Woodward: “Would you ever be open to tax increases as part of that, to solve the problem?”
Trump: “I don’t think I’ll need to. The power is trade. Our deals are so bad.”
Woodward: “That would be $2 trillion a year.”
Trump: “No, but I’m renegotiating all of our deals, Bob. The big trade deals that we’re doing so badly on. With China, $505 billion this year in trade. We’re losing with everybody.”
— exchange during a Washington Post interview, March 31, 2016
Of all the wildly impossible assertions made by Donald Trump, the notion that he could eliminate the nation’s $19 trillion in debt in just eight years ranks near the top. Trump suggests he can manage this feat simply by cutting better trade deals.
If only it were that easy. As we have noted repeatedly, eliminating a trade deficit does not mean the money ends up in government coffers. (Morever, Trump is wrong to say the trade deficit with China is $505 billion; it’s $366 billion, according to the Census Bureau. The trade deficit with all countries is $531 billion.)
But here’s some basic math that shows why this is a fantastical notion.
First of all, the federal budget is already running a deficit. So before Trump can start paying down the debt, he needs to eliminate the deficit — which year after year, is adding to the national debt owed to bondholders.
According to a January projection by the Congressional Budget Office, the federal government will run an additional $6.8 trillion in additional deficits between 2017 and 2024. So the task is not $19 trillion, but nearly $26 trillion over eight years.
Why are deficits expected to climb? That’s because the baby-boom generation is retiring, running up the cost of mandatory spending programs, such as Social Security and Medicare. Alone among Republican hopefuls, Trump has pledged not to touch entitlement spending. So unless he wants to start breaking some campaign promises, one presumes he would not seek to change the laws governing most mandatory spending.
That leaves discretionary spending, which Congress votes on year after year and funds the basic functions of government, such as defense, homeland security, highways, and so forth. In the eight years of a putative two-term Trump presidency, the CBO projects a total of $10 trillion in discretionary spending. So even if Trump eliminated every government function and shut down every Cabinet agency, he’d still be $16 trillion short.
Of course, one can also eliminate deficits with higher federal revenues. But remember that Trump has ruled out raising taxes. (In fact, he wants to cut taxes — significantly.) In theory, the government could gain additional revenue if the economy does better than projected, so let’s assume Trump’s trade initiatives don’t lead to trade wars and recessions but a bountiful, booming economy. What’s reasonable to expect?
The CBO projected revenues would be about 18.1 percent of the gross domestic product in the 2017-2024 period. We checked the historical records and found that revenues in the last half century once reached a peak of 20 percent of GDP in 2000 — during the Bill Clinton administration, the last time the government ran a budget surplus.
But even if revenues achieved 20 percent of GDP year after year, that would only add an additional $4 trillion in revenue over eight years. (We are assuming the elimination of basic government functions does not wreck the economy.)
Trump is still $12 trillion short.
(Update: After this fact check appeared, an advisor to Trump claimed that the candidate could easily meet his pledge by selling “$16 trillion” of national assets. The assets of the United States are valued at about $3.2 trillion, not counting heritage assets such as national parks, forests, museums, monuments and land used by the military. Those assets are not valued, the Government Accountability Office says: “Like stewardship land, the government does not expect to use these assets to meet its obligations.” Moreover, the laws governing their use and management would need to be changed before anyone could contemplate selling off Yosemite National Park and other landmarks to the highest bidder.)
Update, April 22, 2016: In an interview published in Fortune magazine, Trump walked back his pledge to eliminate all of the national debt by the end of his second term. He told Fortune he was only interested in reducing “a percentage” of the debt. Asked how much, he would not give a figure. “It depends on how aggressive you want to be,” he said. “I’d rather not be so aggressive. Don’t forget: We have to rebuild the infrastructure of our country. We have to rebuild our military, which is being decimated by bad decisions. We have to do a lot of things.”
The Pinocchio Test
We regret we have only Four Pinocchios to give for this whopper. Trump is insulting the intelligence of Americans for making such a claim in the first place.
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