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.

(h/t CNN)

Reality

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.”

Media

https://www.youtube.com/watch?v=6FRhyL83qbw

Links

http://video.cnbc.com/gallery/?video=3000515269

http://www.politico.com/story/2016/05/trump-debt-bankruptcy-wall-street-222976

New York Times article that Trump claimed misrepresented him. They didn’t.

Trump is Going to Trial This Year in Trump University Fraud Case

Trump University logo

A federal judge in San Diego set the stage on Friday for what could be one of the strangest presidential transitions in history: He ordered that Donald Trump must go to trial starting Nov. 28 in a civil case in which he is accused of defrauding students who attended Trump University.

“No doubt this will be a challenge … we’re in unchartered waters,” said Daniel Petrocelli, Trump’s lead lawyer in the case, when asked later how his client — if elected in November — would be able to balance preparing to take over the presidency with taking the witness stand in a trial that could run almost until the eve of the following January’s inauguration.

But Petrocelli said Trump was fully prepared to testify and would even attend “most, if not all” of the trial in order to vindicate himself. “His preference would be to be here for the entirety of the trial,” Petrocelli said. “He believes this case is unwarranted and he wants to defend himself fully.”

The ruling today by U.S. Judge Gonzalo Curiel, during a pretrial conference on the six-year-old lawsuit, actually represented a small victory for Trump. The lawyers for the plaintiffs, arguing that “justice delayed is justice denied,” had asked for a trial to start as early as this summer — immediately after the Republican convention in Cleveland. “There are people who are still paying off their debts for the money they paid to Trump University,” said Jason Forge, a lead lawyer for the plaintiffs suing Trump.

Petrocelli, for his part, pushed back, contending that a trial over Trump University would end up becoming a media spectacle that would amount to an “unwarranted intrusion” on the November elections. He had asked that Curiel put the whole matter off until next February, after the inauguration, arguing that Trump, if elected, would be working “around the clock” during the transition to form a Cabinet. He acknowledged to Curiel that he was “fully aware” that a President Trump would not be able to postpone the case indefinitely, consistent with the Supreme Court’s unanimous ruling that President Bill Clinton was not immune to a civil suit by Paula Jones, alleging sexual harassment.

Curiel decided to split the difference: In an effort to “accommodate” Trump’s political campaign, he agreed to put the trial off until after the election — but scheduled it right afterward, rather than “waiting for [a] President Trump to begin his first term,” thereby “placing him a situation where, as a sitting president, he is taking up time as leader of the free world” to sit through trial. (Anticipating difficulty in finding unbiased jurors, the judge said he may want to start jury selection even earlier than Nov. 28.)

But Trump may still find his legal troubles impinging on his campaign; he is facing a separate trial in New York state courts in a civil fraud suit, also stemming from the ill-fated Trump University, brought by New York Attorney General Eric Schneiderman. (No trial date has been set on that case yet, but a spokesman for Schneiderman told Yahoo News that his office believes it could begin as early as this fall.)

The hearing today is the latest development in a case that has already erupted as a campaign issue and has threatened to shine a spotlight on Trump’s business practices — including his penchant for making hyperbolic claims to consumers — at the very moment he is trying to persuade voters he can deliver on his campaign pledges to end illegal immigration, destroy the Islamic State and balance the federal budget without touching entitlements like Social Security and Medicare.

The core case revolves around the operations of a school Trump launched in 2005 with a promotional YouTube video and ads that proclaimed, “I can turn anyone into a successful real estate investor, including you,” “Are you My Next Apprentice?” and “Learn from my handpicked experts how you can profit from the largest real estate liquidation in history.”

