Fox Vs. Fox: Debt Ceiling Edition
In the past week, Fox hosts have contradicted each other and even themselves in their rush to opine on the upcoming vote to raise the debt ceiling. Economists and experts across the board agree that failure to raise the debt ceiling could have catastrophic consequences.
Napolitano, Hannity Agree: "The Debt Ceiling Should Not Be Raised"
Napolitano: "If I Were In The Congress, I Would Encourage Everybody To Vote Against Raising The Debt Ceiling." On the April 11 edition of his Fox Business show Freedom Watch, host Andrew Napolitano interviewed Rep. David Schweikert (R-AZ). During the interview, Napolitano spoke repeatedly about the debt limit and at one point said, "If I were in the Congress, I would encourage everybody to vote against raising the debt ceiling." From the show:
NAPOLITANO: You have a couple of crucial votes coming up, Congressman Schweikert ... I suggest to you, Congressman Schweikert, is one of the more crucial votes you'll have to make this year, and that's the vote on whether or not to raise the debt ceiling.
SCHWEIKERT: The debt ceiling.
NAPOLITANO: And here is where the Republicans alone -- they don't need the Democrats, they don't need Mrs. Pelosi and they don't need the Senate -- can stop the flow of red ink. Because if every Republican in the House, or a majority of the Republicans, simply says no, then the debt ceiling does not go up, and the president is forced to cover the debt service, defense, entitlements and discretionary spending just on what he collects every month. What are the chances of that happening?
SCHWEIKERT: Judge, I've got to tell you, you're speaking like I'm thinking, except there's a lot more in the details. What happens if we stand firm, and do we what's right on the debt ceiling vote, and the bond markets go nuts on us. Every point that interest rates go up on U.S. sovereign debt is close to another 100 billion dollars in debt service. And remember, the discussion is raising the debt ceiling functionally to pay the bills that the previous Congress have already spent the money on.
NAPOLITANO: Correct. Correct, correct.
SCHWEIKERT: And so where do you find the balance of convincing the world debt markets that we're taking our debt seriously, so we don't panic them, and at the same time we bend this curve in the spending? This is walking a tightrope, because if we screw up, boom, every bit of savings we've accomplished gets eaten up by higher interest rates, and if we don't do it enough, then the left keeps buying their next election by this crazy spending.
NAPOLITANO: Last question, Congressman Schweikert. And if I were in the Congress I would encourage everybody to vote against raising the debt ceiling. But you've analyzed this in a most respectful and intelligent way. What will the Republicans get from the president and the Democrats in return for voting to raise the debt ceiling that will permanently, permanently stop this red ink and this madness? [Fox Business, Freedom Watch, 4/11/11]
Napolitano Has Repeatedly Spoken Against Raising The Debt Limit. Napolitano has frequently used his Fox Business show as well as guest host positions on the Fox News Channel to speak against raising the debt limit. As a guest host on the March 10 edition of Fox News' Glenn Beck, Napolitano urged Rep. Jason Chaffetz (R-UT) and Sen. Jeff Sessions (R-AL) to vote against the debt limit. During the January 4 edition of Freedom Watch, Napolitano said, "It's an easy one for me -- the debt ceiling should not be raised." [Fox News, Glenn Beck, 3/10/11 ; Fox Business, Freedom Watch, 1/4/11 ]
Hannity: "I Would Not Vote To Raise The Debt Ceiling." During a panel discussion on the April 12 broadcast of Fox News' Hannity, host Sean Hannity said, "If I was in Congress, I would not vote to raise the debt ceiling." From Hannity:
HANNITY: If I was in Congress, I would not vote to raise the debt ceiling.
FOX NEWS CONTRIBUTOR, DOUG SCHOEN: Right.
HANNITY: Vote for a balanced budget amendment --
SCHOEN: I would with a plan to balance the budget absolutely.
[STAN] DZIEDZIC [FMR. OLYMPIC WRESTLER]: I think it is dangerous to go down that path.
DZIEDZIC: Well, you have to remember that -
HANNITY: Wouldn't force him to cut?
DZIEDZIC: If that was the end result, but you may - you may force a risk premium for uncertainty on the bonds --
HANNITY: Isn't China, isn't Europe lecturing us now on capitalism and how if we don't get control of our debt -- wouldn't they see that as a sign that America may actually get it? [Fox News, Hannity, 4/12/11, accessed via Nexis]
Varney, Goldberg Disagree: "It Would Indeed Be Armageddon" If Congress Did Not Raise Debt Ceiling
Varney: "No Politician Is Going To Allow The U.S. Government To Default ... But If It [Happened], It Would Indeed Be Armageddon." On the April 13 edition of Fox News' Fox & Friends, guest and Fox Business host Stuart Varney agreed with White House Press Secretary Jay Carney that failure to raise the debt ceiling would be "Armageddon." Varney added that it would be "the worst of all possible worlds economically." From the show:
CARLSON: So what will really happen if Congress does not vote to raise the debt ceiling by the May 16 deadline? Stu Varney says it would be Armageddon. You are agreeing with Jay Carney and President Obama.
