💎 Fed’s first rate cut since 2020 set to trigger market. Find undervalued gems with Fair ValueSee Undervalued Stocks

Trump plays down consequences of a US default: 'Could be maybe nothing'

Published 05/10/2023, 10:46 PM
Updated 05/10/2023, 10:50 PM
© Reuters. FILE PHOTO: Former U.S. President Donald Trump speaks during a campaign rally with supporters, in Davenport, Iowa, U.S. March 13, 2023. REUTERS/Jonathan Ernst

By Tim Reid

(Reuters) - Republican former President Donald Trump on Wednesday played down the severity of a potential U.S. government default, saying the consequences of a failure by Congress to raise the nation's debt limit "could be maybe nothing."

Most economists warn that a failure to raise the debt ceiling by June 1, when the U.S. Treasury says the government will start to run out of money to meet its obligations, will trigger a catastrophic economic recession with the loss of millions of jobs.

Democratic President Joe Biden and Republicans who control the House of Representatives are negotiating raising the debt limit, which is a mechanism to allow the government to pay obligations Congress has already incurred, such as payments on foreign debt and monthly Social Security checks.

In a televised CNN town hall appearance, Trump said Congress should claw back money allocated in Biden's domestic spending legislation. "If they don't ... you'll have to default," Trump said. He added consequences of a default could merely lead to "a bad week or a bad day."

Republicans are insisting on massive spending cuts before they agree to pass a debt ceiling increase. Biden so far is insisting on a "clean" measure without conditions.

© Reuters. FILE PHOTO: Former U.S. President Donald Trump speaks during a campaign rally with supporters, in Davenport, Iowa, U.S. March 13, 2023. REUTERS/Jonathan Ernst

Economists say threats by some Republicans not to raise the debt ceiling by June 1 is a dangerous game of Russian roulette with the U.S. and global economy, as a failure to raise it will trigger the first U.S. default in the country's history.

The debt limit was raised three times without a fight during Trump's four years as president, a period when the national debt also exploded because of his tax cuts.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.