Interview with Mary Buffett
by Andreas Deutsch, DER AKTIONÄR (Germany’s major economy and finance magazine)
AD: Before the election everybody was afraid of Mr. Trump. Now he is president-elect and the Dow Jones rises and rises. Will that continue in 2017?
MB: Let’s not make the mistake in equating some momentary uptick in the Dow with a sudden sense that American fears about Donald Trump have somehow normalized to the point of acceptance. Those fears are very much alive and with good reason. In his first meeting with President Obama after the election, reports surfaced that Donald Trump appeared surprised by the scope of the presidency, not even realizing that he would have to replace the entire White House staff by Inauguration Day. President Obama, it was reported in the Wall Street Journal, in the most diplomatic terms available, noted that Donald Trump needed additional tutoring for better understanding of the nature of the presidency. The President-Elect is somebody who is clearly way over his head. I suspect that the learning curve for Donald Trump will be insurmountable.
After a long election, we have no idea of what his financial balance sheet looks like because he has still not released his taxes. For example, are his financials backed by loans from Russian oligarchs or anybody else who has an agenda counter to American interests? Nobody knows. Unlike past American presidents, he has no plans of putting his business interests into a traditional blind trust. The decision to allow his children to run his enterprises creates all sorts of conflict of interest issues, especially when the President-Elect is on the phone with the Argentine President and the topic of an in-country project allegedly is broached. Trump has not made the behavioral leap from businessman to President of the United States and it is doubtful that anything will change near term.
His campaign promises barely add up either. Trump wants to offer massive tax cuts but then also invest a trillion into infrastructure repair. Really? How will one pay for the other? He wants to cancel Obamacare but then says he wants to retain the bans against pre-existing conditions and allow children to remain on their parents’ policies until they are 26. Trump only recently began to understand that you cannot have one without the other.
If Obamacare disappears then roughly 20 million people will be without medical insurance. If Speaker Ryan is allowed to carve up and privatize Medicare into a series of block grants, seniors will find themselves paying for more and getting less. He certainly did not promise that in the campaign either but instead offered a series of gauzy programs of better care at cheaper prices. On a social level, President-Elect Trump is serious about overturning Roe vs. Wade and passing the issue of legal abortion back to the states, which should raise eyebrows everywhere.
In the end, Donald Trump will be accused of over promising to win the White House and after a short period of exuberance, people in the mid-west will ask, where are the jobs you promised? Families will wonder whatever happened to those fanciful medical plans that were once promised. People in coal country will wonder why their jobs have not returned. However, the 1% will remain well cared for and happy with the result. When that realization takes place, there will be a reckoning not seen in generations.
AD: Does the stock market expect marvels from Mr. Trump? Do you believe, that Mr. Trump will bring the USA more good than harm?
MB: Remember, the Dow only represents a snap shot of the moment. Whatever increases in the Dow are still taking place under the Obama presidency because Donald Trump will not take the oath of office until January 2017. Let’s see where things are in the third year of Trump’s presidency. By then, we will see the impact of what a Trump Administration means for the business community. However, for comparison sake, Trump enters the White House without the challenges Barack Obama had in the dark days that led up to his inauguration. Back then, the Dow lost 35% of its value from a January 2008 price point, the auto industry was on the brink of bankruptcy, and the financial sector was a bloodied crime scene. Obama rightfully gets the credit for cleaning up that mess. As president, you’re judged by how you manage the totality of the economy, not one stock market price. However, being president is not solely about judging the crises you can see—it’s more about responding to the crises that lurk around the corner out of our sight. In that sense, Trump has huge shoes to fill and the question remains if he has the attention span to do the job.
AD: In what condition will America be after four or even eight years of Trump regency?
MB: Here is the problem. President-Elect Trump seemed to be more interested in re-litigating old feuds than coming up with an uplifting message that would bind a divided nation. His campaign announcement began by trashing immigrants, suggesting that our neighbor to the South was sending murderers and drug dealers. He wants to build a wall along the Mexican border, which is the Maginot Line of our times. He spent countless news cycles going after a former Miss Venezuela over weight issues. His acceptance speech was one of the darkest delivered in the modern era. Then there was the Access Hollywood tape that horrified a nation. He floundered throughout his debates with Secretary Clinton. However, he won because he was able to leverage the resentments of a number of communities left out by the economic recovery. So what will we see? He will behave as president just as he behaved as a candidate. There will be endless drama emanating out of the West Wing. Old feuds will be reignited with midnight Twitter rants. Potential allies will sit through a withering humiliation.
We have never seen this in modern presidential history and we will be in for a very bumpy ride. In the end, people want adults in charge of a dangerous geopolitical atmosphere; they want people who know what they are doing. With Trump, we get the equivalent of a screaming two-year-old throwing food from his high chair. Americans may quickly grow tired of his act—especially if he does not deliver on everything he has promised.