One day after assuring Americans he is not running for president “to make things unstable for the country,” the presumptive Republican nominee, Donald J. Trump, said in a television interview Thursday that he might seek to reduce the national debt by persuading creditors to accept something less than full payment.
Asked whether the United States needed to pay its debts in full, or whether he could negotiate a partial repayment, Mr. Trump told the cable network CNBC, “I would borrow, knowing that if the economy crashed, you could make a deal.”
He added, “And if the economy was good, it was good. So, therefore, you can’t lose.”
Such remarks by a major presidential candidate have no modern precedent. The United States government is able to borrow money at very low interest rates because Treasury securities are regarded as a safe investment, and any cracks in investor confidence have a long history of costing American taxpayers a lot of money.
Experts also described Mr. Trump’s vaguely sketched proposal as fanciful, saying there was no reason to think America’s creditors would accept anything less than 100 cents on the dollar, regardless of Mr. Trump’s deal-making prowess.
Such remarks by a major presidential candidate have no modern precedent.
Yeah, get used to that. Der Orangenführer lost his brain-to-mouth filter a long, long time ago. It could be a literal blast once his lack of impulse control and the launch codes meet.
I have to admit, the more he talks now, the more I miss the days when his only policy idea was to surround himself “with the best people and make everything blah, blah, blah.” His specifics are often nonsensical or disturbing, like his plan to take time out of his Inauguration Day schedule to call corporate executives and threaten them.
At this point it’s not really a question of whether America will be a dumpster fire next January, but how much gasoline gets poured on it depending on who prevails in November.
Trump’s penchant for pivoting once it’s pointed out that he’s wrong or ridiculous (usually both) may be the only thing that saves the country:
Pressed to elaborate on his remarks, Mr. Trump did appear to step back. He said that he was not suggesting a default, but instead that the government could seek to repurchase debt for less than the face value of the securities. The government, in other words, would seek to repay less money than it borrowed.
Cool corporate trick, but not much of a plan if you’re in charge of a country:
Repurchasing debt is a fairly common tactic in the corporate world, but it only works if the debt is trading at a discount. If creditors think they are going to get 80 cents for every dollar they are owed, they may be overjoyed to get 90 cents. Mr. Trump’s companies had sometimes been able to retire debt at a discount because creditors feared they might default.
But Mr. Trump’s statement might show the limits of translating his business acumen into the world of government finance. The United States simply cannot pursue a similar strategy. The government runs an annual deficit, so it must borrow to retire existing debt. Any measures that would reduce the value of the existing debt, making it cheaper to repurchase, would increase the cost of issuing new debt. Such a threat also could undermine the stability of global financial markets.
Can someone grab an extra fire extinguisher?