In fact, Trump University was never an accredited educational institution, and he was later forced by state attorneys general to change its name to the “Trump Entrepreneurial Initiative.” The plaintiffs, former students at Trump University, allege that Trump used “misleading, fraudulent and predatory practices,” conning them into maxing out their credit cards and in some cases paying more than $35,000 in fees for seminars and “mentoring” by Trump’s “handpicked” real estate experts. The lawsuit against the school, which is no longer in business, alleges that the seminars were little more than an “infomercial” and that the Trump mentors offered “no practical advice” and “mostly disappeared.”

One key issue in the case has been Trump’s boasts that the “courses” and “mentoring” would be conducted by the “best of the best” — real estate experts he personally chose. During a deposition last December, Forge hammered away at Trump on the issue, showing the businessman a photo lineup and playing videos of some of the instructors and asking him if he could identify any of them. Trump could not, at first saying it was “too many years” ago for him to recognize them and then finally admitting he didn’t actually know any of them. “I looked at résumés and things, but I didn’t pick the speakers,” Trump said at one point.

Trump’s lawyers have adamantly denied the charges and insisted that most students who took the courses were satisfied. On the campaign trial, Trump has vowed to never settle the case, claiming it was brought by a “sleazebag law firm” — a reference to Forge’s firm, Robbins Geller — and confidently predicted, “I will win the case at the end.” He has even criticized Judge Curiel, claiming he was biased against him because of his Hispanic origin. “If I didn’t have a hostile judge in California, this case would have ended years ago,” he said during a campaign rally in Arkansas last Feb. 26. (Trump had even suggested he might move for Curiel’s recusal, based on his Hispanic origin, but Petrocelli told reporters today he had no plans to file such a motion.)

The case has already eaten up Trump’s time on the campaign trail, forcing him to sit for two contentious last December and January in which he was grilled by Forge, prompting him to complaint at one point about “harassment” by the lawyer and to shoot back at another point, “Let’s just go to court and get this case — I’m dying to go to court in this case.”

It looks like he might be getting his wish.

(h/t Yahoo News)

Reality

As we investigated before, Trump University was a massive scam.

What will be interesting to note is how right-wing media will cover Donald Trump on trial for fraud compared to the Hillary Clinton email investigation. No need to imagine, here is the Wall Street Journal saying Donald is being set up while Hillary is a criminal.

Donald Trump Hits Back at ‘Goofy’ Elizabeth Warren

Twitter

Donald Trump took to Twitter Friday evening to pile criticism on Massachusetts Sen. Elizabeth Warren, who earlier in the week had condemned the presumptive GOP nominee as a racist.

Trump began Friday, “I hope corrupt Hillary Clinton chooses goofy Elizabeth Warren as her running mate. I will defeat them both.”

He continued: “Let’s properly check goofy Elizabeth Warren’s records to see if she is Native American. I say she’s a fraud!”

Next, he tweeted, “Goofy Elizabeth Warren, Hillary Clinton’s flunky, has a career that is totally based on a lie. She is not Native American.”

Trump was referring to a controversy surrounding Warren that emerged during her successful 2012 Senate bid over her past claims about having Native American ancestry. At the time, her Republican challenger, Scott Brown, demanded she provide documented proof, but Warren said her heritage had been passed down in words, not on paper.
Friday’s tweet storm isn’t the first time Trump has responded to Warren in this fashion.

Asked in March about attacks the Massachusetts senator had made on him, Trump responded, “Who’s that, the Indian?”

Earlier in the week, Warren went on a Twitter tirade against the Manhattan billionaire, saying he had “built his campaign on racism, sexism and xenophobia.”

And shortly after Trump’s latest salvo Friday night, she fired back some shots of her own.
“‘Goofy,’ @realDonaldTrump? For a guy with ‘the best words’ that’s a pretty lame nickname. Weak!” Warren tweeted.

(h/t CNN)

Reality

Instead of responding to Senator Warren’s argument that he is running a racist, sexist, and xenophobic campaign, Donald Trump responded with misogynist bullying. This is a logical fallacy known as ad hominem, or attack the attacker. It is used when a person has no real defense so instead they resort to name calling.

