Trump's ideas on debt would devastate U.S., global economy

Story highlights

  • Errol Louis: Trump claims he can erase U.S. debt by selling off $16 billion in assets. Problem? It's not nearly enough
  • If economy crashed, Trump said, he'd 'make a deal.' Louis: that would crash global economy, is unconstitutional

Errol Louis is the host of "Inside City Hall," a nightly political show on NY1, a New York all-news channel. The opinions expressed in this commentary are solely those of the author

(CNN)Among the many generally accepted rules of politics that Donald Trump routinely flouts is the notion that a political leader's ideas, promises and pronouncements should remain coherent and consistent after they've been offered up publicly.

But on Trump's signature issue -- his professed ability to stimulate the nation's sluggish economy and eliminate the national debt -- he is anything but consistent, and his verbal maneuvering this week went from wobbly to downright alarming.
    "I have a strong core, but I've never seen a successful person who wasn't flexible," Trump said at one of the presidential debates. But there's a fine line between flexible and incoherent.
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    "We've got to get rid of the $19 trillion in debt," Trump says often, reflecting the longstanding concern of fiscal conservatives that our country is saddling future generations with high taxes and onerous interest payments. Trump claims he can eliminate the debt within eight years, an extraordinary promise—and with little to support it.
    Even if the sluggish economy suddenly jumped to white-hot levels, economists estimate the resulting tax revenue would not be nearly enough to pay down more than $4 trillion in eight years. Confronted with this fact, one of the candidate's supporters suggested Trump could sell off $16 trillion in national assets to retire the debt -- an intriguing idea, except the Government Accountability Office values the government's assets at only $3.2 trillion, not nearly enough.
    The fact-checkers at the Washington Post recently branded Trump's promise as utterly dishonest: "We regret we have only Four Pinocchios to give for this whopper. Trump is insulting the intelligence of Americans for making such a claim in the first place."
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    Not only has Trump not backed down from the promise, his economic plan calls for deep tax cuts and additional government borrowing that would actually make the debt even higher -- after which, the candidate says, he would negotiate the nation's obligations down to a manageable level.
    "I would borrow, knowing that if the economy crashed, you could make a deal," Trump told a business reporter. "And if the economy was good, it was good. So therefore, you can't lose."
    That's wrong, of course: there's no such thing as "making a deal" to honor U.S. government bonds. The Constitution explicitly rules out dealmaking around the debt: The 14th Amendment specifies that "The validity of the public debt of the United States, authorized by law...shall not be questioned."
    Beyond the legal prohibition is the practical matter of what it would mean to crash the global economy, which relies upon U.S. government bonds as a benchmark of safety and reliability. Back in 2011, when a major credit rating agency downgraded U.S. bonds in the middle of a Congressional budget standoff -- in effect, suggesting the government was slightly less likely to repay its debts -- stock markets slumped immediately, wiping out billions in in value.
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    After an uproar following his "make a deal" comment, Trump tried to walk back the idea. But the flap underscored how much the candidate's thinking on taxes and debt keeps changing.
    Back in 2000, in a book called The America We Deserve, Trump offered yet another path to retiring the debt: imposing a one-time 14.25% megatax on individuals and trusts worth $10 million or more, in exchange for ending the inheritance tax forever. If enacted, wrote Trump, the move would raise $5.7 trillion, enough to pay off the national debt at that time.
    That idea has been dropped from the Trump playbook. What remains of his claim to retire the debt in eight years is anybody's guess.
    "I understand debt better than probably anybody. I know how to deal with debt very well," Trump recently told CNN. "I love debt -- but you know, debt is tricky and it's dangerous, and you have to be careful and you have to know what you're doing."
    Trump claims that he knows what he's doing. The trick is getting him to explain it to the rest of us.