Donald Trump continues to demonstrate on an hourly basis it seems that he is not fit to hold the office of president. Trump has come up with yet another idea to deal with the national debt. “Mr. Trump” thinks he can get America’s debt holders to accept less than what is owed.
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.
Trump is proposing one of two solutions. The first is bankruptcy or partial default. Not paying bills is something Trump is very good at in his business career.
The second one when Trump suggested repurchasing the debt at a lower amount. The problem with that is that it’s not possible with government debt. Those contracts have to satisfied in full and there is no renegotiation on them.
Trump’s ideas will raise borrowing costs for the government and will make our budget problems even worse. Not only that, but most debt is domestically held. It will be American businesses, savers, and Social Security recipients who suffer.
It won’t be China, Japan, and all of Donald Trump’s foreign boogeymen who pay the price. Foreign countries do bill collecting too and it won’t be pleasant when they do.
Finally, investing in U.S. treasuries is a way for foreign countries to do something with their American dollars that they have in reserve. The stability of U.S. tresauries is a reason why the U.S. dollar is still the leading global reserve currency. If Trump decides to default on the debt, those dollars will be heading back home. We have been fortunate to have low inflation for the past few decades. When those dollars held overseas come home, it won’t be pleasant to say the least.
The worst thing about Trump and his idiotic ideas on the debt is that it actually makes it harder to come up with an actual solution to the debt. It sends the message that the debt really isn’t that much of a concern. That is why Donald Trump is such a disaster.
P.S. “Mr. Trump” should read Section 4 of the 14th Amendment that says this:
The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any state shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.