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Donald Trump declared Monday the U.S. never has to default on debt “because you print the money,” while trying to clarify his strategy for managing the national debt.

Trump insisted that he never said the U.S. should default or attempt to renegotiate with creditors, as had been reported.

“People said I want to go and buy debt and default on debt, and I mean, these people are crazy. This is the United States government,” Trump told CNN’s Chris Cuomo on “New Day.” “First of all, you never have to default because you print the money, I hate to tell you, OK?”

The presumptive Republican presidential nominee explained he would center his approach on debt buybacks if and when interest rates go up.

“I said if we can buy back government debt at a discount, in other words, if interest rates go up and we can buy bonds back at a discount — if we are liquid enough as a country, we should do that,” Trump said. “In other words, we can buy back debt at a discount.”

He also repeated his claim that he is “the king of debt.”

“I understand debt better than probably anybody. I know how to deal with debt very well. I love debt — but you know, debt is tricky and it’s dangerous, and you have to be careful and you have to know what you’re doing,” Trump said.

Split with establishment

As Trump’s high-profile back-and-forth with House Speaker Paul Ryan last week highlighted, a wide ideological gap exists between Trump and “establishment” Republican types over debt and entitlement reform.

Ryan won his post as House speaker in part by outlining an orthodox conservative policy agenda centered on these issues. And in an interview with CNBC in March — long before Trump became the GOP’s presumptive nominee — Ryan defended his support for entitlement reform.

“I believe that if we do not prevent Medicare from going bankrupt, it will go bankrupt,” he said. “And that will be bad for everybody. We have to tackle our debt crisis. We have to tackle the drivers of our debt. And I think, I hope, that whoever our standard bearer’s going to be will acknowledge that.”

Trump, for his part, vowed during a Republican presidential debate on CBS in February that he would “not touch” entitlements, saying, “I will do everything within my power not to touch Social Security, to leave it the way it is.”

‘Make a deal’

Trump had kicked up a firestorm in economic and political circles when, in an interview last Friday on CNBC, the presumptive Republican nominee seemed to suggest that rather than pay its outstanding national debt in full, the country could renegotiate.

Asked if the U.S. needs to pay its debt in full or if it could negotiate a partial repayment, Trump said: “I would borrow, knowing that if the economy crashed, you could make a deal.”

Such a renegotiation risks creating financial turmoil because U.S. Treasuries are considered the safest assets on the planet and a major benchmark for valuing other securities. Risking their safety through a renegotiation like the kind Trump seemed to propose could cause borrowing rates everywhere to skyrocket and create chaos in global markets.

During his CNBC interview, Trump had also said that interest rates should be kept low — contradicting his remarks on CNN Monday — because a rate jump could trigger a catastrophic increase the cost of borrowing.

“We’re paying a very low interest rate,” he said. “What happens if that interest rate goes up 2, 3, 4 points? We don’t have a country.”

And Trump signaled that he would be inclined to replace current Federal Reserve chair Janet Yellen, who has defended the Fed’s low rate policy, saying that while “people I know have a high regard for her,” “she’s not a Republican.”


And the real estate mogul on Monday also cited his experience buying up mortgages at discount during the 2008 financial crash, while noting that managing the national debt would be a very different task.

“In business (debt buyback) happens all the time. I bought mortgages back when the market went bad, I bought mortgages back at tremendous discounts, and I love doing that,” he said. “There’s nothing like it actually, it gives me a great thrill. But in the United States with bonds, that won’t happen because you know in theory the market doesn’t go down so that you default on debt, and that’s what happens.”

Whether through debt buyback or restructuring, neither of Trump’s debt-reduction proposals from the past week square with his party’s core approach on the issue — deep spending cuts and entitlement program reform.

The Republican Party’s official platform argues the U.S.’s looming “debt explosion” should be averted through “immediate reductions in federal spending, as a down payment on the much larger task of long-range fiscal control.” These cuts “must be accompanied by major structural reforms,” according to the platform, and pointing to programs such as Medicare, Medicaid, and Social Security, the GOP argues that “we must restructure the twentieth century entitlement state.”