David Stockman has become every major news organization's (and CNBC) go to critic when it comes to bashing each stupid idea currently preoccupying the DC C-grade soap opera artists. Obviously, at the current time this would mean the budget deficit and the debt ceiling. On both those issues, Stockman's position is well-known. Today, when asked by Bloomberg's Tom Keene to compare the current deficit with that of Reagan's, Stockman spares no praise: "The essential distinction is that we had a clean balance sheet then - $1 trillion of national debt. Today we have $14 trillion in national debt. We have used up all the runway, so to speak. We have piled our national balance sheet with so much debt that the government is at the very edge of a huge solvency crisis that isn't going to be addressed unless both parties dramatically change their position, and I see no sign of it. So we're going to have a gong show." Stockman also opines on the Monetary Roach Hotel that the US debt has become: "We have not had a two-way bond market. We have had a rigged market that has been dominated by not just the Fed, but all the central banks. Today over half of the $9 trillion in publicly-held debt is in central bank vaults. I call it the 'Monetary Roach Hotel.'" Lastly, on a proposal endorsed by Zero Hedge back in the summer of 2009, namely the introduction of a Tobin tax for Wall Street's high-frequency casino: "Wall Street needs to have a transaction tax. I know they won't like it. A tax on every trade, a small amount, would go a long way to putting money in the coffers." As usual: absolutely spot on recommendations, which have little to no chance of occurring before the final bond crash finally takes away the multiple-use heroin needle from both DC and Wall Street.

Stockman on what's different regarding the deficit under Obama vs. Reagan:



"The essential distinction is that we had a clean balance sheet then - $1 trillion of national debt. Today we have $14 trillion in national debt. We have used up all the runway, so to speak."



"We have piled our national balance sheet with so much debt that the government is at the very edge of a huge solvency crisis that isn't going to be addressed unless both parties dramatically change their position, and I see no sign of it. So we're going to have a gong show. Year after year after year of these debt ceiling crises, maybe they will be solved for a month or two, and then we will go right to the next."



Stockman on the deficit to GDP ratio:



"When this all started, it was 30% national debt to GDP. Now, effectively what's built in will take us as close to 100% within a matter a couple years. That is baked into the cake and cannot be stopped."



"I think the more important thing is the annual deficit to GDP. It should be a balance over the cycle, but we have not had any balance over the cycle for decades…We were petrified in 1982 when the deficit went to 6%, the highest ever seen. Reagan, although he is known as a great tax cutter, signed a huge tax increase bill in 1982 at the bottom of the worst recession that we'd had up until then and raised taxes by the tune of 1.5% of GDP."



On the issues with the current market:



"We have not had a two-way bond market. We have had a rigged market that has been dominated by not just the Fed, but all the central banks. Today over half of the $9 trillion in publicly-held debt is in central bank vaults. I call it the 'Monetary Roach Hotel.' Bonds go in and never come out. If the central banks stopped buying the debt, which will happen with the end of QE2, then we're going to get back into a real investor's market, a two-way market where some people don't believe that Congress and the White House have the capacity to deal with our problems. I think then we run the risk that we'll get real pricing on the debt, which has to be a lot more than 3%."



On how the debt ceiling debate will be resolved:



"I do not know that there's any process that can solve it. We're so far down the road here that I think it will take a thundering conflagration in the global bond market to wake up the process and get people out of their positions...Look at the current White House. We had Geithner last night saying, you don't dare not raise the debt ceiling, but the policy of this administration is de facto default. They have a war budget as big as Bush ever had, therefore, extending 75% of the Bush tax cuts. The only thing they have objected to is the 2% risk."



On why we should care about the debt ceiling:



"I do not think we should care about the debt ceiling, because they will extend it when push comes to shove at the 11th hour after a lot of smoke and mirrors and tricks have been played...What we should care about is the fact that we're borrowing $6 billion every business day. Both parties have taken fiscal positions that will not even begin to close the gap. Both parties are simply aligned, deceiving the public that there will not be sacrifice. There will be. Tax increases across the board for the entire middle class, not just the rich."



Stockman on whether the tax base needs to be broadened:



"I think bring the tax base or have new tax revenue sources. We are in a stage where I think a tax on imported oil might be one way to get two birds with one stone. Revenue into the coffers of the Treasury and also some incentive for more conservation, domestic production, and alternative energy.



"Secondly, Wall Street needs to have a transaction tax. I know they won't like it. A tax on every trade, a small amount, would go a long way to putting money in the coffers."