President Donald Trump is obsessed with money but his multiple bankruptcies, his countless failed ventures, and his latest interview with Fox News’ Sean Hannity suggest he doesn’t actually understand a lot about it.
Trump attempted to claim that he has already reduced the federal government’s debt because the stock market has gone up in his first nine months in office.
“The country – we took it over and owed over $20 trillion. As you know the last eight years, they borrowed more than it did in the whole history of our country. So they borrowed more than $10 trillion, right? And yet, we picked up $5.2 trillion just in the stock market,” Trump told Hannity Wednesday. “So you could say, in one sense, we’re really increasing values. And maybe in a sense, we’re reducing debt. But we’re very honored by it.”
That’s not how any of this works.
It wasn’t a slip of the tongue or Trump getting ahead of himself, either. He pushed the same point during a prepared speech in Harrisburg, Pennsylvania Wednesday.
“Very proudly, just in the stock market alone, we have increased our economic worth by $5.2 trillion, that’s right, since Election Day. $5.2 trillion,” Trump said. “Think about that, that’s a quarter of the $20 trillion that we owe.”
Again, unless Trump intends to actually seize all of the stock market gains to pay off the debt, the stock market has not actually affected the federal debt at all.
“The stock market’s gains have virtually nothing to do with the size of the national debt, which continues to rise because government spending far exceeds government receipts,” political economist Greg Valliere told CNN.
“A higher stock market encourages consumers and companies to spend more, which helps the overall economy,” he added. “But it’s absurd to contend that the national debt has fallen because of this.”
In fact, under President Obama, the stock market went up about 235 percent while debt kept piling up.
In any case, Trump did not reduce anything. The national debt was $19.9 trillion in January. It stood at $20.2 trillion last month.
The government ran a $693 billion budget deficit this year and is projected to have a deficit for at least the next decade.
According to multiple studies, the plan would add $2 trillion to $2.5 trillion to the national debt over the next decade.
The Trump administration argues that the tax cuts will increase growth and the government will take in more in revenues but experts say this historically has never happened and there is no “evidence that tax cuts pay for themselves.”
“There’s just not any evidence that there’s a huge effect on wages or economic growth,” Tax Policy Center co-founder Len Burman told Forbes. “It’s irresponsible to overhype the claims.”