Posted on 05/06/2016 5:38:20 AM PDT by reaganaut1
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.
“No one on the other side would pick up the phone if the secretary of the U.S. Treasury tried to make that call,” said Lou Crandall, chief economist at Wrightson ICAP. “Why should they? They have a contract” requiring payment in full.
Mr. Trump told CNBC that he was concerned about the impact of higher interest rates on the cost of servicing the federal debt. “We’re paying a very low interest rate,” he said. “What happens if that interest rate goes two, three, four points up? We don’t have a country. I mean, if you look at the numbers, they’re staggering.”
(Excerpt) Read more at nytimes.com ...
“A 20% tariffs raises $540 Billion and balances the budget tomorrow.”
If your goal is to use tariffs as the stick to get manufacturing to come back to the US, then isn’t your balanced budget short lived?
The vast majority of Americans have never been given the opportunity to face this choice. Corporate greed prevents company execs from facing their OWN 25% pay cut, so they can't imagine their workforce would happily take a 25% pay cut if it keeps the factory from moving to Mexico or China.
Everyone in America, and I do mean everyone (even those on minimum wage**), could handle a 25% pay cut. But most people are so selfish, they won't even talk about it.
**And to save repeated back and forth on this: This country hasn't known hardship since WWII, let alone The Depression. Low-income families could choose to combine households to save housing expenses -- but they don't, because they think they are entitled to owning and living in their own home. Hispanics, Vietnamese, and other ethnicities often combine families into one household to save money. Every low-income group could do the same. But the Democrats believe no one should "have to" share a roof in America. For me, it's simple math. If you can afford your own roof, you can have your own roof. If you can't, then you can't. Same with a Lamborghini.
I know exactly what Trump is trying to avoid-Greece.
There are two primary ways to go about that - cutting spending and raising revenues. I won’t get into specifics on how that can be done, but suffice it to way, both will require the presidency plus a working majority in both houses of Congress for many years - not just 4 or even 8. We ain’t gonna get ‘er done with the kind of paltry economic growth we’ve had for more than a decade or without major overhauls in entitlement spending. Both will also require standing up to and repelling an all out assault by Democrats and their press sycophants.
Undermining trust in U.S. treasuries is a foolhardy notion. We need people clamoring to invest in this country.
“Don’t think so. A “mere librarian” couldn’t come up with economic myths that still entrance such current notables as Hilary, Bernie and Mr. Trump.”
He learned to write fiction early in his librarian career and the talent for constructing a make-believe political system (Marxism has nothing to with economics) lasted for his whole life.
The correct way to get rid of the debt requires two actions:
Cutting taxes in a way that stimulates business and increases hiring.
Controlling spending and reducing it 1% per year.
The two actions will meet at some point and the excess revenues due to both much increased business can be used to decrease the debt.
You have to remember that we are going through one of the worst recessions in our history. FDR set it off by signing the Smoot-Hawley Tariff Act for the same reason that people want high tariffs now, to protect our own industries. The whole world went into a deep recession as countries began to raise tariffs and restrict trade. It was a disaster that lasted until 1947 or so.
Although Hoover raised tax rates in 1932, FDR was in agreement with most of the provisions and further extended their reach with large additional tax increases in 1935, 1936 and 1937.
The original recession would have ended in 1934 but the increases in tax rates killed off the recovery.
The references to Hoover and FDR refer to the great depression not the current depression.
>> Marxism has nothing to with economics <<
Yeah, sure, just as Christianity has nothing to do with religion.
Very ill informed post. Other countries we trade with ALREADY heavily tariff our exports.
Hopefully. The massive increase in economic activity will off set the decrease in imports. That is the plan. Yes
It is called competition and prices will go down because of price competition and market share increase. So which is it? Do yo believe in the law of supply and demand or yo don;t?
Wasn’t this tried with Smoot-Hawley?
And look at the result.
Agreed. Reagan accomplished the first big time, but Congress wouldn't allow him to accomplish the second.
We can't tax our way out of debt. The ONLY way to do it is to combine explosive economic growth (lower taxes, less government regulations) with incremental, but steady cuts in spending.
I skimmed your article (don’t have time to take it apart in detail right now), but the author is full of used food. Smooth Hawley *prolonged* the Great Depression, not the cause of it!
AFA the author’s contention that raising tarriffs from 44% to 54% and then says that was a small change - that right there is a laffer.
Nice try.
Do you know what the % of GDP imports represented in 1930?
And all the domestic goods and services that compete with those overseas goods and services.
Treasury debt is not the Federal Reserve.
The people are not obligated to pay. It is not like a car payment.
No downside to default?
No nation’s people are required to pay their central bank.
What about other holders of Treasuries?
Central banks are a fool’s scam.
Can you explain further?
And never ever buy US bonds again.
Until one of the domestic manufactures wants more market share then they will drop their price. Price fixing not only never seems to work it is also illegal.
We can't avoid the higher prices by avoiding imports.
You were wrong. Maybe you should stop making that claim?
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