In truth, Trump’s suggestion is much more of a musing than an actual plan. His entire comments Wednesday morning on CBS were contradictory and at times incoherent. “I’m the king of debt. I’m great with debt!” he said at first, embracing a label that Hillary Clinton seized on during her anti-Trump economic speech on Tuesday. “Nobody knows debt better than me. I’ve made a fortune by using the debt. If things don’t work out, I renegotiate the debt. That’s a smart thing, not a stupid thing.”
Trump’s argument: Debt is good, and so is renegotiating it. “You go back and say, hey guess what, the economy just crashed. I’m going to give you back half,” he said.
But then he switched, clarifying that what’s good for Trump is not necessarily good for the country. “I like debt for me. I don’t like debt for the country. I like debt for my company. I don’t like debt for the country,” he said. “We are sitting on a time bomb,” Trump continued, pointing out that the national debt has soared in recent years to more than $19 trillion. “We have to start chopping that debt down.”
Debt is bad. Got it?
Then Trump shifted again, emphasizing that “chopping that debt down” or offering to pay less was not renegotiating it. “I wouldn’t renegotiate the debt,” he said. “That’s a different thing. That’s just a corporate thing.”
“So I wouldn’t do that,” Trump added. “But I think it could be a good time to borrow, and pay off debt. Borrow debt. Make longer-term debt.”
The most charitable explanation of Trump’s idea is that he would seek to restructure the nation’s debt in a way that would benefit the economy just like he did with corporate debt as a businessman. But of course, at times during that interview he said he would do no such thing.
There are a couple of risks associated with Trump’s lack of clarity. The first is that in the financial world, idle speculation from current or would-be presidents can have actual effects on financial markets, which can cost real people real money. Trump’s low standing in the polls at the moment may mitigate any fallout, but the closer he gets to Clinton and the closer it gets to November, the greater the impact these comments could have. The second is that most U.S. voters are not financial experts, and Trump’s suggestion for restructuring, or renegotiating, or just not paying all of the nation’s debt sounds great in theory—especially when politicians of all stripes have made the debt ceiling sound like an average credit card. (Just make the minimum payment!)
Trump could help clear things up by putting out an actual plan and explaining how he intends to run the nation’s finances. But unless he commits to staving off an unprecedented default, he probably won’t satisfy economists or the markets, even if his tough talk and business savvy sounds appealing to regular people.