Three U.S. States Hold Primaries; Trump’s View About Repurchasing Debt Makes Little Sense

Today 3 U.S. states will hold nominating primaries for Democratic and Republican candidates.

Nebraska and West Virginia will hold state primaries for Republicans while Democrats will see only 1 primary race in West Virginia with 29 delegates up for grabs.

Next Tuesday May 17th will see more state primaries in Oregon and Kentucky with 116 Democratic delegates deciding between the 2 states.

Oregon will also hold a Republican primary next Tuesday with 28 Republican delegates.

Donald Trump is the only Republican candidate left standing and will likely accumulate the majority of the remaining delegates to capture the Republican nomination.

On the Democratic side, Hilary Clinton hasn’t accumulated enough delegates to qualify for nomination and remains 155 delegates shy of the 2,383 total delegate threshold she needs to capture for the Democratic Convention in July.

When Super delegates are included Clinton has already obtained 2,228 delegates. Super delegates are free to switch sides between now and the Democratic Convention in July.

In terms of pledged delegates (minus Super delegates), Clinton holds a 290 delegate lead over Sanders (1705- 1415).

Trump’s Contradictory Statements

Donald Trump has been all over the map when recently explaining some of his domestic policies ranging from handing the national debt which stands at $19 trillion ($13 trillion owned by the U.S. public) to the federal minimum wage.

Last Thursday on CNBC’s Squawk Box, Trump was asked whether the U.S. needed to pay its debts in full or whether he could negotiate a partial repayment.

Trump explained, “I love debt” and described himself as the “King of debt.”

“I would borrow, knowing that if the economy crashed, you could make a deal” Trump said on Squawk Box.

The billionaire Republican candidate compared the U.S. $19 trillion debt pile to a poker game and said that he’s borrowed, knowing you can pay with discounts.

“And if the economy was good, it was good. So therefore- you can’t lose.” It’s like you make a deal before you go into a poker game” Trump added.

Holders of U.S. debt (Treasury bills) would not likely want to offer discounts to the U.S. government or to Donald Trump if he was elected president.

Repurchasing debt is a common strategy in the corporate world and it only works if the debt is trading at a discount.

Trump fails to realize that the U.S. government can’t pursue the same strategy.

Since the U.S. government runs a deficit, it must borrow to service its existing debt.

Any actions taken to lower the face value (nominal value), making it cheaper to repurchase, would increase the cost of issuing new debt.

Donald Trump re-addressed buying U.S. debt back at a discount on CNN’s New Day yesterday and said the U.S. can’t default because it prints money.

Trump’s statement about printing money may be true, but printing money to handle insolvency could  lead to inflation.

Minimum Wage Flip Flop

Last November during a Republican debate, Trump said “wages are too high” but on Sunday during an interview with Meet the Press, he said that minimum wage should be raised on a state by state level.

“I have seen what’s going on, and I don’t know how people make it on $7.25” – referring to the U.S. federal minimum wage.




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