At last count, the United States’ national debt is more than $36 trillion, more than a fourth of which was racked up during Donald Trump’s first term in the White House. The president has vowed to lower the debt — though he’s never said how or when he intends to do so.
It was against this backdrop that Trump broke new ground over the weekend, telling reporters that the nation’s $36 trillion debt might actually be inflated by possibly fraudulent debt payments. Reuters reported:
Speaking to reporters aboard Air Force One, Trump said administration officials who have been combing through payment records in an effort to identify wasteful spending have turned their attention to the debt payments that play a central role in the global financial system.
“We’re even looking at Treasuries,” the Republican said. “There could be a problem — you’ve been reading about that, with Treasuries and that could be an interesting problem.”
For some reason, the president went on to add, “It could be that a lot of those things don’t count. In other words, that some of that stuff that we’re finding is very fraudulent, therefore maybe we have less debt than we thought.”
His comments were, for all intents and purposes, gibberish. But more importantly, they were also potentially dangerous.
“For those not familiar with how financial markets work, US Treasuries are the ultimate safe asset, used as collateral for everything,” economist Paul Krugman explained. “Even a hint that some Treasuries might not be honored could bring everything to a screeching halt.”
The Nobel laureate added that the president and Elon Musk both have a habit of stiffing people they owe money to, and “if markets even suspect that this habit will extend to Treasuries, God help us.”
It didn’t take long for an administration official to start walking back Trump’s comments, telling a Politico reporter that he wasn’t talking about U.S. Treasury notes, but rather, federal payments made by the U.S. Treasury.
Given the actual words the president spoke — out loud and on the record — the walkback seemed exceedingly difficult to believe, but the White House likely realized that it had to clean up the comments before international markets started freaking out.
And so, the potential controversy over Trump’s comments quickly fizzled. As TPM’s Josh Marshall summarized, “[T]his will just end up being something Old Man Trump said on a plane.”
But let’s not brush past the story too quickly. An incident like this one reinforced some key fears about Trump’s understanding of details he really ought to know.
After all, if there’s one thing he should have some basic understanding of, it’s U.S. debt and treasuries — not just because he’s already served a full term as the nation’s chief executive, and not just because he was responsible for adding nearly $8 trillion to the debt (most of it before Covid), but also because Trump, whose businesses have repeatedly filed for bankruptcy, has repeatedly claimed to have some expertise in this area.
The incumbent president is the self-described “King of Debt,” relying on banks and borrowing to finance his business operation for many years.
If Trump thinks he can pretend the nation’s debt load is smaller by pointing to “fraudulent” treasury notes that don’t exist, the political world needs to appreciate the fact that he’s playing with fire that will burn everyone.
