Donald Trump, who is once again running for president, has urged Republican lawmakers to let the United States default on its debt if Democrats do not agree to spending cuts. Speaking during a CNN town hall, Trump said that if Republicans do not receive “massive cuts,” they will have to default. He believes that Democrats will “absolutely cave” to his demands. Trump believes that the country is spending money like “drunken sailors.”
Republicans could use a default to their political advantage
Trump’s comments come weeks before the US is projected to run out of cash to pay its bills unless Congress addresses the debt limit. The US government has taken extraordinary measures since January to avoid default. However, a default could trigger chaos in markets and result in millions of job losses, according to analysts and economists.
Trump is the leading contender for the 2024 Republican presidential nomination. If he faces President Joe Biden in a rematch next year, he would likely use a default to his political advantage. His words could encourage his many GOP supporters in the House to harden their stance against raising the debt limit without corresponding spending cuts.
Biden has said he will not negotiate over raising the debt limit, although he is open to discussing ways to reduce spending in a separate context. Biden and the top four congressional leaders, including Trump supporter House Speaker Kevin McCarthy, R-Calif., will meet again to discuss the debt ceiling on Friday. Treasury Secretary Janet Yellen has said the US government could hit the debt limit as soon as June 1.
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