Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

Donald Trump’s Idea to Cut National Debt: Get Creditors to Accept Less
New York Times ^ | May 6, 2016 | BINYAMIN APPELBAUM

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 ...


TOPICS: Business/Economy; News/Current Events; Politics/Elections
KEYWORDS: debt; nationaldebt; trump
Navigation: use the links below to view more comments.
first previous 1-20 ... 61-8081-100101-120 ... 141-155 next last
To: Buckeye McFrog

Now, that is an interesting idea.

What’s the old saying:

If you owe the bank a little, the bank owns you.

If you owe the bank a lot, you own the bank.


81 posted on 05/06/2016 7:13:17 AM PDT by exit82 (Road Runner sez:" Let's Make America Beeping Great Again! Beep! Beep!")
[ Post Reply | Private Reply | To 75 | View Replies]

To: TexasFreeper2009
That debt will NEVER be repaid.

In the end, most of it will be written off, mark my words.

You may be right... but it isn't a minor thing. This is a government bond default, like we're seeing in Puerto Rico, on a global scale.

82 posted on 05/06/2016 7:13:46 AM PDT by pgyanke (Republicans get in trouble when not living up to their principles. Democrats... when they do.)
[ Post Reply | Private Reply | To 9 | View Replies]

To: RedWulf
Trump does not need to dodge these questions. He needs in a fatherly--but clearly understandable way--to explain markets and economic reality. Mastering that communicative skill will absolutely destroy his enemies credibility. They have long depended on obfuscating how economies really work.

As for debt default? It has been our ill defined & usually unstated policy for almost a century:

Debt Default In America.

Trump is on track to prove the man of the hour, if he continues to speak truth to the prevailing illusions.

83 posted on 05/06/2016 7:17:38 AM PDT by Ohioan
[ Post Reply | Private Reply | To 72 | View Replies]

To: InterceptPoint

Not nervous at all.

I do enjoy watching you anti-Trump people walking the razors edge though.

Vote Trump 2016


84 posted on 05/06/2016 7:30:38 AM PDT by TheStickman (If we don't elect a PRO-America president in 2016 we lose the country!)
[ Post Reply | Private Reply | To 10 | View Replies]

To: Beernoser

Many interesting antidotes from Germany following the Weimar collapse.

When money dies is a worthy read for anyone interested. free PDf available at Mises.org. the diary of Frau Eisenmenter is another facinating read of post WWI Life in Vienna dealing with currency collapse. Also a free read PDFS.


85 posted on 05/06/2016 7:31:35 AM PDT by zek157
[ Post Reply | Private Reply | To 67 | View Replies]

To: Brilliant
Greek strategy has been let the Greeks take it up their collective backside and gain loans that immediately transfered to other European banks outside of Greece. Greeks gained nothing but more obligations that cannot be serviced. Other banks remain solvent albeit temporarily.
86 posted on 05/06/2016 7:38:10 AM PDT by zek157
[ Post Reply | Private Reply | To 66 | View Replies]

To: reaganaut1
One of the many alternatives used in the REAL business world.

Unfortunately, in the past, the Government uses only "bailouts" at the expense of the taxpayers to solve thier problems.

My point: THEY do NOT lose... the taxpayers DO.

87 posted on 05/06/2016 7:39:04 AM PDT by VideoDoctor
[ Post Reply | Private Reply | To 1 | View Replies]

To: reaganaut1

We have 94 million people out of work.

The tax revenues from them being employed would be $2 trillion per year into the government coffers.

That would reduce the debt rather decently.


88 posted on 05/06/2016 7:41:14 AM PDT by DoughtyOne (He wins & we do, our nation does, the world does. It's morning in America again. You are living it!)
[ Post Reply | Private Reply | To 1 | View Replies]

To: central_va

End users pay all tariffs and taxes levied against goods and services.

That would be us.


89 posted on 05/06/2016 7:41:19 AM PDT by buffaloguy
[ Post Reply | Private Reply | To 22 | View Replies]

To: randita

Keep walking dead with the status quo isn’t much of an option, but it does keep some happy in the matrix.

I suspect you have no idea what Trump is trying to avoid.


90 posted on 05/06/2016 7:41:44 AM PDT by zek157
[ Post Reply | Private Reply | To 15 | View Replies]

To: exit82
Careful there Road Runner,

Speaking the TRUTH, as you done in post #50, could scare hell out of those who have nary a clue.

Very good explanation of the oncoming situation.

91 posted on 05/06/2016 7:43:28 AM PDT by VideoDoctor
[ Post Reply | Private Reply | To 50 | View Replies]

To: Dr. Sivana

Very easy actually. Since the government owes it to the government they just dont pay it. Do you realize that the government owing the government is simply an accounting fiction? Bonds held by SS must be paid back by the US government who must get the money by using taxes or borrowing.

There is no trust fund the bonds mean nothing. Today’s SS recipients get their money directly from today’s workers. If there isnt enough money to go around then either benefits get cut or taxes go up. In other words SS is just like any other welfare scheme. Take from one to give to another to buy votes.


