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During the first presidential debate, Hillary Clinton and Donald Trump fought about his statements on the national debt.
Clinton said, "You even one time suggested that you would try to negotiate down the national debt of the United States." As she spoke, Trump interjected, "Wrong. Wrong."
We did not get a reply from the Trump campaign on the night of the debate. The Trump campaign also did not respond when we looked at his debt comments in May.
Clinton is correct that Trump did talk about negotiating down the debt, but he backtracked on his views after economists panned his idea.
Trump’s debt statements
Clinton’s attack stems from comments Trump made about the national debt in two separate interviews in May.
Trump’s initial remarks came in an interview with CNBC’s Andrew Ross Sorkin and Becky Quick on May 5, 2016.
Sorkin: "Mr. Trump, you talk about debt. And you are to some degree the king of debt. I appreciate that point. You have also renegotiated debt agreements over the years. Do you believe that we, in terms of the United States, need to pay 100 cents on the dollar, or do you think that there's actually ways that we can renegotiate that debt?"
Trump: "Yeah, I think -- look. I have borrowed, knowing that you can pay back with discounts. And I have done very well with debt. Now, of course, I was swashbuckling, and it did well for me and it was good for me and all that. And you know, debt was sort of always interesting to me. Now we're in a different situation with the country. But 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. It's like, you know, you make a deal before you go into a poker game, and your odds are so much better." ...
Quick: "I understand that you've done this in business deals, but are you suggesting we would negotiate with the U.S. credit in such a way?"
Trump: "No, I think this. I think there are times for us to refinance. We refinance debt with longer term. Because you know, we owe so much money. … I could see long-term renegotiations, where we borrow long-term at very low rates." ...
Quick: "But let's be clear. I mean, you're not talking about renegotiating sovereign bonds that the U.S. has already issued?"
Trump: "No. I don't want to renegotiate the bonds. But I think you can do discounting, I think, you know, depending on where interest rates are, I think you can buy back. You can -- I'm not talking about with a renegotiation, but you can buy back at discounts, you can do things with discounts. … I would refinance debt. I think we should refinance longer-term debt."
The second comments came in an interview with the Wall Street Journal, on May 9, 2016.
Trump: "I’m only saying you can buy back. Look, this isn’t a real estate deal where you can go in and buy out a mortgage at a big discount because the market crashes, okay? This is the United States government. The bonds are absolutely sacred. … I’m saying if interest rates go up, you can buy debt at a discount on the market — just on the market. You just buy back debt on — at a discount."
Wall Street Journal: "And so the U.S. government should spend its money to go buy back its bonds and --"
Trump: "Well, if they can make good deals. If they can buy the debt back at good deals, you could buy it back in the market. And if rates go up, you’ll always — you’re always given that opportunity. But no, I’m not talking about negotiating with — with people that own the debt or creditors or anything like that."
He tried to clarify his remarks in an interview on CNN May 9, and said that his comments had been misrepresented by the media.
"If interest rates go up and we can buy bonds back at a discount, if we are liquid enough as a country, we should do that. In other words, we can buy back debt at a discount," he said. "People said I want to go and buy debt and default on debt, and these people are crazy."
Experts told PolitiFact in May that Trump’s statements were unclear and that he confused the concepts of "discount," "refinance," and "renegotiate." (We provided a more detailed discussion of the consequences of what he seemed to argue for in this article.)
"The statements are neither clear nor coherent," said Paolo Mauro, a senior fellow at the Peterson Institute for International Economics and a visiting professor at Johns Hopkins University Carey Business School when PolitiFact asked him about it in May.
On the night of the first presidential debate, Dean Baker, an economist with the left-leaning Center for Economic and Policy Research, said that Trump’s comments "didn’t make any sense."
"The U.S. has the strongest possible credit rating because it has always paid its debt," he said. "It would pay an enormous price if he tried to negotiate a write-down. We would pay higher interest rates for many decades in the future.More importantly, with the ratio of interest payments to (gross domestic product) at 50-year lows, it is hard to see why anyone would try to do this."
"No one on the other side would pick up the phone if the secretary of the U.S. Treasury tried to make that call," said Lou Crandall, chief economist at Wrightson ICAP, a firm that analyzes Federal Reserve operations, economic data and Treasury financing trends, told the New York Times. "Why should they? They have a contract" requiring payment in full.
Clinton said Trump one time suggested that he "would try to negotiate down the national debt."
In two separate interviews in May, Trump suggested that he could do something to negotiate federal debt through "discounting" and that he would "refinance debt" and "buy back debt on — at a discount." He backtracked after criticism, saying his words had been misinterpreted.
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PolitiFact, "A closer look at Donald Trump's comments about refinancing U.S. debt," May 16, 2016
CNN, "Why Donald Trump's debt proposal is reckless," May 9, 2016
CNN, "Trump: U.S. will never default 'because you print the money,'" May 10, 2016
New York Times, "Donald Trump’s Idea to Cut National Debt: Get Creditors to Accept Less," May 6, 2016
Washington Post editorial board, "Donald Trump sets a new record for economic recklessness," May 6, 2016
Washington Post, "Amid alarm, Trump tries to clarify economic proposals," May 10, 2016
Politico Wrongometer, "Trump in denial about his own debt comments," Sept. 26, 2016
Interview, Josh Schwerin, Hillary Clinton campaign spokesman, Sept. 26, 2016
Interview, Dean Baker, economist with the Center for Economic and Policy Research, Sept. 26, 2016
Interview, Eric Rauchway, Professor of History, University of California Davis, Sept. 26, 2016
Interview, Jeffrey Frankel, Harvard University, Professor of Capital Formation and Growth,Sept. 26, 2016
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