Throughout much of his presidential campaign thus far, billionaire businessman Donald Trump has brought attention to the extraordinarily high national debt, which will likely be well over $20 trillion by the time a theoretical President Trump takes office.
Trump recently raised quite a few eyebrows by floating a rather novel and unprecedented idea for handling and gradually lowering that monstrous debt, essentially by restructuring or otherwise modifying it with the creditors, according to The New York Times.
Trump suggested that he may be able to reduce the national debt by forging new deals with our creditors, who will be persuaded to accept something less than a full payment on what is owed.
“I would borrow, knowing that if the economy crashed, you could make a deal,” Trump stated, adding, “And if the economy was good, it was good. So, therefore, you can’t lose.”
Trump stuns critics with idea to cut national debt: “Such remarks…have no modern precedent” https://t.co/G8Bhv8LzeO
— TheBlaze (@theblaze) May 6, 2016
What Trump has suggested is not at all an uncommon tactic in the business world, where creditors who fear they may not be repaid at all will accept partial payments instead of an outright default, something President Barack Obama threatened would happen several times.
But such a move has never been tried at the national level, and there are many who are critical of Trump’s idea, likening it to a structured bankruptcy.
Others fear that Trump’s move could wreak havoc on the economy and financial markets, possibly causing interest rates to spike, which in turn would make future borrowing more expensive, leading to even larger debt.
While Trump’s idea to essentially restructure America’s loans could succeed in saving some money, it would likely be marginal savings that wouldn’t amount to much or save us from a debt crisis.
In truth, the best way to tackle the debt problem is through a sound fiscal policy which would have to include cutting spending and increasing revenue, preferably through growing and empowering the tax base rather than increasing already burdensome tax rates.
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