Home LIFESTYLE Style News Donald Trump Claims Stock-Market Gains Cancel Out National Debt

Donald Trump Claims Stock-Market Gains Cancel Out National Debt

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With alarming regularity, Donald Trump will offer an authoritative opinion on a topic he clearly knows nothing about. Last week, for instance, he told Fox News that he might “wipe out” Puerto Rico’s $72 billion debt—something neither he nor the federal government has the power to do. Over the summer, he described a (nonexistent) health-insurance plan with a $12 annual premium. In May, he told The Economist that he invented the phrase “prime the pump.” And last night, he boldly claimed that gains in the stock market under his administration have reduced the national debt.

Speaking to his pal Sean Hannity on Fox News, Trump said, “The country—we took it over and owed over $20 trillion,” referring to the national debt. He went on, “As you know, the last eight years, [the federal government] 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. Possibly picked up the whole thing in terms of the first nine months, in terms of value.”

“So, you can say in one sense we’re really increasing values; and maybe in a sense we’re reducing debt,” he added. “We’re very honored by it.”

Here’s where Trump’s desperate need for adulation and complete ignorance on most topics converged. While the stock market is in the midst of a historic—but not at all unprecedented!—run, which the president regularly brags about on Twitter, it has . . . no effect on paying down the national debt. Higher stock prices mean gains for investors and shareholders; they in no way impact the amount of money the government owes. (Case in point: during the Obama years, the S&P 500 returned a whopping 235 percent while the national debt skyrocketed.)

As Business Insider’s Josh Barro theorized, it’s possible that Trump was thinking about the national debt and the stock market in the same terms as one of his real-estate holdings—stocks are up in anticipation of future growth, which improves the government’s hypothetical ability to service its debt. But even this generous explanation relies on so many assumptions that it doesn’t really help Trump—as the president continues to be reminded, the United States is not a real-estate business, and the White House is not a family office.

During his campaign, Trump claimed that under his tutelage the U.S. would be debt-free within eight years—a feat that has not been accomplished since 1835. But from his point of view, the U.S. is just a few good quarters away from accomplishing that goal ahead of schedule.

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