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STEVE WYNN: There's more to this election than just Trump versus Clinton

Steve Wynn, chairman and CEO of Wynn Resorts. REUTERS/Fred Prouser

Billionaire casino magnate Steve Wynn, the CEO and chairman of Wynn Resorts (WYNN), went on a tirade about the US presidential election during his company’s second quarter earnings call.

During the Thursday call, the outspoken 74-year-old was asked by an analyst “how the US election may impact business in Vegas.”

It’s not about Hillary Clinton or Donald Trump, he argued. Instead, it’s about “self-destructive” monetary and fiscal policy that needs to be stopped.

“The election in the United States, I think we’re all in the same position. It’s almost impossible to predict exactly what effect that will have. Without getting into an economics discussion, we have – sooner or later, our political establishment is going to be forced, regardless of party affiliation, to deal with $19 trillion in debt that’s climbing by around $1.6 billion a day,” Wynn said, according to a transcript posted by SeekingAlpha.

He noted that the growing deficit and the Federal Reserve printing money at its current rate is “directly impacting the living standard or the buying power of the US dollar.” However, this is not “well understood” by Americans, he added.

Inflation, taken to the extreme, could result in another Weimar Republic, where people paid for food using wheelbarrows of currency in the early 1920s, he said.

“So this deficit issue impacts the mental health, the frustration, the positive sense of tomorrow that working people feel in America. It hasn’t got to do with rich folks. It’s got to do with government, fiscal and monetary policy,” Wynn said.

He continued: “We have $14 trillion in public debt and $5 trillion in intergovernmental debt. The coupon on that $19-trillion-and-climbing is around 2.3%, and that’s with short-term interest rates at zero virtually. Now, the current Fed, the lady is going to keep interest rates where they are. That, of course, protects all of the credit card debt of $1 trillion that’s out there. And so, we don’t have mass panic on the credit card interest. But I know that the government is in a quandary as to what to do about this.”

As for the upcoming election, he said both sides of the aisle are missing the point.

“Now, the issue about what’s going to happen with the election isn’t so much an issue of Trump versus Clinton at the moment. It’s a question of whether the House and the Senate and the Executive branch can get together and make Americans feel safer and have a fiscal and monetary policy that isn’t self-destructive, which currently it is.”

He added that both sides are “making all kinds of promises and declarations” that will only exacerbate the “problems that are currently plaguing the country.”

“What is lamentable is that the public discourse today on both sides misses the point entirely. We’re in the ‘chicken for every pot’ season where everybody is promising the moon,” he said.

He used the example of student loans as one of the big themes of the 2016 election. It started with Bernie Sanders who wanted to offer free college tuition. In early July, Clinton amended her platform so it would eliminate college tuition for working families. Specifically, the platform states that “families with income up to $125,000 will pay no tuition at in-state public colleges and universities.” The plan would start with families making $85,000 or less, and then the income threshold will increase by $10,000 every year over the next four years.

Wynn believes that such promises can have negative consequences.

“Well, when the Affordable Care Act was passed and it was going to have a negative impact on the deficit, which its sponsors had promised it wouldn’t, the sponsors went looking for a way to offset $8 billion or so in additional deficit and they came up with the kind of a stunt that we did with Fannie Mae and Freddie Mac when we eliminated mortgage brokers and we just took the loans directly into Fannie Mae and Freddie Mac and that led to the collapse of $5 trillion off the system. Well, they did the same thing with the Department of Education. They gave the student loans directly from the Department of Education and eliminated any middle people. And then they charged 6.5 points or 650 basis points for student loans instead of passing the savings because the Department of Education doesn’t really have a cost of money. But they’re making the student loans direct since the Affordable Care Act. Bernie Sanders didn’t talk about that. But that 650 basis points, that carry is being made by the government to offset what would have been an even greater impact on the deficit by the Affordable Care Act. Well, if you really were sincere about making a better life for the kids, you would have passed the loans from the Department of Education to the kids at cost, which would have been interest free,” Wynn said.

He said if this doesn’t stop, the American consumer is going to feel the impact elsewhere.

“But this kind of hypocrisy, which sort of is endemic to the whole system regardless of party, has got to come to a halt. Because if it doesn’t, then it insinuates itself into economic demand for services and products. It certainly insinuates itself into the price of everything from Walmart to shoes and sneakers. Those things haven’t been by themselves become more precious. The value of the dollar has declined.”

Wynn also said that he doesn’t think the dollar has gotten stronger, but that other currencies, like the euro, have gotten weaker because of quantitative easing and printing money in that part of the world.

“I know that we talk about China fooling with their currency. The United States has fooled with its currency even more aggressively than the People’s Republic of China. I’m not an apologist for China or anybody. I am simply stating the fact. But you won’t see this in the conventions of either party. You won’t hear this sort of thing because it’s so uncomfortable to talk about it,” Wynn said.

He concluded: “But the election could put America on a better track if all the Senators and Congressmen and the [President] and the cabinet members decide that they should or it won’t. I don’t know about anybody on this call, but I’m not in a position to make that prediction. But it surely, surely impacts the life of every American. Tax policy and all the rest all roll into this and businessmen across the country and people that work in businesses will be affected by this as sure as sunrise tomorrow. And there seems to be a fear to deal with it directly. So count me as one of those old white guys that’s frustrated.”

Julia La Roche is a finance reporter at Yahoo Finance.

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