Trump Tries to Backtrack His Defaulting on Debt Comments
Donald Trump declared Monday the U.S. never has to default on debt “because you print the money,” while trying to clarify his strategy for managing the national debt.
Trump insisted that he never said the U.S. should default or attempt to renegotiate with creditors, as had been reported. Trump told CNN’s Chris Cuomo on “New Day”:
People said I want to go and buy debt and default on debt, and I mean, these people are crazy. This is the United States government. First of all, you never have to default because you print the money, I hate to tell you, OK?
The presumptive Republican presidential nominee explained he would center his approach on debt buybacks if and when interest rates go up.
I said if we can buy back government debt at a discount, in other words, if interest rates go up and we can buy bonds back at a discount — if we are liquid enough as a country, we should do that. In other words, we can buy back debt at a discount.
He also repeated his claim that he is “the king of debt.”
I understand debt better than probably anybody. I know how to deal with debt very well. I love debt — but you know, debt is tricky and it’s dangerous, and you have to be careful and you have to know what you’re doing.
Trump lied. In an interview with CNBC on 5/6/16 that we cataloged here along with video, Trump was asked if the U.S. needs to pay its debt in full or if it could negotiate a partial repayment, Trump said:
I would borrow, knowing that if the economy crashed, you could make a deal.
Also during his CNBC interview, Trump had said that interest rates should be kept low — contradicting his remarks on CNN Monday — because a rate jump could trigger a catastrophic increase the cost of borrowing.
We’re paying a very low interest rate. What happens if that interest rate goes up 2, 3, 4 points? We don’t have a country.
Furthermore, whether through debt buyback or restructuring, neither of Trump’s debt-reduction proposals from the past week square with his party’s core approach on the issue — deep spending cuts and entitlement program reform.
The Republican Party’s official platform argues the U.S.’s looming “debt explosion” should be averted through “immediate reductions in federal spending, as a down payment on the much larger task of long-range fiscal control.”
These cuts “must be accompanied by major structural reforms,” according to the platform, and pointing to programs such as Medicare, Medicaid, and Social Security, the GOP argues that “we must restructure the twentieth century entitlement state.”