Presumptive Republican nominee Donald Trump floated a controversial idea to cut the United States’ national debt on Thursday, suggesting he might try to convince creditors to accept less than full payment under certain circumstances.
Critics of Trump’s idea have likened the plan to “structured bankruptcy.”
Trump's idea for paying back the national debt is basically "Use the bankruptcy laws to further our success!" https://t.co/mEUpmUbJJ4— Kyle Feldscher (@Kyle Feldscher)1462543066.0
Trump sees debt as a free put option. https://t.co/D8HWElOhkt https://t.co/zgJ3UBAxKt— Joe Weisenthal (@Joe Weisenthal)1462540107.0
It was during an interview with CNBC on Thursday that Trump was asked if the U.S. should repay its debts in full or attempt to establish a lower repayment agreement. The Republican replied, "I would borrow, knowing that if the economy crashed, you could make a deal."
"And if the economy was good, it was good. So, therefore, you can't lose,” he continued.
The New York Times reported that “such remarks by a major presidential candidate have no modern precedent.”
More from the report:
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.
Trump also seemed aware of what even a moderate interest rate increase to the country’s national debt would do to the U.S. government.
"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,” he said.
The U.S. currently has a national debt of nearly $19.3 trillion.