President Donald Trump said Sunday that the U.S. national debt could be smaller than thought because of fraud.
Speaking to reporters aboard Air Force One, Trump suggested that the administration and Elon Musk’s efficiency team found irregularities at the Treasury Department that could mean the U.S. government’s more than $36 trillion debt isn’t that high.
“We’re even looking at Treasuries,” Trump said. “There could be a problem – you’ve been reading about that, with Treasuries and that could be an interesting problem.”
“It could be that a lot of those things don’t count. In other words, that some of that stuff that we’re finding is very fraudulent, therefore maybe we have less debt than we thought,” he added.
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It wasn’t clear from Trump’s comments whether he was referring to debt service or other government payments that are handled by the Treasury Department.
FOX Business reached out to the Treasury Department for clarification.
“It is virtually impossible that President Trump’s comments refer to the debt held by the public, including foreign holders,” said Maria Vassalou, head of the Pictet Research Institute. “This is the reason the market is not reacting and any reaction would be based on misunderstandings or misinformation.”
She added that about one-fifth of the gross U.S. federal debt is held in government accounts that are mostly related to trust funds for Social Security and Medicare, adding that Trump’s comments “most likely refer to that portion of U.S. debt.”
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“(Markets) do care and should care, absolutely, given the $35 odd trillion in public debt,” said Martin Whetton, head of financial markets strategy at Westpac in Sydney. “In short, until it is clarified it is meaningless.”
Given the lack of certainty over what Trump intended to say, financial markets have focused on the economy and the Federal Reserve’s path for interest rate cuts later this year.
The Labor Department on Friday reported the U.S. economy added 143,000 jobs in January, below the 170,000 jobs expected by LSEG economists.
The market’s expectations around the Fed’s plan for interest rate cuts were little changed by the news, with the probability of the Fed leaving rates unchanged at its March meeting rising to more than 91% from 86% a week ago, according to the CME FedWatch tool.
Reuters contributed to this report.
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