Donald Trump Just Threatened to Cause an Unprecedented Global Financial Crisis

In an interview on CNBC, Donald Trump broke with tired clichés about the evils of federal debt accumulation. “I am the king of debt,” he said. “I love debt. I love playing with it.”

But he replaced fearmongering about debt with an even more alarming notion — a bankruptcy of the United States federal government that would incinerate the world economy.

“I would borrow, knowing that if the economy crashed, you could make a deal,” Trump said. “And if the economy was good, it was good. So therefore, you can’t lose.”

With his statement, Trump not only revealed a dangerous ignorance about the operation of the national monetary system and the global economic order, but also offered a brilliant case study in the profound risks of attempting to apply the logic of a private business enterprise to the task of running the United States of America.

Trump’s business logic makes sense

Trump is a businessman, and in terms of thinking like a businessman his idea makes sense.

The interest rate that investors currently charge the United States in order to borrow money is very low. A smart business strategy under those circumstances would be to borrow a bunch of money and undertake a bunch of big investment projects that are somewhat risky but judged to possibly have a huge payoff.

You now have two possible scenarios.

In one scenario, the investments work out and you make a ton of money. In that case, you can easily pay back the loan and everyone wins.

In another scenario, the investments don’t work out and you don’t make much money. In that case, you objectively can’t pay back the loan. You either work out a deal with the people you owe money to in which they accept less than 100 percent of what you owe them (this is called a “haircut”) or else you go to bankruptcy court and a judge will force them to accept less than 100 percent.

This is how businesspeople think — especially those who work in capital-intensive industries like real estate. And for good reason. This is the right way to run a real estate company.

Applying this idea to the United States would destroy the economy

The United States of America, however, is not a real estate development company. If a real estate company defaults on its debts and its creditors lose money, that’s their problem. If a bank fails as a result, then it’s the FDIC’s responsibility to clean it up.
The government doesn’t work like that. Right now, people and companies all around the world treat US government bonds as the least risky financial asset in the universe. If the government defaults and banks fail as a result, the government needs to clean up the mess. And if risk-free federal bonds turn out to be risky, then every other financial assetbecomes riskier. The interest rate charged on state and local government debt, on corporate debt, and on home loans will spike. Savings will evaporate, and liquidity will vanish as everyone tries to hold on to their cash until they can figure out what’s going on.

Every assessment of risk in the financial system is based on the idea that the least risky thing is lending money to the federal government. If that turns out to be much riskier than previously thought, then everything else becomes much riskier too. Business investment will collapse, state and local finances will be crushed, and shockwaves will emanate to a whole range of foreign countries that borrow dollars.

Remember 2008, when the markets went from thinking housing debt was low-risk to thinking it was high-risk, and a global financial crisis was the result? This would be like that, but much worse — US government debt is the very foundation of low-risk investments.

What’s especially troubling about Trump’s proposal is that there is genuinely no conceivable circumstance under which this kind of default would be necessary. The debt of the federal government consists entirely of obligations to pay US dollars to various individuals and institutions. US dollars are, conveniently, something the US government can create instantly and in infinite quantities at any time.

Of course, it might be undesirable to finance debts by printing money rather than raising taxes or cutting spending. In particular, that kind of money printing could lead to inflation, and even though inflation is very low right now there’s no guarantee that it will always be low.

But a little bit of inflation is always going to be strictly preferable to destroying the whole American economy, especially because a debt default would cause a crash in the value of the dollar and spark inflation anyway.

Trump doesn’t know what he’s talking about

This is the second time this week that Trump has revealed a profound ignorance of an issue related to government debts.

The early instance in which he kept proposing that Puerto Rico declare bankruptcy even though doing so is illegal was on a question that’s very important to Puerto Ricans but not so important to everyone else. It is, however, important to pay attention to how presidential candidates approach issues across the board — and what we saw with Puerto Rico is that Trump approached the issue by simplistically applying business logic without bothering to check whether it applies to the actual situation.

