On Thursday, Donald Trump’s tweet about tacos was only the second-most alarming message he sent to potential voters. Less open to humorous interpretation was his threat to default on U.S. debt in the event of a recession.
“I’ve borrowed knowing that you can pay back with discounts,” he told CNBC. “I would borrow knowing that if the economy crashed, you could make a deal.”
This policy would be so disastrous that even its suggestion is dangerous. In the event of a recession, Trump would treat the full faith and credit of the United States to a capricious hair cut. As Josh Barro explained, this wouldn’t just represent a historic default, putting the U.S. in the position of a country like Greece or Argentina; it could also spark an international financial crisis, as “investors would cease to see Treasuries as a safe asset and demand higher interest rates in exchange for risk.”
Trump has promised to make America great again. But a closer look his policy proposals, such as they are, suggests that within his first few years as president, he would more likely make American recessionary again.
The problem begins with his outspoken approach to Mexican immigration. His “plan” to deport 11 million undocumented immigrants would shrink the economy by about 2 percent, according to American Action Forum (AAF), a conservative and pro-business think tank. The sudden subtraction of 7 million workers would cause an immediate shock to thousands of businesses, triggering a GDP collapse ranging from $400 billion to $600 billion in production, AAF’s analysis found, with the worst of the slump occurring in industries like construction and hospitality. “The things Donald Trump has said are utterly unworkable,” Douglas Holtz-Eakin, an economic adviser to Senator John McCain’s 2008 presidential campaign and the forum's president, told Reuters.