Paul Ryan and Donald Trump, ostensibly the two leading politicians of the Republican party at this point, hardly overlap in their long-term visions for the U.S. economy.
One of their emerging differences is how each views the federal government’s debt. Ryan sees the country’s total obligations as an urgent matter, increasingly ominous and fixable only with the restructuring of Medicare and Social Security. Trump has expressed similar alarm about the immensity of what the nation owes its creditors—but he personally “loves” debt, loves “playing” with it, would be open to taking out more of it to fund infrastructure spending as president, and instead of paying it off in the long run with changes to federal entitlement programs, he’s said he’d knock it out in eight years by renegotiating trade deals.
There’s a word for these kinds of differences: irreconcilable. And there are maybe two of them to describe Trump’s solution.
“Completely unrealistic,” Veronique de Rugy, senior research fellow at George Mason University’s Mercatus Center, says. “There’s only one silver bullet” to addressing the country’s long-term debt, “and it’s not one that a lot of people are willing to talk about.”
Certainly not Trump. His hands-off approach to entitlements, save for tackling the “waste, fraud and abuse” that’s more a matter of responsible bookkeeping than serious change, is opposite of the reform agenda that helped make Ryan a star of the right and bogeyman to the left. Trump’s revenue-raising trade crackdown, aside from being an outrageously unrealistic mechanism for paying off some $20 trillion of debt over a two-term presidency, is a hundred-mile stack of economics textbooks from Ryan’s proud free-market philosophy. Now these past several days comes the Trump policy of repurchasing debt at a discount, an idea he borrowed from the corporate world that he explained Initially last Thursday and clarified Monday.
“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,” he said on CNN’s New Day. The problem: Short of finding many trillions of dollars under a pillow, the government isn’t liquid enough, and it would have to borrow money at the higher interest rate to buy back the debt—the higher interest rate that was the impetus for the buyback to begin with.
This novel attempt at financial creativity ultimately evades what government must do to tackle the U.S. debt, de Rugy says.
“He’s a very successful man, but he’s neither as powerful as he thinks he is, nor as crafty as he thinks he is. I think he’ll realize in [government] that things are slightly harder, especially when you’re trying to negotiate a roughly $14 trillion public debt.” (Including more than $5 trillion of debt held by the U.S. government, total debt is now in excess of $19 trillion.)
Ryan used the term “a standard bearer that bears our standards” last week to describe the ideal Republican presidential nominee. Whether Ryan embodies those standards himself is part of an uncomfortable internal discussion occurring within the party now.
But there is one reasonable conclusion: Trump does not bear Ryan’s standards.
