Trump Has Always Been the 'King of Debt,' but Now He's Sticking Taxpayers With the Tab

Trump planned to borrow heavily to fund his still unreleased infrastructure plan, even while the Republicans in Congress were making the deficit worse.


Jose Luis Gonzalez/REUTERS/Newscom

President Donald Trump planned to borrow heavily to finance his long-awaited infrastructure plan.

"Donald Trump wants to rebuild America's infrastructure the same way he built his buildings: debt, debt and more debt," Jonathan Swan writes at Axios. According to Swan's reporting, Trump's then-economic advisor Gary Cohn was preparing a $200 billion federal infrastructure plan that was supposed to be leveraged into a $1.5 trillion spending package, with the private sector and state or local governments picking up the rest.

"Think about when you're putting up a building, you put down $50 million of your own money to leverage several hundred million," Cohn told Trump last year, according to Swan.

Trump reportedly wasn't impressed. The president told Cohn he would never put his own money down for a building project. "He'd borrow the first installment from one bank and borrow the rest from another bank," Swan writes.

That conversation has not been previously reported, but it fits perfectly with Trump's opinion of himself as the "king of debt."

"I'm the king of debt. I'm great with debt. Nobody knows debt better than me," Trump told CBS during the 2016 campaign. "I've made a fortune by using debt, and if things don't work out I renegotiate the debt. I mean, that's a smart thing, not a stupid thing."

Indeed, most of Trump's alleged business success was built on the back of debt. He borrowed heavily to finance hotel and casino projects, then stiffed contractors and shortchanged investors when things didn't work out. Whether Trump's multiple bankruptcies reflect a failed businessman who took advantage of the system or a brilliant schemer who used the system to his advantage depends on your point of view, but there's no denying that Trump is quite comfortable taking risks with other people's money.

When things go bad, "you go back and you say, hey guess what, the economy just crashed. I'm going to give you back half," Trump told CBS in that same 2016 interview.

That's a workable strategy in the private sector, where all those transactions are taking place voluntarily. It may even be a wise one, as long as you can keep finding suckers to lend you money. Banks didn't have to bet on Donald Trump, and other developers didn't have to put their own skin in the game to back his projects. When private-sector mistakes are made with debt, bankruptcy court sorts out the fairest way to settle the matter; and as Trump well knows, getting bad debt out of the system is important.

Public debt is a different matter. Every time a presidential administration and Congress team up to add to the national debt, they are promising to raise taxes on future Americans in order to avoid raising taxes on present Americans. The "other people" that Trump wants to borrow from are, quite literally, all Americans both present and future—and we do not get to turn down the request. There is no bankruptcy court to erase these mistakes when it all goes wrong.

Trump either does not understand this all-important distinction—much like he misunderstands the trade deficit—because he's never been involved in public policy before, or he simply does not care.

Either way, it's difficult to imagine a worse time for the Republicans in Congress to have completely lost their fiscal backbones. Between last year's tax cuts and this year's spending hikes, the budget deficit has jumped 32 percent during the current fiscal year. A new Congressional Budget Office projection predicts a $1 trillion deficit during the fiscal year that begins on October 1, and yet no one is taking the deficit seriously—including, it seems, the president.

Much like other members of his party, Trump talked a good game on the budget deficit. In that 2016 CBS interview, Trump was clear to differentiate between private debt and public debt. "I like debt for my company, but I don't like debt for the country," he said. "It's going to be very soon $21 trillion—not billion. I will tell you, we are sitting on a time bomb."

Trump seems to have abandoned those concerns now that he's in office. In fact, if Democrats win control of Congress in November, some Republicans worry that Trump seems willing to cut a deal that would prioritize federal spending—and borrowing—in his infrastructure plan, according to Swan.

Republicans' abdication of fiscal conservatism over the past two years has already made the budget situation worse—the country now faces a $1 trillion deficit next year. If it ends up emboldening Democrats and Trump to splurge even more—as Reason's Peter Suderman predicts it will—the president's previous bankruptcies may pale in comparison.

NEXT: The Senate Needs to Hear Out Kavanaugh's Accuser

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  1. There’s no infrastructure bill. It did not pass. You are complaining about something that did not happen.

    Does that count towards your weekly quota of complaints about Trump?

    1. Reason is a complete joke, all complaining about Trump all the time.

      It’s not Trump that is the source of the debt problem, it is out of control centralized governments + an electorate that wants things for free + a FED that prints money and enables infinite zero risk debt expansion.

      The only way to break this cycle is for either a) the electorate to focus back on hard work and paying their own way, or b) for the FEDs ability to expand debt to break. Option a is not happen, thus this will continue until FED dollars are worthless and people no longer accept them for payment. It has nothing to do with Trump and he is powerless to stop it.

      1. the electorate to focus back on hard work and paying their own way

        Fucking conservatives.

        1. Fucking conservatives.

          Yup. That’s what Trump’s been doing!!

