Erin Burnett At Odds With Her CNN Colleagues Over Debt Ceiling

Blog ››› ››› JUSTIN BERRIER

Erin BurnettCNN host Erin Burnett attempted to downplay the consequences of reaching the debt ceiling, ignoring both the reporting of her CNN colleagues and experts who warn that passing the debt ceiling would result in default and economic harm.

On the October 8 edition of CNN's OutFront, Burnett argued that the conversation around reaching the debt limit had become "hyperbolic," claiming "experts tell us you can reach the debt ceiling without defaulting on the debt" because "if the debt ceiling is breached, there is enough money to fund half to two-thirds of the economy." Burnett repeated one economist's claim that "The bottom line is there is enough money coming in to pay the interest on the debt, the military, and up to two-thirds of government activity":

Earlier in the day, however, CNN anchor Christine Romans argued against proponents of prioritization, saying: "You hear people like Congressman Ted Yoho and others talk about, you know, 'Oh, they'll just have to prioritize.' You can't. There's not enough money that we finance the operations of the government. It would be instant austerity that many economists say could send us into a recession if they don't work this out":

Experts have also pointed out that the prioritization plan Burnett pushed would not prevent default. Deputy Treasury Secretary Neal Wolin wrote in a Treasury Department blog that prioritizing debt payments "would not actually prevent default":

While well-intentioned, this idea is unworkable.  It would not actually prevent default, since it would seek to protect only principal and interest payments, and not other legal obligations of the U.S., from non-payment. Adopting a policy that payments to investors should take precedence over other U.S. legal obligations would merely be default by another name, since the world would recognize it as a failure by the U.S. to stand behind its commitments. It would therefore bring about the same catastrophic economic consequences Secretary Geithner has warned against.

Business Insider post also pointed out: "It's not true that on all days the Treasury has more money coming in than it has to pay out. ... The U.S. might be able to prioritize for a few days, but come November the U.S. would have to pay way more than was coming in that day, and we'd have a real breach no matter what." The post included a chart that compiled data from Goldman Sachs and the Treasury Department, showing that by early November, the combination of headroom under the debt ceiling and cash balance would reach zero by early November:

Another of Burnett's CNN colleagues pointed out that the consequences of reaching the debt ceiling would have a devastating effect on the stock market. During the October 8 edition of The Lead, CNN business correspondent Alison Kosik responded to a question about the debt ceiling's effect on the economy by noting that "if a default happens, there's one analyst who says that the S&P 500 could drop 45 percent":

Posted In
Economy, Budget
Network/Outlet
CNN
Person
Erin Burnett
Show/Publication
Erin Burnett OutFront
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