92 posted on 05/06/2016 7:43:49 AM PDT by FreedomNotSafety
[ Post Reply | Private Reply | To 2 | View Replies]

To: reaganaut1
We've managed to run our national credit card up to $20 Trillion which is more than everybody makes (our GDP) in an entire year - and we expect there are zero consequences for our complete irresponsibility as a nation?

Imagine if you made $50,000 a year, continued to spend $70,000 a year (putting the balance on your credit cards) and today had a credit card debt of $450,000. Where do you think that would lead - especially if your credit interest rate was 1% but was soon going up?

Let's face it. We've been totally screwed by our politicians. They have been spending our money and going into huge debt to get themselves re-elected. Both Parties have been playing the game and kicking the inevitable calamity down the road.

The complete economic crash will be coming soon. Trump is sending up the WARNING flags now. He sees it and so do most of us who are paying attention. The coming economic reckoning is a disaster and it can't be stopped without radical and massive surgery soon. It can only be mitigated if we miraculously get a booming economy (more revenue), massively cut our expenses (hugely doubtful), and start paying off our principle. And then we might have a chance if the interest rates stay historically low - and it will still take many years to do it.

It's bleak out there, folks, and Trump is only pointing it out. The Washington politicians sure won't.

93 posted on 05/06/2016 7:44:58 AM PDT by Gritty (Assent to obvious lies is co-operating with evil. A society of liars is easy to control.-T.Dalrymple)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Fai Mao

And you thought we could repay $19 trillion. :-)


94 posted on 05/06/2016 7:45:14 AM PDT by Georgia Girl 2 (The only purpose of a pistol is to fight your way back to the rifle you should never have dropped)
[ Post Reply | Private Reply | To 4 | View Replies]

To: zek157

I saw Trump talk about his plan to pay the debt yesterday with Brett. I got the impression that he was backtracking. He said there were a lot of options one of which was to refinance. I guess technically refinancing is paying the debt but you’re still stuck with debt when you refinance. Only the terms are different. And I don’t see refinancing as an advantage given that the debt is already financed at very low rates. He also said that we could discount the debt. I took that to mean that when interest rates go up the value of the debt will go down since its financed at such low rates. He wants to buy it back at that reduced price. But I don’t really see that as a way to pay off the debt in such a short period of time. Basically I got the impression that he doesn’t have a plan and didn’t really mean what he seemed to say.


95 posted on 05/06/2016 7:49:26 AM PDT by Brilliant
[ Post Reply | Private Reply | To 86 | View Replies]

To: GOPJ

Here’s what would happen:

The interest rate at which investors would be will ing to buy our bonds would go up. Perhaps 4 to 5% or more.

Alternatively, the cost of the bond would be discounted to reward risk taking behavior.

Example:

East St. Louis offered a 30 year bond at 45 with 7% interest.

So for every 450 bucks you sent them they would give you a 30 year 1,000 buck bond. You were paid 7% on the 1,000 face value.

I doubt that they were ever paid off. This was in the 70s.


96 posted on 05/06/2016 7:54:23 AM PDT by buffaloguy
[ Post Reply | Private Reply | To 51 | View Replies]

To: buffaloguy
That would be us.

More tariffs and less income taxes.

97 posted on 05/06/2016 7:56:53 AM PDT by central_va (I won't be reconstructed and I do not give a damn.)
[ Post Reply | Private Reply | To 89 | View Replies]

To: buffaloguy

When we start to ‘default’ (if we stay on the same ‘greek’ path we’re on now) it would be MUCH worse than what you’ve outlined. Besides, I suspect you’re overstating a tad...


98 posted on 05/06/2016 8:07:24 AM PDT by GOPJ (Imagine the shrieking MSM outrage if Trump supporters had tried to flip a car... David French)
[ Post Reply | Private Reply | To 96 | View Replies]

To: TheStickman

I do enjoy watching you anti-Trump people walking the razors edge though.
++++
I have no idea what you mean by that.

For the record I am:

A Ted Cruz supporter.
A Donald Trump in 2016 supporter.
I’m voting for Trump in November.

Question: Do these credentials allow me to criticize our candidates policy positions?


99 posted on 05/06/2016 8:12:03 AM PDT by InterceptPoint
[ Post Reply | Private Reply | To 84 | View Replies]

To: InterceptPoint

>> Another really kookie idea from Trump <<

How dare you imply that Mr. Trump doesn’t know squat about how an economy operates!

Do you not realize that Mr. Trump is the greatest economic genius since Karl Marx?

Moreover, he’s the greatest financial genius since Walter Bagehot.

Shame on you. Tut, tut.


100 posted on 05/06/2016 8:15:52 AM PDT by Hawthorn
[ Post Reply | Private Reply | To 10 | View Replies]


Navigation: use the links below to view more comments.
first previous 1-20 ... 61-8081-100101-120 ... 141-155 next last

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson