Trump Finds a Way to Be Just a Bit More Unhinged than the Republican Establishment Is About the Federal Debt

Posted in: Tax and Economics

Late last week, the world wondered whether Donald Trump would begin to sound at least a tiny bit responsible in his comments, now that he is the Republican nominee-apparent. It took no time at all for Trump to disabuse people of the idea that he has a substantive side hidden beneath his carnival barker id.

The most egregious example of Trump’s detachment from reality—with plenty of competition, of course—was his claim two days after locking down the Republican nomination that he would reduce the federal government’s debt simply by repudiating it.

Although Trump did not use the word “repudiation,” there was no doubt what he meant. As one news report described Trump’s bombshell: “Asked on Thursday 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.’”

The response to Trump’s irresponsible comments has been appropriately harsh. Even the reporter who wrote the straight news report that I linked above, who tried mightily not to put an editorial gloss on the story, could not help reporting the many ways in which Trump’s idea was indefensible.

Far be it from me to disagree with any of the negative commentary about Trump’s latest attempt to prove that he is unfit for the presidency. Instead, in this column I will describe why Trump has already backed away from those indefensible statements about the debt, and I will then explain why Trump’s public statements about the public debt are not appreciably worse—and are certainly no more ill informed—than the views of the supposedly responsible leaders of the Republican Party.

To be clear, what Donald Trump said about the federal debt last week is absolutely, completely, and shockingly irresponsible. And his walk-back this week, as I explained yesterday on the Dorf on Law blog, is in some ways worse than his original off-the-cuff comments.

The deeper problem, however, is that Trump has far too much competition when it comes to speaking nonsense about the national debt. Amazingly, all of that competition is coming from people (mostly in the Republican Party, but some Democrats as well) who think themselves quite wise when it comes to discussions of government borrowing.

Is Trump Engaged in Performance Art, Rather Than Policy Discussions?

It might have been reasonable to expect (or at least hope) that Donald Trump, once he had vanquished his opponents in the Republican primaries, would morph into a responsible presidential contender. At some point, he would have to admit that he will not build a wall between Mexico and the United States, and that he could not force Mexicans to pay for that wall (or retaliate against them for their refusal to pay, by making the wall ten feet higher). Right?

Even if he is engaged in an elaborate fraud, however, now is not the time for Trump to change his tune. His announced plans for his “first 100 days” include his own extreme views (designing the wall, banning Muslims from entering the United States) and off-the-shelf Republican staples (harass—er, audit—the Federal Reserve, try to repeal the Affordable Care Act, and so on). Trying to establish himself as a man with views acceptable to his adopted party is generally not a stretch.

If Trump were to decide to act like a normal candidate, he would start to shade some of those views. He is anything but normal, however, and he has millions of fired-up supporters. He also has six months in which to play out the rest of his scam. As of now, he seems not to be expending any effort to make himself more electable.

On the other hand, Trump appears to have few policy positions that actually motivate him. He knows that he wants America to “win again,” whatever that means, but he has never really bothered to formulate views on a wide range of issues. Instead, he seems to grab onto ideas that seem popular and that sound conservative to him, and despite his reputation for not backing down, he is actually more than willing to change positions on the fly when he finds it necessary to do so.

For example, one of the many mini-brouhahas that have trailed the Trump campaign focused on abortion. Trump, who once called himself pro-choice, announced more recently that he is anti-abortion. Even so, reproductive rights have never been on his radar screen as a candidate, and true-believing religious conservatives were understandably wondering whether Trump actually shared their views.

In March, Trump was asked in an interview whether women who seek abortions should be criminally prosecuted. It was clear that Trump had never thought for even a moment about the issue. One could almost hear the wheels whirring in his head as he formulated an answer, based on a thought process that might have gone something like this:

“Hmmm. I know that I’m now saying that I’m against abortion. That means that abortions should be illegal. People who do illegal things must be prosecuted. These rubes like that law-and-order stuff. So I guess that must mean I’m in favor of prosecuting women who break the anti-abortion laws that I’ll probably sign, not that I really care one way or the other.”

Trump then learned that highly motivated anti-abortion voters actually do not want to prosecute women who seek abortions. One can actually feel some sympathy for Trump on this issue, because he really was simply trying to follow a logical progression, not knowing that the clear implication of the anti-choice logic was politically toxic with his target audience. He quickly changed course, and within the last few days he has made further comments on the abortion issue that are so incoherent that they would embarrass a person who was capable of self-doubt.

The point is that Trump is simply uninformed (apparently about everything), and he has shown no inclination to become better informed even on the issues that voters care about most. (If evidence or logic mattered to Trump, after all, he would have changed his views on immigration long ago.) He picks up other peoples’ assertions and uses them as his own without thinking beyond the moment.

Even Trump’s views on taxes fall amusingly into this category of bad ideas that Trump stole from others. As I noted in a Verdict column last Fall, “[i]t would be inaccurate to characterize what he described as an actual ‘proposal’ or even a ‘plan,’ because such labels suggest a level of detail and careful policy coordination that Trump rejects.”

In that column, I cited a business writer for The New York Times, who pointed out that the Trump proto-plan was “essentially the same [as Bush’s] plan, but bigger.” Trump had no particular reason to glom onto Bush’s proposal, which simply mucked around with the tax system to make it much less progressive, as opposed to Ted Cruz’s plan, which proposed a radical change in the entire tax system to make it much less progressive. Why should Trump care either way?

Strangely enough, however, Trump took the plan that falsely appeared to be safe and moderate, because it came from Bush, and then he made it even more damaging. Trump thus showed once again that he is able to mimic at a superficial level that which he hears, without understanding it.

In fact, Trump has more recently said that he is “not necessarily a huge fan of” the tax cuts for billionaires that he had previously supported, and he has punted the issue by saying that his tax plans will be negotiated later. And even though he is actually not at all a good businessman, and he is most assuredly not the great dealmaker that he claims to be, we are supposed to believe that Trump will negotiate a “beautiful” tax plan that will triple the country’s economic growth rate.

The Safe, Superficial, Damaging Republican Consensus on the Federal Debt

As with his views on abortion and taxes, so too with the national debt. Trump simply listens to people just barely long enough to form an opinion that he can repeat ad nauseam (or, as necessary, abandon without shame). On the issue of the federal government’s debt, it is actually quite easy to figure out what the safe position is: Denounce debt, and talk about how government borrowing will ruin us all!

Again, Trump has evidently not thought beyond that talking point, but then again, neither have any of his former opponents (and current intra-party antagonists). Nearly every Republican, from Rand Paul to Paul Ryan to John Kasich to Mitch McConnell, repeats over and over that the federal debt is $19 trillion, without admitting that “gross debt” is meaningless and without putting the level of debt in the context of the overall economy or explaining the disastrous consequences of trying to reduce the debt.

In a Verdict column last October, I described an appearance by Donald Trump on “The Late Show with Stephen Colbert,” in which Trump tried to sound serious. And what could be a more serious topic than the national debt? The problem is that Trump simply announced that someone had told him (“they say”) that there is a “magic number” of $23 or $24 trillion, and if the U.S. debt rises beyond that level, “we become a large-scale version of Greece, and that’s not good.”

The level of ignorance here is beyond belief. Again, however, how is this really different from supposedly serious Republicans? For example, now-failed presidential candidate John Kasich’s entire economic plan revolved around adopting a balanced budget amendment to the United States Constitution, without ever explaining why that would be a good policy—or, more importantly, how we should actually change our fiscal policies to live within the Constitution after it was amended. (“Reduce and control spending of the Washington bureaucracy,” which was Kasich’s big idea on his website, is positively Trumpian in its superficiality.)

The Repudiation Game: Trump Wants to Walk Away From the Nation’s Debt

As I noted at the beginning of this column, however, Trump finally did figure out a way to saying something about the federal debt that was surprisingly new and categorically more inane than anything Republican leaders have said to date. Don’t like owing $19 trillion? Negotiate it down! Trump, after all, is infamous for entering into business deals and then forcing onerous changes in terms on his victims/partners. Why should the federal debt be any different, Trump apparently wonders.

Unsurprisingly, there are plenty of reasons that the federal government cannot simply refuse to pay its debts in full and on time. Those reasons include the effects of debt repudiation on the government’s ability to borrow in the future, the consequences for financial markets and homeowners of a financial crisis, and on and on.

Indeed, debt repudiation is the one thing that I thought everyone would agree was a terrible idea. (And as I noted above, Trump now seems to have changed his tune, although his new song is equally discordant.) Many readers might recall the painful series of debt-ceiling crises that brought the country to the brink of a constitutional crisis several times over the last few years. (Note: Those bad old days might well return next March, if Donald Trump fulfills his destiny by losing to Hillary Clinton in November without managing to lose the Republicans’ majority in the House of Representatives. Republicans, after all, are champing at the bit to force Clinton into a constitutional crisis.)

In the early stages of the first go-round on the debt ceiling in 2011, much of the debate centered on a clause in the Fourteenth Amendment that states that the “validity of the public debt of the United States … shall not be questioned.” The debate at that time centered on whether this Public Debt Clause applies only to outright repudiation of the debt, or whether it extends to anything that brings the validity of the debt into question.

In a series of law review articles in 2012-14, Professor Michael Dorf and I pointed out that one need not even reach the Public Debt Clause in analyzing the debt ceiling (even though we did endorse the view that the Fourteenth Amendment makes the debt ceiling statute unconstitutional). We ultimately concluded that a president who faced a binding debt ceiling would be forced either to exceed the debt ceiling by borrowing directly in the usual manner, or by telling the government’s creditors, “We can’t pay you today, but sit tight and we’ll get your money to you soon.”

Those are actually two different forms of borrowing money, and we pointed out that the only way out of that bind would be for the president simply to say, “We’re not paying you now, or ever.” If she were to do that, however, then even the most conservative reading of the Fourteenth Amendment would say that the president had violated the Constitution.

The Donald Trump of last week, however, would not even bother to wait for a political crisis. Whereas the question had previously been whether a Tea Party-led congressional blockade against increasing the debt ceiling would force the U.S. to default on its payments as they come due, Trump simply said, “Let’s make a deal, where you give me something and I give you nothing.”

To the surprise of no one, of course, Trump has now opportunistically changed course, pretending that he never said any of this. Which leaves him where, exactly? He would gain plaudits from his Republican critics by going back to their brand of nonsense, which would have the advantage of not causing an immediate crisis, but would nonetheless mean that Trump had returned to mouthing unexamined sound bites from people like House Speaker Paul Ryan.

In a Verdict column this past March, I noted that Senator Marco Rubio had claimed that “Social Security will go bankrupt and it will bankrupt the country with it,” and I pointed out that Rubio had lifted that talking point from repeated comments by Speaker Ryan. In that column, I explained why Social Security is most definitely not going bankrupt, but I set aside the question of whether “it will bankrupt the country with it.” That issue is front and center here.

Let us set aside the fact that, if the Social Security trust fund ever does reach a zero balance (which, again, is not “bankruptcy,” but which seems to be what people like Ryan and Rubio mean when they use that term), retirement benefits will automatically be reset to equal Social Security taxes. That is, there is no way that Social Security’s faux-bankruptcy could at all contribute to a long-term budget crisis, because from that point forward Social Security’s account would be forced into balance on an annual basis.

The larger point, however, is that people like Ryan, McConnell, and all the rest have been saying for years that the public debt is going to bankrupt the country. I have not heard anyone other than Trump invoke that “magic number” of $23 or $24 trillion, but every day those politicians claim that we have to dismantle important government programs like Medicare and Social Security in order to save the country from certain fiscal doom. The reality, at worst, is that health care spending will need to be reduced at some point in the decades ahead. But under current law, there is simply no debt crisis visible over any time horizon.

Of course, it is always possible to create a debt crisis. Estimates of Donald Trump’s vague tax “plan” suggest that he would add $1 trillion per year to the federal deficit, with no payoff to the economy as a whole. And if he really does think that he can strong-arm the federal government’s creditors the same way that he has blundered his way through his checkered business life, we will see what a real economic crisis looks like.

There is, of course, a simple solution: Keep Donald Trump as far away from the presidency as possible. Some Republicans have already reached that conclusion. The rest should do so as soon as possible.

7 responses to “Trump Finds a Way to Be Just a Bit More Unhinged than the Republican Establishment Is About the Federal Debt”

  1. G.N.M. says:

    While I agree that repudiating the federal debt would be irresponsible, it would be refreshing to hear the outgoing president even comment on it. He has been in large measure responsible for increasing it by several trillion dollars yet the topic seems not to concern him. He will leave that issue unresolved when he goes on to the speech circuit to begin his post-presidency money-raising. Mr. Buchanan rightly is concerned about what might happen to the debt under a Trump presidency, yet fails to mention what has happened to it under Obama. In fact, Mr. Obama’s name is not mentioned in this otherwise well-written article. Oh well.

    • Ted Harvatin says:

      You are talking facts. This political hack economist has no interest in anything other than spreading left wing talking points.

      • midway54 says:

        What a display of substance! Must have taken you about 15 seconds to frame a response a la Limbaugh or Hannity.

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    • Joe Paulson says:

      Not sure how much he personally was “in large measure responsible” … at the very least, you’d think Congress (with the power of the purse) would be at least equally so. He has “commented” on the federal debt. (I, e.g., did a search on the White House website & repeated references arose). Anyway, since Obama is not running, I am somewhat less concerned his name was not mentioned. I would instead focus on the fact you seem to agree with his criticism of Trump. Who is.

  2. Frank Willa says:

    Thank you Professor for the reality check on the notion of default. However, lately I have come to a view that Trump may not be all that shallow, but rather engaged in a very cynical tactic to “have it both ways”. For example, with regard to the abortion issue he makes a statement that he later repudiates; there are many conservative voters that are so extreme on this issue that to them punishment for the woman is not beyond the pale. He gets their attention and support and then walks it back. They have heard something they can support, and so he gains their vote- they will not change that they will vote for him, and the walk back keeps him in realm of more mainstream voters. The same seems to apply to the debt issue; he talks the default position and then softens the stance after gaining the support of the far right voter, and keeps the realistic ones.
    My recollection of how we got in the debt so deeply was that it was when Reagan quadrupled the debt during his term, Bush one increased it, Clinton paid down on it, Bush two exploded the debt, Obama has paid down on it. Republicans have been the drivers with the “supply side” policy that has never worked; it is the massive interest on the debt, and the reduced revenue of republican tax cuts that have put us int this position