While boasting about the US economy during an interview on Wednesday, President Donald Trump made the freaky suggestion that gains in the stock market actually reduce federal debt. "They said - they lost the election - they sat in a room and they said, "Wow, we look bad, '" Trump said during an interview with Fox News" "Hannity".
The Republican tax plan unveiled last week calls for as much as $6 trillion in tax cuts that would sharply reduce federal revenues. Possibly picked up the whole thing in the first nine months, in terms of value. Last week, for instance, he told Fox News that he might "wipe out" Puerto Rico's $72 billion debt-something neither he nor the federal government has the power to do. "So, you can say in one sense we're really increasing values; and maybe in a sense we're reducing debt". And no, that stock market rally did not reduce or offset the national debt either. "But we're very honored by it".
A White House spokeswoman did not immediately respond to CNBC's request for additional information about the president's comments. Consequently, debt is directly reduced when nations take in more money then they spend, a feat typically accomplished by raising taxes or cutting spending.
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"A higher stock market encourages consumers and companies to spend more, which helps the overall economy", said Valliere of Horizon Investments. No, a far more appropriate measurement would be to compare the national debt to the size of the national economy.
And it's absolutely the case that the national debt increased by $9 trillion during President Barack Obama's time in office, but many were scratching their heads at Trump's implication the debt was lessening because markets are increasing in value.
When Obama was inaugurated in 2009, the U.S. owed $10.6 trillion in debt, according to figures from the U.S. Treasury Department. As of October 10, the USA owes over $20 trillion in debt, a slight increase from January. The U.S. intelligence community has concluded that the Kremlin attempted to influence the election.