Now in the CNBC interview he’s done the exact same thing on a matter of more consequence —not the debts of Puerto Rico but the debts of the United States of America. It’s understandable that a real estate developer might assume that what works in real estate would work in economic policy, but it’s not true. And Trump hasn’t bothered to check or ask anyone about it.

(h/t CNBC)

Reality

What Donald Trump is proposing to pay off the national debt (which is money that we are obligated to pay creditors and for services) is to borrow large sums of money at a lower rate. In other words robbing Peter to pay Paul.  Should the economy be healthy then we can pay back that borrowed money no problem. However should the economy crash, and the United States is unable to meet the legal obligation of debt repayment (‘defaulting‘) then Trump proposed to renegotiate that new debt at a lower rate.

While Trump did not say the word ‘default’ he explained the exact definition of the word default in his proposal.

This raised eyebrows by suggesting an unorthodox approach towards cutting the national debt… not paying it then renegotiate terms. Such a renegotiation risks creating financial turmoil because U.S. Treasuries are considered the safest assets on the planet and a major benchmark for valuing other securities. Calling into question their safety could cause borrowing rates to rise and create confusion in the markets.

Confusion in the markets is a very bad thing. Wall Street and businesses need to know what the rules are in order to subvert play them.

Media

http://video.cnbc.com/gallery/?video=3000515269

Donald Trump Flip-Flops on Campaign Self-Funding

Facing a prospective tab of more than $1 billion to finance a general-election run for the White House, Donald Trump reversed course Wednesday and said he would actively raise money to ensure his campaign has the resources to compete with Hillary Clinton’s fundraising juggernaut.

His campaign also is beginning to work with the Republican National Committee to set up a joint fundraising committee after his last two rivals—Texas Sen. Ted Cruz and Ohio Gov. John Kasich—dropped out in the wake of Trump’s resounding Indiana win on Tuesday.

“I’ll be putting up money, but won’t be completely self-funding,” the presumptive Republican nominee said in an interview Wednesday. Trump, who had largely self-financed his successful primary run, added that he would create a “world-class finance organization.” The campaign will tap his expansive personal Rolodex and a new base of supporters who aren’t on party rolls, two Trump advisers said.

The new plan represents yet another flip-flop for Trump, who has for months portrayed his Republican opponents as “puppets” for relying on super PACs and taking contributions from wealthy donors that he said came with strings attached.

Mr. Trump’s creation of a joint fundraising committee comes eight months behind that of his likely general-election foe, Clinton. She and the Democratic National Committee reached an agreement last August to create the Hillary Victory Fund, which raised more than $60 million through the end of March. Of that, about $13 million has been transferred to Mrs. Clinton’s campaign, while nearly $6 million has gone to the DNC.

The former secretary of state raised more than $213 million for her campaign through the end of April, on top of more than $67 million raised by her allied super PACs.

(h/t Fox News)

Reality

With the many other flip-flops since becoming the Republican party’s nominee, he’s rejected almost every stance that his supporters loved which separated him from the other candidates.

Media

Donald Trump’s ‘Taco Bowl’ Message: ‘I Love Hispanics’

Less than 48 hours after becoming the presumptive Republican nominee, Donald J. Trump began his Hispanic outreach with … “taco bowls.”

On his social media accounts, including Twitter, Mr. Trump shared on Thursday afternoon a photo of himself eating what he called a taco bowl and offering a thumbs up at his desk in Trump Tower, along with the message:

Happy #CincoDeMayo! The best taco bowls are made in Trump Tower Grill. I love Hispanics!

During his telephone interview with “Fox & Friends,” Trump responded to remarks from Democratic strategist Robert Zimmerman, who called the tweet offensive and akin to the ayatollah of Iran posting a picture of him enjoying matzoh ball soup “and claiming he loves Jews.”

