Trump Urges Republicans to ‘Do a Default’
The Debt

Trump Urges Republicans to ‘Do a Default’

Reuters/Tom Brenner

The Donald Trump Show was back on TV last night as CNN hosted a controversial and at times testy New Hampshire town hall event with the former president, who is also the current frontrunner in the 2024 Republican presidential field.

Trump steamrolled the ratings-starved news network or dunked on it, depending on which metaphor and news purveyor you prefer. Either way, the point is that Trump lied and blustered his way through the event.

In short, Trump was Trump, inevitably. He dug in on his 2020 election lies and said he is inclined to pardon a “large portion” of the people who rioted at the Capitol on January 6, 2021. He refused to say whether he wants Ukraine to win its war against Russia. He smeared E. Jean Carroll, who was just awarded $5 million in damages by a jury who found him liable for sexually abusing and defaming her, as a “wack job.” He repeatedly played to the Republican audience — his base — and continually elicited cheers and laughter from them.

He also may have delighted Democrats by reminding swing voters of just what another Trump term might look like. “It’s simple, folks. Do you want four more years of that?” President Biden tweeted.

Trump calls for massive cuts, or default: Trump certainly made plenty of news — not least, from a fiscal perspective, because he urged Republicans to press ahead with their debt-limit brinkmanship and demands for Democrats to agree to spending cuts, despite the potentially catastrophic economic risks.

“I say to the Republicans out there — congressmen, senators — if they don’t give you massive cuts, you’re gonna have to do a default,” Trump said. “And I don’t believe they’re going to do a default because I think the Democrats will absolutely cave because you don’t want to have that happen. But it’s better than what we’re doing right now because we’re spending money like drunken sailors.”

Economists have warned that a default on U.S. obligations would lead to widespread financial and economic damage, potentially including millions of lost jobs, devastated retirement savings accounts and spiking interest rates that raise the cost of mortgages, car loans and credit cards.

CNN host Kaitlan Collins pointed out that Trump as president had once argued against using the debt ceiling as leverage. “So why is it different now that you’re out of office?” she asked.

“Because now I’m not president,” Trump deadpanned, drawing more cheers and applause.

Trump also downplayed the potential economic consequences of a default. “You don’t know,” he said. “It’s psychological. It’s really psychological more than anything else. And it could be very bad. It could be, maybe, nothing. Maybe it’s – you have a bad week or a bad day, but, look, you have to cut your costs.”

Yellen warns against default: Treasury Secretary Janet Yellen on Thursday warned that, contrary to Trump’s comments, a default would threaten the global economy.

"America should never default. It would be tremendously, economically and financially damaging," she told reporters ahead of a meeting of G-7 finance ministers in Niigata, Japan. "The notion of defaulting on our debt is something that would so badly undermine the U.S. and global economy that I think it should be regarded by everyone as unthinkable."

Yellen also expressed doubts about whether the president could invoke the 14th Amendment to essentially ignore the debt limit, saying such a move would be “legally questionable.”

She emphasized that raising the debt ceiling and avoiding what she called “a crisis of our own making” is the responsibility of Congress. “There is no good alternative that will save us from catastrophe,” she said. “I don’t want to get into ranking which bad alternative is better than others, but the only reasonable thing is to raise the debt ceiling and to avoid the dreadful consequences that will come.”