial crisis it’s inviting by not raising the debt limit?

Dismantle those exact reforms.

Perhaps this is what’s making investors so giddy. Watching the banks and their favorites take aim at these imperfect yet highly underrated reforms should make you feel like you’re watching a parole officer take a prisoner just released after a burglary conviction on a shopping trip for a ski mask and gloves.

In short, the folks who led us into the last financial crisis have learned nothing.

Let’s say Trump’s “Nixon in mid-Watergate” approval numbers are a fluke. Let’s say “the Russia thing with Trump and Russia is a made-up story.” Let’s say Trump doesn’t turn out to be hybrid of Richard Nixon, Bernie Madoff and Russian spy Robert Hanssen.

Let’s just say Trump is another George W. Bush.

Wall Street is partying like it’s 2001 and wants to return to the same fevered gambling that gave us 2008. Who will be surprised when another Trump-run casino goes bust?

Jason Sattler, a member of USA TODAY's Board of Contributors, is a columnist for The National Memo. Follow him on Twitter @LOLGOP.

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