Trump plans to add $5.088 trillion to the debt in his first term
Trump had promised to eliminate the debt during his campaign. If he remains in office for a second term, he plans to add $9.1 trillion.
Trump has a cavalier attitude about the nation’s debt load. During the campaign, he said the nation could “borrow knowing that if the economy crashed, you could make a deal.”5 He added, “The United States will never default because you can print the money.”
Trump thinks about the national debt as he does personal debt. A 2016 Fortune magazine analysis revealed Trump’s business is $1.11 billion in debt.6 That includes $846 million owed on five properties. These include Trump Tower, 40 Wall Street, and 1290 Avenue of the Americas in New York. It also includes the Trump Hotel in Washington D.C. and 555 California Street in San Francisco.
But sovereign debt is different. The World Bank compares countries based on their total debt-to-gross domestic product ratio. It considers a country to be in trouble if that ratio is greater than 77%. The U.S. ratio is 104%. That’s the $21.516 trillion U.S. debt as of September 28, 2018, divided by the $20.658 trillion nominal GDP.7
On February 11, 2019, the U.S. debt exceeded $22 trillion. That puts the U.S. debt-to-GDP ratio at 108%.
The United States also has a massive fixed pension expense and health insurance costs. A business can renege on these benefits, ask for bankruptcy, and weather the resultant lawsuits. A president and Congress can’t cut back those costs without losing their jobs at the next election. As such, Trump’s experience in handling business debt does not transfer to managing the U.S. debt.
A budget deficit occurs when a country, business, or an individual has spending that is greater than the revenue they receive over a specific period—usually measured as a year. When spending exceeds revenue—or income—it’s called deficit spending. On a government-level, the national debt is the accumulation of each year’s deficit. For a business or individual, this would be their total debt.
When the revenue exceeds the spending, it creates a budget surplus. A surplus will reduce debt.
The U.S. Treasury must sell Treasury bonds, bills, and notes to raise the money to cover the deficit and fund regular government operations. This type of financing is known as public debt since these bonds are sold to the general public. Treasury debt is considered one of the most secure investments in the world because these debt securities have the backing of the U.S. government.
In addition to the public debt, the government regularly loans money to itself. This intragovernmental debt is in the form of Government Account Series securities. Most of these funds come from the Social Security Trust Fund.
During the 2016 presidential campaign, Republican candidate Donald Trump promised he would eliminate the nation’s debt in eight years.1 Instead, his budgets would add $9.1 trillion during that time. It would increase the U.S. debt to $29 trillion according to Trump’s budget estimates.2
For example, they can borrow from federal retirement funds. The Social Security Trust Fund has run a surplus since 1987.2 More working people contributed via payroll taxes than retired people withdrew in benefits. The Fund invests its surplus in U.S. Treasury notes. The president can reduce the deficit by spendingthese funds instead of issuing new Treasury securities. It doesn’t, however, reduce the debt.
House Nears Historic Impeachment; Trump Cries ‘Perversion’
On the eve of his all-but-certain impeachment, President Donald Trump fired off a furious letter to House Speaker Nancy Pelosi denouncing the “crusade” against him.
In the fiercely accusatory, sometimes rambling six-page letter,
Trump defended his “absolutely perfect” phone call with the Ukraine president that sparked the impeachment inquiry. He also tried to justify anew the Ukrainian investigations he wanted into Democratic rival Joe Biden while withholding military aid from the vulnerable U.S. ally and disputed the charges of abuse of power and obstruction of Congress’ investigation in the charges against him.
“Ÿou are the ones bringing pain and suffering to our Republic for your own selfish, personal political and partisan gain,” Trump contended, accusing Democrats of “Trump Derangement Syndrome” while still smarting from their 2016 election losses.