      2. It’s not Trump that is the source of the debt problem,

        Not the source of it, but he’s already added more debt in less than two years, than Obama added 8 years, (8 year actual vs 8 year forecast).

        Obama inherited the 2nd worse recession since the 1930s.
        Trump inherited the longest recovery EVER for an incoming President — from Obama.

        What could possibly be more total fiscal mismanagement than creating record levels of debt, in the longest recovery ever? Trump, a lifelong Democrat, has created a Republican New Deal — even worse than Bush’s!

        Left – Right = Zero

    2. You are complaining about something that did not happen.

      Read the very first sentence.
      You’re complaining about something that did not happen..

  2. Our debt and deficit were fucked long before Cheeto came anywhere near the Presidency. What do you think he’s going to do, raise taxes? LOLOLOLOL!

    1. “Unsustainable!”

    2. If they did manage to raise taxes in a way that actually increased total revenue* congress would simply increase spending by more than revenue increased and we would make no progress at all. The current congress shows no spending discipline at all (both parties are to blame for this). If they can’t keep to a budget withing $X, what makes you imagine that they will be able to stay within a budget of $X+Y?

      *High taxes can lead to reduced economic activity which can result in lower revenue for the government despite the higher tax rates.

  3. Trump didn’t do something stupid, that just proves what a genius he is. All Hail Our Glorious Leader!

    1. Reason is really phoning these stories in today. They’re really getting some use out of that magic 8-ball.

  4. King of Debt?

    I thought he was the King of Pain !

    Or was that Sting?

    1. There’s a little red spot on the budget today
      It’s the same old spot as yesterday…

  5. Trump has spent less than the last president with 19 months into his presidency.

    -In FY 2010, Obama’s first budget, he spent $527.2 billion on the DoD and $851.6 billion on total military spending. He signed the $787 billion Economic Stimulus Act. Obama bailed out the U.S. auto industry on March 30, 2009. Obama used Bush-era Troubled Asset Relief Program funds to create Home Affordable Refinance Program. In 2012, The Congressional Budget Office estimated the cost of Obamacare to be $1.76 trillion.

    As a result, the FY 2009 budget deficit was $1.4 trillion. Obama’s FY 2010 budget deficit was $1.294 trillion. The FY 2011 budget deficit topped that at $1.3 trillion. Obama added a total of $8.5 trillion by the end of FY 2017.

    -Trump budgeted $574.5 billion for the Department of Defense for Fiscal Year 2018. That’s 10 percent more than the $526.1 billion spent on the DoD in FY 2017.

    The FY 2017 budget enacted by Congress estimated a $666 billion deficit. Trump’s FY 2019 budget creates a $833 billion deficit. It will be $987 billion by FY 2020.
    Trump vs Obama budget

    1. That makes Trump’s debt even more atrocious!

      More new 8-year debt in less than two years than Obama added after 8 years.

      Trump had no bailouts — because he inherited the longest recovery ever for an incoming President — from Obama.

      Trump’s bots are rushing around with phony and or irrelevant “alternative facts” for their fellow cult followers
      While libertarians see a half century of the same sad fact: Left – Right = Zero

  6. MOAR TAXEZ NEEDED! The only way to prosperity is through taxes!


      Trump’s New Deal adds more new new 8-year debt in less than 2 years than Obama added after 8 years.
      Obama inherited the 2nd worst recession since the 1930s .. handed Trump the longest recovery EVER for an incoming President … so Trump adds record new debt!.

      Democrats borrow trillions for free stuff
      Republicans borrow trillions for free tax cuts.
      Libertarians are the ONLY ones saying CUT SPENDING.

      Left – Right = Zero

  7. What?
    Politicians sticking the American taxpayers for their financial incompetence?
    Now that’s something new!
    Does the New York Times know about this?

  8. I don’t know why you’re worried about Democrats and Trump running up the debt, when you know every Republican President has increased the deficit since Nixon, and they haven’t overseen a balanced budget since WW2. The idea of them being deficit hawk is a fairy tale. They don’t like spending on poor people stuff, but they certainly love spending money to pay back campaign donators and build up our military to over 50% of the world’s defense spending. Obama actually cut the deficit in half in his time in office.

  9. Donald J. Trump is not the king of debt. He is the King of bankruptcy, adept at stiffing contractors and employees. Now he wants to repeat the process with the American tax payer. Bonds however must be repaid. They are issued with the full faith and credit of the US government.

  10. Trump’s view of debt for a bankrupt government is not that different from his debt as a bankrupt businessman.
    After multiple bankruptcies and other business failures, virtually penniless (for his class), and shut out by every American bank, he was nevertheless able to secure financing to restore his entire current fortune.
    From Russia.

    He’s sold himself to Putin. Is America next? We’re now in the early phases of a Republican New Deal, with a President who spent most of his life as a Democrat.. Can Trump outhustle FDR? He’ll give it his best!

    Left – Right = Zero

  11. I agree! You can discuss with other side. That’s how you learn and expand your view points.

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