STEVE KORNACKI (HOST): Joining me now, economist Doug Holtz-Eakin, who said this about Trump's economic predictions: “it's irresponsible. It's baffling that he would do this, and also substantively wrong. There is no recession in sight.” Doug is president of the American Action Forum, he was the top economic adviser to John McCain's 2008 campaign, he's also a former director of the nonpartisan Congressional Budget Office. Doug, thanks for joining us. So -- well, let me start with this, what we just had there. Donald Trump says the real employment rate somewhere in the in the twenties, he says we're sitting on a financial bubble, that a recession is in sight. That's his take on the economy. How would you describe the state of the American economy right now?

DOUGLAS HOLTZ-EAKIN: Well, I think everyone knows that it's not as strong as we'd like it to be, obviously there's been a lot of pain in the labor market during the recovery. But, look, you can't get a recession without having household spending, which is two-thirds of the economy, actually falling. And right now the combination of wage growth, job growth, and hours growth adds up to something that looks like six -- almost six percentage point growth per year, in sort of payrolls. And that's the kind of income growth that will support household spending, you're not going to get a recession with that kind of an outlook.

KORNACKI: Let me you ask about this claim about the unemployment rate. I think we can put this up on the screen, this kind of looks at the employment level going back, really to the start of the Obama -- well, this is the current one. In the most recent report, more than 200,000 jobs added in March, the unemployment rate sitting at five percent. If we put this in a little context, six years ago, it was sitting up near ten percent, basically now half of that at five percent. With Trump -- and I've heard others throw numbers like this around, I'm curious as an economist, when Trump makes that claim, the real unemployment rate is in the 20s -- do you have any idea what kind of math he's using to get that kind of -- where he's getting that from?

HOLTZ-EAKIN: I don't know where he's getting his numbers. I do know that you can adjust that, the sort of typical unemployment rate, for the kinds of workers who are marginally attached to the labor force, working less than they would like to. So, part-time work, you know, a variety of measures that actually are put out by the Labor Department, and the broadest measures is known as the U-6 unemployment rate. That's at nine percent or so. So, It's hard to get to 20. We know that labor force participation has fallen during the recovery, we kjnow that -- you know, unemployment has come down, and the combination of those two things just gets you to a point where you can't be saying that 20 percent of Americans who want to have a job don't have a job.

KORNACKI: So he is tapping into something though, clearly.

HOLTZ-EAKIN: Sure.

KORNACKI: And when you look at the raw statistics, an unemployment rate being cut in half over the last five, six years, down to 5 percent, what is it, though? You say the economy is not as strong as we think. What are the things you think he's specifically tapping into? Are there economic indicators, numbers, pieces of data you would look at and say, this is where Trump resonates when he says things like this?

HOLTZ-EAKIN: I think the key is very simple. If 5 percent is the unemployment rate, that means 95 percent of those who want to work are at work, but they haven't had a raise. They haven't had a raise since before the great recession. They've lived through their house prices collapsing, really bad wage growth, the median family income declining during the recovery. And that has generated some real economic distress out there. He's tapping into that. And, you know, people don't know what the numbers are, that I promise you. I live by the numbers and people find that the least interesting thing you can talk about. They know they're not doing well. They hear Donald Trump say, “Hey, we have a big recession coming, we've got big problems in the stock market and 20 percent of people are unemployed.” And that resonates with them saying “Yeah, things aren't so good, and I'm worried about it, and I'm worried about my future.”

KORNACKI: And finally, there's also this subject of the national debt. It sits near $20 trillion right now, $19 trillion. And Donald Trump promising in this article, he says he can get rid of that, he can wipe that away in eight years. When you look at the numbers, this is a guy, he says he does not want to touch entitlement spending, he doesn't want to touch Social Security and Medicare. He says he does favor a tax cut, so he would reduce revenue coming in. He would not be cutting a big source of expenditures, entitlement programs. What would it take with those parameters, what would it take to accomplish what he's talking about?

HOLTZ-EAKIN: Look, this is pretty simple. He will inherit $6 trillion of deficits on, you know, baked into the budget from this administration. So first, he's going to take care of that. Then there's another $14 trillion in debt in the hands of the public, so that's $20 trillion he's got to somehow get his arms around in eight years. Two and a half trillion a year. Well, right now we spend, for entitlements, about two and a half trillion a year. So he could wipe out all the entitlements and get there, but as you pointed out, he's promised not to touch Social security or Medicare. There isn't enough defense and non-defense annual spending to cover that, so he can't go there, so he would have to raise taxes, but he's already promised to cut taxes. The bottom line is that it just doesn't add up and it's not going to happen.

Previously: 

On CNN, Art Laffer Defends Trump's Lies About Unemployment And His Laughable Plan To Eliminate National Debt

CNN's Christine Romans Fact-Checks Donald Trump's False Unemployment Rate Claims

Right-Wing Media's False Unemployment Statistics Seep Into Trump's NH Victory Speech

Bill O'Reilly Lets Donald Trump Push Conspiracy That 4.9 Percent Unemployment Rate Is A “Phony Number”