Limbaugh Displays His Own Debt Ceiling Ignorance While Attacking CNN's Velshi
Blog ››› ››› TERRY KREPEL
UPDATE: Velshi responds to Limbaugh.
Rush Limbaugh insisted that the federal debt ceiling is like a limit on credit card spending in an attempt to prove that CNN's Ali Velshi was a "low-information reporter." In fact, by attacking Velshi, Limbaugh demonstrated his own ignorance on the debt ceiling; failure to raise the debt ceiling is actually like refusing to pay a credit card bill because it restrains the government's ability to pay its debts, not future spending.
On the January 4 edition of his syndicated radio show, Limbaugh told his listeners that "some of you have limits on your credit cards," adding, "Think of the federal budget as much the same. Think of the debt limit as your monthly credit card limit. You can't go over it on your credit card, and the United States government can't spend more than what its credit limit is, or its debt limit." Limbaugh then criticized CNN chief business correspondent Ali Velshi for saying the debt limit has no relation to spending.
In fact, Velshi is correct -- the debt ceiling does not constrain spending, only the ability of the federal government to pay its debt after the money has been spent.
Federal Reserve Chairman Ben Bernanke explained in a July 2011 congressional hearing: "The analogy about balancing your check book and getting your finances in order is wrong. The right analogy for not raising the debt ceiling is going out and having a spending spree on your credit card and then refusing to pay the bill. That's what not raising the debt limit is."
A Bloomberg View editorial further stated:
Republicans (and more than a few Democrats) may think that the government is putting too much on its credit card. That's a different argument. To reduce its debt, the federal government has to stop putting so much stuff on its card in the first place. It can't just say it's going to stop paying for what it has already bought, which is what rejecting a debt-limit increase would amount to.
Limbaugh went on to mock Velshi's claim that Americans are "engaged" on budget issues by playing clips from entertainment shows about celebrities making money, such as Kim Kardashian possibly posing nude while pregnant, to suggest that this is the only way Americans understand the economy.
UPDATE: On the January 8 edition of CNN Newsroom, Velshi highlighted Limbaugh's criticism and once again explained the debt ceiling. He stated that it was created to allow the Treasury Department to borrow "chunks of money" in order to avoid having to get approval from Congress to issue bonds every time a spending bill was passed," and that "it had absolutely nothing to do with spending control or debt control." Velshi concluded, "Rush, I hope you're taking notes."