Donald Trump’s newly installed campaign finance chair tried to walk back Friday Trump’s idea that the U.S. should flirt with defaulting on its debt.
“I’d say, I’m not going to comment specifically on that. Obviously, the government has to honor its debts,” Steven Mnuchin, who worked for years in the finance industry, said on CNBC. He was asked whether Trump was suggesting he was willing to “‘adjust and massage’ the full faith and credit of the United States.”
“I think that Donald’s comments about, we have too much debt, interest rates are going to go up, this is going to cost more money,” said Mnuchin, who spent 17 years at Goldman Sachs before launching his own hedge fund. “I think that cutting the deficit and cutting the amount that we borrow is very, very important to the economy.”
In an interview on CNBC Thursday morning, Trump suggested he would cut down on the U.S.’s debt by paying U.S. creditors less than the full amount that they are owed.
“I would borrow knowing that if the economy crashed you could make a deal,” Trump said. “And if the economy was good, it was good. You can’t lose.”
While renegotiating debt is a not uncommon practice in the business world, it would be devastating for the U.S. government to even consider such a move, financial experts have said. If creditors no longer believe the U.S. could be trusted to pay back its debt in full, it would send the currently low interest rates on U.S. debt soaring and could threaten to shake up the global economy.