President Trump left more than a few economists scratching their heads last night when he told Sean Hannity on Fox News that recent gains in the stock market in some way reduce the national debt:
"The country — we took it over and owed over 20 trillion. As you know the last eight years, they borrowed more than it did in the whole history of our country. So they borrowed more than $10 trillion, right? And yet, we picked up 5.2 trillion just in the stock market, possibly picked up the whole thing in terms of the first nine months, in terms of value. So you could say, in one sense, we're really increasing values. And maybe in a sense, we're reducing debt.”
Experts were quick to point out that there is no clear link between the stock market and the national debt. "The stock market's gains have virtually nothing to do with the size of the national debt, which continues to rise because government spending far exceeds government receipts," economist Greg Valliere told CNNMoney. Trump’s comments did find some defenders, who said Trump wasn't completely off base. MarketWatch’s Steve Goldstein argued that “to a degree, the ability to service the debt has improved because of the stock market’s rise.”
The Committee for a Responsible Federal Budget was having none of that, noting that capital gains taxes accounted for only 4 percent of total federal revenue last year, and even a record jump next year wouldn't amount to much. In the end, they say, "there is no 'sense' in which higher stock market value led to lower national debt. The two numbers are completely unrelated to each other."