Paul Ryan Is Unlikely To Be Trump's Running Mate

Yesterday, Noah hit on something when he pointed out that in 1968 George Wallace had picked insubordinate and apocalyptic crackpot and arch-war criminal General Curtis LeMay as his running mate. LeMay, who tried to trigger a nuclear showdown with Russia over Cuba, called JFK's avoidance of the Cuban missile showdown "the greatest defeat in our history." Is there a general-- or even just a major-- as dangerous and controversial today as LeMay was back when LBJ fired him or when George Wallace drafted him for Trump to look to as a running mate? (Sorry, LeMay is dead now.) "Mad Dog" Mattis seems too reasonable and polished for a sociopath like Trump.

Although nothing about Trump is remotely straight-forward or even rational, there would be something particularly anomalous about Trump picking a garden variety politician like Rick Perry or Little Marco, each of whom is facing unemployment and virtually begging for the position. I guess Rick Scott or Mike Huckabee would be smarmy enough. A military crackpot or a pop culture celebrity like Trump himself is probably a better bet than a politician. These potential vice presidents have all endorsed Trump: Sly Stallone, Clint Eastwood, Kirstie Alley, Sean Hannity, Hulk Hogan, Lou Ferrigno, Mike Ditka, Ann Coulter, Scott Baio, Alex Jones, Charlie Daniels, Tom Brady...

The Clinton Machine decided on Julián Castro long ago, even before she had "decided" to run herself. But, for the sake a some easy drama and political junkie buzz, she floated a bunch of names, from progressives champions she agrees with virtually nothing on-- like Sherrod Brown, Tom Perez and Elizabeth Warren-- to a bunch of reactionaries from her own Republican wing of the Democratic Party, like Mark Warner and the even more execrable Evan Bayh.

One place you can turn to get some really bad insights into who the two probable nominees will pick as running-mates would be the European betting houses. The Hillary thing "secret" is out so Castro is actually the favorite, although some really implausible candidates are being floated as well, from Bernie and Joe Biden to Cory Booker, Brian Schweitzer and John Hickenlooper. The real cluelessness comes from the Trump list where Kasich is the top choice followed by Chris Christie (who may be too busy defending himself on the witness stand to campaign), Susana Martinez, a sloppy drunk who says she's not interested and was ruled out by some Trump staffer on Twitter yesterday, Nikki Haley and KKK folk hero Jeff Sessions. Newt Gingrich-- who applied for the job-- Little Marco, Ted Cruz and Ben Carson are rated as less likely.

It probably won't be Paul Ryan, who Trump seems to think he can fire as Speaker of the House but with whom he'll probably kiss and make up next week. Ryan had the temerity to publicly demand that Trump earn his support by proving himself fit to be president. A New York Times article yesterday by Binyamin Appelbaum would-- if Ryan were a serious man-- rule Trump out entirely for fiscally conservative Republicans like Ryan. Trump seems to think he can dispose of the national debut the same way he disposed of his bad gambling debts in Atlantic City-- when he took the Taj Mahal, Trump Plaza, Trump Casino Resorts and Trump Entertainment Resorts through serial bankruptcies and swindled everyone concerned out of billions of dollars, denigrating his own investors as "worse than murderers." Shocked, Applebaum wrote that Trump told a CNBC interviewer that "he might seek to reduce the national debt by persuading creditors to accept something less than full payment... He said that he was not suggesting a default, but instead that the government could seek to repurchase debt for less than the face value of the securities. The government, in other words, would seek to repay less money than it borrowed."

Asked whether the United States needed to pay its debts in full, or whether he could negotiate a partial repayment, Mr. Trump told the cable network CNBC, “I would borrow, knowing that if the economy crashed, you could make a deal.”

He added, “And if the economy was good, it was good. So, therefore, you can’t lose.”

Such remarks by a major presidential candidate have no modern precedent. The United States government is able to borrow money at very low interest rates because Treasury securities are regarded as a safe investment, and any cracks in investor confidence have a long history of costing American taxpayers a lot of money.

Experts also described Mr. Trump’s vaguely sketched proposal as fanciful, saying there was no reason to think America’s creditors would accept anything less than 100 cents on the dollar, regardless of Mr. Trump’s deal-making prowess.

“No one on the other side would pick up the phone if the secretary of the U.S. Treasury tried to make that call,” said Lou Crandall, chief economist at Wrightson ICAP. “Why should they? They have a contract” requiring payment in full.

...Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said that she shared Mr. Trump’s concern about the size of the federal debt, but that the issue needed to be addressed through changes in fiscal policy-- some combination of less spending and more revenue.

“It’s a policy problem, not a debt-management problem,” she said. “When it comes to fiscal responsibility, people are always looking for the easiest of answers. If there were low-hanging fruit here, the Treasury Department would already be on it.”

Repurchasing debt is a fairly common tactic in the corporate world, but it only works if the debt is trading at a discount. If creditors think they are going to get 80 cents for every dollar they are owed, they may be overjoyed to get 90 cents. Mr. Trump’s companies had sometimes been able to retire debt at a discount because creditors feared they might default.

But Mr. Trump’s statement might show the limits of translating his business acumen into the world of government finance. The United States simply cannot pursue a similar strategy. The government runs an annual deficit, so it must borrow to retire existing debt. Any measures that would reduce the value of the existing debt, making it cheaper to repurchase, would increase the cost of issuing new debt. Such a threat also could undermine the stability of global financial markets.

In 1979, for example, what the government described as “bookkeeping problems” temporarily delayed $120 million in interest payments. In the aftermath of the delay, investors pushed up interest rates on Treasuries by about 0.6 percentage point, according to a 1989 study by Terry L. Zivney of the University of Tennessee at Chattanooga, and Richard D. Marcus of the University of Wisconsin-Milwaukee. That cost taxpayers roughly $12 billion.

In 2011, federal borrowing costs climbed as congressional Republicans refused for a time to increase the federal government’s statutory borrowing limit, raising doubts about the government’s ability to repay its debts. The Bipartisan Policy Center calculated that the higher rates will cost taxpayers about $19 billion.

There is a limited opportunity for Mr. Trump to pursue bond buybacks without disrupting markets. He could seek to take advantage of the market’s preference for brand-new Treasuries. In a longstanding quirk, older vintages of Treasuries trade at slightly lower prices than the latest issuance. Treasury officials have discussed issuing new debt to fund purchases of older debt, but they would do so because newer securities are easier for investors to buy and sell. That might improve the workings of financial markets. Any savings, however, would be small change.

“It would not move the needle at all on the overall debt,” Mr. Crandall, the economist, said.