Former U.S. President and 2024 Republican presidential candidate Donald Trump has recommended that Republican lawmakers allow the United States to default on its debt obligations if Democrats do not concede to substantial spending cuts. During a televised CNN Town Hall on Wednesday, Trump emphasized that allowing a default is preferable to the current state of excessive government spending, likening it to the behavior of “drunken sailors.”
Trump advised Republicans, including congressmen and senators, to push for massive cuts and consider defaulting on debt obligations if Democrats refuse to cooperate. He believed the Democrats would ultimately “cave,” as they would not want a default to occur. Despite this, Trump urged for immediate action, stating that the country is “dying” and being “destroyed by stupid people, by very stupid people.”
Potential consequences of a default
Trump’s comments arrive just weeks before the U.S. is expected to exhaust its cash reserves, leading to an inability to pay its bills unless Congress addresses the debt limit. The U.S. government has employed extraordinary measures to avoid default since January. If a default were to happen, it would likely provoke chaos in financial markets and lead to millions of job losses, according to analysts and economists. During Trump’s presidency, Republicans voted to raise the debt ceiling three times.
These statements by Trump could potentially embolden his GOP supporters in the House to adopt a more rigid stance against raising the debt limit without corresponding spending cuts. President Joe Biden has declared that he will not negotiate over raising the debt limit, although he is open to discussing ways to reduce spending in a separate context. On Friday, Biden and the top four congressional leaders will reconvene to discuss the debt ceiling. Treasury Secretary Janet Yellen has warned that the U.S. government could reach the debt limit as early as June 1.
In recent months, Trump has issued numerous warnings regarding the U.S. economy and the U.S. dollar, claiming that the USD is crashing and “will soon no longer be the world standard.” He also cautioned that “we are very close” to World War III. Treasury Secretary Yellen has informed lawmakers that the Treasury Department may only be able to pay some of the government’s bills as early as June 1 if Congress raises or suspends the debt limit before then.