That’s a terrible thing that a guy can say that. As of yesterday, I had 59,000 retweets. 59,000 in a short period of what? That’s almost got to be some kind of a record. People loved it.

It is not a record.

Trump then claimed:

I’m going to do great with Hispanics. I mean, I’m going to do fantastically because I’m bringing jobs back to America.

(h/t New York Times, Politico)

Reality

Mr. Trump has alienated many Hispanic voters with his campaign, which he began with a speech that dubbed Mexicans as criminals and rapists. His rallies often include rowdy calls to build a large wall at the border with Mexico.

Seventy-seven percent of Hispanic registered voters view Mr. Trump unfavorably and only 12 percent view him favorably, according to a Gallup poll in March. And Hispanic leaders immediately seized on Mr. Trump’s taco bowl posts as demeaning.

Also if you notice, Donald Trump’s taco bowl had no guacamole. No guacamole! Who orders a taco bowl and skips on the guacamole!?

 

Trump Flip-Flops on Elements of His Tax Plan

Presidential candidate Donald Trump today backed away a bit from his tax plan, describing it as open to negotiation.

Pressed by CNBC as to how he could simultaneously brand himself as a populist who will take on wealthy elites while proposing sweeping tax cuts for billionaires, Trump backed away from his plan.

I am not necessarily a huge fan of that. I am so much more into the middle class who have just been absolutely forgotten in our country.

Trump described his tax proposal, which was the most detailed policy paper he put out in the campaign, as merely a starting point for a future deal.

You know, when you put out a tax plan, you are going to start negotiating. You don’t say, ‘OK, this is our tax plan, lots of luck, folks.’ There will be negotiation back and forth. And I can see that going up, to be honest with you.

The Trump tax plan has attracted criticism in two main areas: first, in that it loses too much revenue, and second, in that it primarily benefits high-income taxpayers. Both are shown in the Tax Foundation analysis published last year. A third criticism, albeit a more subtle one, is that Trump’s plan reduces rates without doing much to improve tax bases, and therefore generates less growth than it could otherwise, as Tax Foundation President Scott Hodge has argued.

If Trump moderates some of the elements of his tax plan, he may want to consider getting rid of the preferential rate for pass through income, which benefits wealthier Americans and encourages relabeling, and also reducing the size of the zero bracket in his plan, which is about four times larger than the current standard deduction, and contributes substantially to the plan’s $10 trillion revenue loss.

(h/t Tax Foundation)

Reality

A politician changing their mind toward a better idea can be a good thing as it shows progress. But when a politician changes their mind, not organically, but timed as a means to maximize their popularity, this is called a flip-flop.

In our review of Donald Trump’s tax reform plan would reduce federal revenues by $9.5 trillion dollars over 10 years causing massive cuts from the military to Social Security. Any change here would be progress.

Media

Links

Stop The Donald Trump’s Tax Reform Analysis

Trump Flip-Flops on Raising the Minimum Wage

In a reversal, Donald Trump expressed openness to raising the federal minimum wage during an interview on Wednesday.

“I’m looking at that, I’m very different from most Republicans,” the presumptive GOP presidential nominee told CNN Wednesday about the prospect of increasing wages.

You have to have something you can live on. But what I ‘m really looking to do is get people great jobs so they make much more money than that, much more money than the $15.

The federal minimum wage is $7.25, but labor groups have been pushing for it to be raised to $15.

During a November debate, Trump voiced opposition to raising the minimum wage.

“I hate to say it, but we have to leave it the way it is,” he said during the debate.

During a November appearance on MSNBC’s “Morning Joe,” Trump said the current minimum wage is too high and was slowing job growth.

“We have to become competitive with the world. Our taxes are too high, our wages are too high, everything is too high,” he said. “What’s going to happen is now people are going to start firing people.”

On Wednesday, Trump did caution that lawmakers would have to be careful not to raise the minimum too much.

