Quote of the Day (Warren Buffett, on Donald Trump and Debt)

“The big problem with Donald Trump was he never went right. He basically overpaid for properties, but he got people to lend him the money. He was terrific at borrowing money. If you look at his assets, and what he paid for them, and what he borrowed to get them, there was never any real equity there. He owes, perhaps, $3.5 billion now, and, if you had to pick a figure as to the value of the assets, it might be more like $2.5 billion. He’s a billion in the hole, which is a lot better than being $100 in the hole because if you’re $100 in the hole, they come and take the TV set. If you’re a billion in the hole, they say ‘hang in there Donald.’” —Warren Buffett on Donald Trump, in a spring 1991 speech to Notre Dame University students, quoted in Julia La Roche, “Warren Buffett Nailed Why Donald Trump's Businesses Failed in a Lecture 25 Years Ago,” Yahoo Finance, June 21, 2016

You really have to hand it to Donald Trump (pictured, of course, in a typical "mouth that roared" moment). Here he is the other day, in between lunges at “corrupt Hillary,” deciding that counterpunching on policy would make him look Presidential—or, at least, like a candidate with gravitas. So what’s the ground he chooses for his fight? Debt.

That takes the same kind of hubris required if Bluebeard ever ran for President on a platform criticizing his opponent’s proposals as bad for women. (Oh, wait: twice-divorced, philandering, STD-was-my-personal-Vietnam Trump has done that, too.)

Trump would probably have been better off with the “corrupt Hillary” spiel. Sure, it’s so tiresome now that even The Donald must be bored by it. But, for every voter who claims the charge is a lie or at least overblown, there’s another for whom Hillary Clinton reeks of inauthenticity.

Even trade might have worked as a wedge issue against Hillary. Bill Clinton, after all, had signed NAFTA, an agreement more problematic (certainly for manufacturing workers) than proponents claimed at the time.

But debt? By the end of Bill's second term, the federal deficit had been erased and the budget balanced. He was not solely responsible for that, of course (stock-market gains, the dot-com bubble, and fiscal restraints imposed by a GOP Congress also played their part).  But the tax hike (chiefly on upper-income brackets) passed early in his term played a considerable role—and without inciting a recession, as Republicans claimed it would. Bill Clinton developed a justified reputation for untrustworthiness. But problems with the debt cannot be laid at his door. No, debt increased under his Republican successor in office.

On the other hand, if reducing debt is a virtue, then Trump is utterly without credibility on this issue. Indeed, in an interview with Norah O’Donnell that aired on “CBS This Morning,” he admitted to having “made a fortune by using debt.”

You might say that that is what builders like Trump do, where the practice is to borrow and make up for it on the back end. But in these enterprises, he was dealing often with private investors who were willing to put up not just with these norms but with his shenanigans. As President, he would deal with other people’s money. You know, tax revenues.

Taxes are supposed to be an issue that the GOP owns, but it’s now in free play. Are voters going to trust a candidate who, if he continues his business practices once elected, will spend their money like a drunken sailor? (Trump likes to say he’s never declared bankruptcy. Personal bankruptcy, he means. He’s been involved with four corporate bankruptcies. Again, other people’s money.)

The interview with O’Donnell opened Trump up to other unforced errors. First, the self-proclaimed “king of debt” brags about his proclivities: “Nobody knows debt better than me.” A great Democratic attack ad could begin with that line, followed by his shamefaced reassurance about an education at the now-infamous “Trump University” that could set attendees back $35,000: “It takes money to make money.”

Second, he briefly opened a window revealing how he has largely escaped damage to his net worth: “I’ve made a fortune by using debt, and if things don’t work out I renegotiate the debt,” he told O’Donnell. “I mean, that’s a smart thing, not a stupid thing.” Most people don’t have that luxury: they are at the mercy of financial institutions with enough time and big pockets to wait out court proceedings. Renegotiation is at the banks’ mercy, not their own.

“If things don’t work out I renegotiate the debt.” Indeed.  It goes back to the difference that Warren Buffett underscored between a $100 debtor and a $1 billion debtor. The last decade has shown that there is a different law in this country for the one-percenters than for everyone else. A Trump victory in November would mean nothing more or less than an even more enduring one for them, his true natural constituency. 

If you think living in post-recession America is bad, you won’t want even to think about a post-Trump America. The lessons learned from that will be an education even harder to afford than Trump University.