Trump Makes Puzzling Claim That Stock Market Gains Have Reduced The Debt

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If you weren't one of the 1,000 people invited to hear President Donald Trump speak in Harrisburg, there will be a chance to see the commander-in-chief in an interview with Sean Hannity.

Let's break down his astonishing claim.

During his campaign, Trump claimed that under his tutelage the US would be debt-free within eight years-a feat that has not been accomplished since 1835. "As you know, the last eight years, they borrowed more than it did in the whole history of our country".

The Republican tax plan unveiled last week calls for as much as $6 trillion in tax cuts that would sharply reduce federal revenues.

Also, more or less accurate - $9 trillion to be exact.

"I'm so proud of the $5.2 trillion dollars of increase in the stock market", Trump said, referring to the bull market that began as the economy pulled out of the Great Recession during the months after President Obama took office. So you can say in one sense, we are really increasing values and may be in a sense, we are reducing debt. The stock market has nothing to do with the debt. "It [stock market gains] reflects a stronger underlying economy that will eventually help reduce the national debt through higher tax revenues but there is just no connection".

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The debt is money that the federal government has already spent. No commensurate spending cuts have been proposed. But from his point of view, the U.S.is just a few good quarters away from accomplishing that goal ahead of schedule.

In Trump's fractured mind, the stock market is part of a big pile of money that is used to pay the national debt.

"There seems to be way too much pivoting away from the basic fact that we will have to make some hard choices to get our unsustainable national debt under control", said Maya MacGuineas, the president of the Committee for a Responsible Federal Budget, in Washington.

Mr. Trump once suggested that "massive trade deficits" are to blame for the national debt, a claim many economists challenge.

In fact, the president wants to cut taxes and potentially add to the debt if spending cuts can not be found to offset those tax cuts.

"They said - they lost the election - they sat in a room and they said, 'Wow, we look bad.'" Trump said. No question investors cheer this president's pro-business, anti-regulation, lower taxes agenda. And no, that stock market rally did not reduce or offset the national debt either.

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