Would Trump Deliberately Default on America's Debt?

This article first appeared on the American Enterprise Institute site.

With Donald Trump's victory in Nevada, the likelihood that he could be the Republican nominee is increasing. Even if senators Marco Rubio or Ted Cruz takes Texas and rebuilds momentum, it may soon be too late to catch up.

Analysts have long stopped trying to figure out Trump's true positions or political philosophy—if he has one—since he has flip-flopped so much. But on one issue, Trump has been both consistent and unapologetic about his business record and his defense of bankruptcy.

If that's a window into Trump's vision for political leadership, it's truly troubling.

Back in August 2015—and sporadically since then—Donald Trump has deflected criticisms of the four major bankruptcies his business empire has weathered as just the cost of doing business or as his shrewd use of existing bankruptcy law to his advantage.

Let's put aside that, while his Chapter 11 bankruptcies have indeed allowed his businesses to live and see another day, they were the equivalent of throwing under the bus multiple up-and-coming smaller businesses that had contracted with the Trump empire.

The question at hand, if Trump is so proud of his tactics, is whether they provide a model for President Trump when dealing with what many (myself included) believe to be out-of-control American debt. Given Trump's willingness to place a tactical game on bankruptcy against reputation, it is fair to ask whether or not he would default on all or part of America's multitrillion dollar debt.

After all, given populist anger and the fact that the United States can't continue to spend other people's money ad infinitum, will Trump respond not with responsible fiscal reforms as someone like Mitt Romney once proposed or Cruz discusses (in his case with the elimination of unnecessary and bloated cabinet departments), but rather by simply declaring that the current terms are unsustainable? Ordinary Americans may support his blustery defense that he wants to keep American dollars in America.

In other words, under President Trump, will the United States become the new Argentina? The reverberations of such a move would be devastating, not only to the reputation of the United States but, given the fragility of the international economic system, to the world as a whole.

But Trump may not understand or believe the consequences would be so grave that those who hold U.S. debt would have no choice by to eliminate some. He may engage in a game of brinkmanship with the global economy, believing that those who hold American debt will have no choice but to deal lest their own economy tank.

The question then becomes: what would Trump's deal be? Would he forfeit American interests in East Asia? In Taiwan? In Southeast Asia in exchange for financial concessions? Or would he allow Chinese interests to enter sectors inside the United States like telecommunications and ports which hitherto have been blocked by national security concerns?

Trump's business record isn't simply a political weak point to provide fodder for his opponents' campaign commercials. Rather, it is a reflection of character and an insight into the tactics the man embraces. It's bad enough when his tactics are utilized by a business mogul; it's quite another should they be embraced by the president of the United States.

Michael Rubin is a resident scholar at the American Enterprise Institute and a former Pentagon official.