(CNN)Donald Trump declared Monday the U.S. never has to default on debt “because you print the money,” while trying to clarify his strategy for managing the national debt.
Trump insisted that he never said the U.S. should default or attempt to renegotiate with creditors, as had been reported.
‘The king of debt’
Split with establishment
As Trump’s high-profile back-and-forth with House Speaker Paul Ryan last week highlighted, a wide ideological gap exists between Trump and “establishment” Republican types over debt and entitlement reform.
Ryan won his post as House speaker in part by outlining an orthodox conservative policy agenda centered on these issues.
And in an interview with CNBC in March — long before Trump became the GOP’s presumptive nominee — Ryan defended his support for entitlement reform.
“I believe that if we do not prevent Medicare from going bankrupt, it will go bankrupt,” he said. “And that will be bad for everybody. We have to tackle our debt crisis. We have to tackle the drivers of our debt. And I think, I hope, that whoever our standard bearer’s going to be will acknowledge that.”
Trump, for his part, vowed during a Republican presidential debate on CBS in February that he would “not touch” entitlements, saying, “I will do everything within my power not to touch Social Security, to leave it the way it is.”
Grover Norquist, a Republican who leads the anti-tax group Americans for Tax Reform, defended Trump’s debt-reduction comments on CNN on Monday, though he warned conservatives must preserve their traditional commitment to spending cuts and reform.
Asked specifically about Trump’s remark that the U.S. will never default on its debt because it can always print more money, Norquist said: “Well, that’s just stating a fact. It’s what the United States government has been doing for quite a number of years is printing more money.”
“Is it a good thing to do? No. Is it where you want to be? No. Is it what governments do over time? He’s quite correct, that’s what they tend to do,” he said.
“(But) when somebody says this is the way governments have behaved, that’s not necessarily an argument that that’s what they ought to do — what we should do is reduce spending as well as create growth.”
‘Make a deal’
Trump had kicked up a firestorm in economic and political circles when, in an interview last Friday on CNBC, the presumptive Republican nominee seemed to suggest that rather than pay its outstanding national debt in full, the country could renegotiate.
“There’s nothing like it actually, it gives me a great thrill. But in the United States with bonds, that won’t happen because you know in theory the market doesn’t go down so that you default on debt, and that’s what happens.”
Whether through debt buyback or restructuring, neither of Trump’s debt-reduction proposals from the past week square with his party’s core approach on the issue — deep spending cuts and entitlement program reform.
The Republican Party’s official platform argues the U.S.’s looming “debt explosion” should be averted through “immediate reductions in federal spending, as a down payment on the much larger task of long-range fiscal control.”
These cuts “must be accompanied by major structural reforms,” according to the platform, and pointing to programs such as Medicare, Medicaid, and Social Security, the GOP argues that “we must restructure the twentieth century entitlement state.”
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