From the October 12 edition of MSNBC Live with Velshi and Ruhle:
ALI VELSHI (CO-HOST): We woke up to some head scratching claims from President Trump. Listen to this:
DONALD TRUMP: 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.
VELSHI: That is nuts. For fact's sake, stock price increases have absolutely nothing to do with the federal debt. Let me show you how this works. Debt is what the government owes through spending. The only way to reduce debt is to increase the money that goes to the government. Either by raising taxes or with stronger economic growth or by reducing spending. The market gains --
STEPHANIE RUHLE (CO-HOST): Can you just say that again for me? So the president lied to the American people, the forgotten American who is saying “I want to have more money, I want to reduce the deficit.” The only way you're going to reduce the national debt -- and yes, it ballooned under the Obama administration -- is if you raise taxes and cut spending. Neither of which are happening. Tying that to the stock market is pure garbage.
VELSHI: Doesn't make any sense at all. These market gains that the president was talking about, that's money that companies make. We talk about how they grow the economy, but it does nothing to affect the debt. There's some abstract way in which you say if companies make more money they pay more taxes and that reduces the debt. That's not what the president was talking about. He made a mathematical equation that is absolutely incorrect. Unless you raise taxes, which apparently doesn't seem to be the plan. Let's talk about what the president has said about that.
VELSHI: Generally speaking, when companies get tax cuts, they keep them for themselves and distribute them to their shareholders. It doesn't work its way through to wages. We also want -- the president wants to cut the tax rates. We currently have seven tax brackets, which apply to different levels of income. The president is proposing going through to three. But we don't actually know who falls into these three. And there's some estimates that in the middle, some families might actually end up paying more in taxes when they end up in a higher tax bracket. We have to find out more information to confirm or deny what the president is saying. Now, according to estimates, the president's plan could add -- listen to this, Stephanie -- could add between $2.2 trillion and $2.7 trillion to the debt.
RUHLE: How does the Freedom Caucus feel about that? So, to the president's point about cutting the national debt, this is the opposite of cutting the national debt. The polar opposite.
VELSHI: Opposite of cutting. A red arrow going up is the opposite of cutting. So, I just -- This is unbelievable, I can't understand what this is all about.
VELSHI: Go back to 2009 when President Obama took office in that month. The S&P 500 was at about 800. That was the level of that exchange. Take a look at where it went through the entire Obama administration. This is until Donald Trump took office. If you want to just take a straight edge of some sort -- let me just grab a piece of paper -- and if you were to draw a continuous upward line, guess where you'd be? Right where we are today. It stands at 2,100. So, again, it's a dangerous game. You live by the sword, you die by the sword. If you want to talk about stock market gains, and what they're due to, we have had one, as you said, for 113 straight months. That conversation with [Sean] Hannity was just weird.
RUHLE: How are [National Economic Council Director] Gary Cohn, how are [Secretary of the Treasury] Steve Mnuchin possibly going to defend President Trump's statements last night? And you do have some smart economists. You've got guys like Larry Lindsey, who have said “I think the tax reform plan will work.” But it gets muddied and destroyed by the president's own hand with nonsense talking about stock market gains wiping out the national debt.