“If you start playing around too much with that lower level number, you are not going to be competitive,” he said, before reiterating that he’s “open to doing something” with the federal minimum wage.

Democratic front-runner Hillary Clinton backs a $12 minimum wage and has supported local attempts to push for $15 per hour; her rival, Bernie Sanders, supports a $15 federal minimum wage.

Republicans at large are against raising that number. Rick Santorum is the only GOP presidential candidate who backed raising the minimum wage. Ben Carson briefly signaled openness before walking that back.

(h/t The Hill)

Reality

Just a few months ago Trump said he would lower the minimum wage during a Republican debate:

Taxes too high, wages too high.

And again on Fox News he doubled-down:

Whether it’s taxes or wages, if they’re too high we’re not going to be able to compete with other countries.

And then he told auto workers right to their faces that they make too much money.

Media

Artist Who Drew Donald Trump With Small Penis Claims She Was Assaulted By Trump Fan

The Los Angeles artist who painted a viral portrait of a nude Donald Trump says someone gave her the typical Trump supporter treatment: Punching her in the face.

Illma Gore posted two photos of her bruised face on Instagram Monday, and said an apparent Trump-loving stranger attacked her several days ago.

“Today I was punched in the face by a man who got out of his car and yelled, ‘Trump 2016!’ in Los Angeles, just days after I returned home from London just down the road from my house,” Gore wrote.

“I am sad that this is the state of our America right now. I am sad that Trump, and many of his supporters, don’t find words enough to express their opinions – they need walls, waterboarding and punches.”

She tagged Donald Trump and urged him: “Make America Decent Again!”

Gore filed a police report, which she sent to the Daily News. The report says the attacker fled in a car right after the punch, and that Gore was not seriously injured. Gore told the News the aggressor was with “a group of guys in the car.”

The LAPD did not immediately comment on her case.

Reality

The artist Illma Gore received death threats and fled the country for a time. Shortly upon returning she was assaulted by an alleged Trump supporter.

Donald Trump has previously condoned violence against those who disagree with him.

Media

Trump Accuses Cruz’s Father of Helping JFK’s Assassin

Donald Trump alleged that Ted Cruz’s father, Rafael Cruz, was with John F. Kennedy’s assassin shortly before he murdered the president. Trump claimed that Rafael Cruz was pictured with Lee Harvey Oswald handing out pro-Fidel Castro pamphlets in New Orleans in 1963.

His father was with Lee Harvey Oswald prior to Oswald’s being — you know, shot. I mean, the whole thing is ridiculous. What is this, right prior to his being shot, and nobody even brings it up. They don’t even talk about that. That was reported, and nobody talks about it. But I think it’s horrible. It’s absolutely horrible.

As the anchor mentioned the photo that allegedly included Cruz, Trump continued:

I mean, what was he doing — what was he doing with Lee Harvey Oswald shortly before the death? Before the shooting? It’s horrible.

(h/t Politico)

Reality

Donald Trump’s source is the pro-Trump supermarket tabloid newspaper The National Enquirer. That’s right… this paper:

National Enquirer, "Ted Cruz Father Linked to JFK Assassination!"

The Miami Herald debunked this claim rather well:

Gus Russo, an author and journalist who has written extensively about the JFK assassination and Oswald, is dubious. Russo told [the reporter] in an interview that Oswald, who was living in New Orleans in 1963, was not connected to the Cuban community there and would not have had a Cuban supporter helping him. “He was the ultimate loner,” said Russo. Another man seen in the video handing out leaflets had been hired by Oswald to do so at an unemployment office, according to the Warren Commission. Rafael Cruz also lived in New Orleans, but it was later in the 1960s. As for the photo “evidence,” Russo said, “It’s very subjective. It’s not proof. It’s just an opinion. To charge something this big, you’d better have better proof than that ‘it looks like him.’”

Media

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