“Wrong,” Donald Trump responded when Hillary Clinton pointed out the real estate mogul said he would try and negotiate down the national debt.
But in an interview with CNBC in May, Trump said, “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.”
When asked (twice) in follow up questions if he was saying he wanted to renegotiate the debt, he replied, “No, I don’t want to renegotiate the bonds, but I think you can do discounting. I think depending on where interest rates are, I think you can buy back. I’m not talking about with a renegotiation, but you can buy back at discounts, you can do things at discounts. I’m not even suggesting that we don’t borrow money at very low rates long term so we don’t have to worry about when they come due.”
Economists say Trump’s plan isn’t realistic and the mere suggestion would have dramatic negative impacts.
“The prospect of investors in U.S. debt accepting less on the dollar than they are owed could tank the economy,” NPR reported.
It also wouldn’t reduce the debt.
“It would not move the needle at all on the overall debt,” Lou Crandall, chief economist at Wrightson ICAP, told the New York Times.
“If the U.S. were running a deficit and interest rates rose, the government could buy back its debt at discount prices,” Guy LeBas, chief fixed income strategist at Janney, told NPR. “But then it would have to issue more debt at a higher interest rate to fund the buyback, which would be a wash.”