VARNEY: Look, it's not going to happen, OK? No politician is going to allow the United States government to default. It's not going to happen. But if it did, it would indeed be Armageddon, OK? It would be the worst of all possible worlds economically. OK. Go through the chain reaction. All the world's big banks have lent Uncle Sam money. In the event of a default, Uncle Sam doesn't pay back that money. And the banks have no money. They are bankrupt. They cannot make car loans. They cannot make house loans. They can't finance smaller companies. Even their payroll. So you --
CARLSON: OK, so if it's not going to happen --
VARNEY: -- It would be an instant depression. Not going to happen.
CARLSON: This is a major bargaining chip for the Republicans, though --
CARLSON: -- who will say, the only way we're going to vote for this, President Obama, is if you give us tons of stuff in return.
VARNEY: Well, there's a great danger in that. Because as you approach this deadline, if you're even talking about default, as even a possibility, a remote possibility, you really spooked the world's money people. You really spook them. [Fox News, Fox & Friends, 4/13/11 ]
Goldberg: Not Raising The Debt Ceiling "Would Be Catastrophic." On the April 11 broadcast of Fox News' The O'Reilly Factor, Fox News contributor Bernie Goldberg discussed media coverage of the debt ceiling debate and predicted: "[Y]ou will see stories about how, if the Republicans play hard ball again and act, according to the words of the editorial, irresponsibly and like a bunch of radicals, how if they behave that way again when it comes to raising the debt ceiling, we could have a default in this country, and that would be catastrophic. It would be." [Fox News, The O'Reilly Factor, 4/11/11, accessed via Nexis]
Bolling Flip-Flops: "You're Gonna Have To Raise The Debt Ceiling" To "Let Them Default"
Bolling, April 12: "Look, You're Gonna Have To Raise The Debt Ceiling. No Doubt About It." On the April 12 edition of Fox News' Fox & Friends, during the segment with Varney, Fox Business host Eric Bolling, who was filling in for Fox & Friends host Steve Doocy, said:
BOLLING: So Senator Obama was against it. But President Obama [now] seems [to think] it's a good idea to raise the debt ceiling. Look, you're going to have to raise the debt ceiling. There's no question about it. You can't get another year and a half without raising it. But you really, really have to go and -- forget the machete or the scalpel, take a chainsaw to the budget, start cutting now, and then go ahead and raise the debt ceiling. [Fox News, Fox & Friends, 4/12/11]
Bolling, April 13: "I Say Let Them Default." The next day, while still guest-hosting on Fox & Friends, Bolling told Varney, "I say let them default. ... What's going to happen?" Varney replied, "Armageddon is going to happen." From the show:
VARNEY: There's a great danger in that. As you approach this deadline, if you're even talking about default, as even a possibility, a remote possibility, you really spook the world's money people. You really spook them.
BOLLING: I say let them default.
BOLLING: Let them go. What's going to happen?
VARNEY: You're a brave guy.
BOLLING: What's going to happen?
VARNEY: Armageddon's going to happen.
BOLLING: How is it going to be Armageddon? Let's talk about that for a second.
VARNEY: OK. If we fail to allow ourselves to borrow any more money --
BOLLING: I know the process. And then everyone raises their hands and says, "Oh my God, the U.S. is going to default." Well -- where are they going to go? If the U.S. defaults, every other country in the world is going to default, too.
VARNEY: We're paying out --
BRIAN KILMEADE (co-host): That sounds like Armageddon.
VARNEY: We're paying out -- yeah, exactly.
BOLLING: My point is they're going to get the -- the theory that let's let it go and see what happens -- I like it. I like it. Because we could default and then get the spending under control. Get everything we want in default. It's -- for my -- for my dollar, let them go. Let them get to the point where --
KILMEADE: We can't get a credit card for seven years after that. As a country.
BOLLING: We'll get it the next day. China will be on our doorsteps saying, when can we give you money again?
VARNEY: You think?
BOLLING: Yeah, I do.
VARNEY: OK. If you don't allow us to borrow any more money, you've got $350 billion every month going out and only $200 billion coming in.
BOLLING: That's got to stop. That will force it to stop. That will guarantee --
VARNEY: So you've got an immediate $150 billion cut every month.
BOLLING: That will guarantee in order for it to come out of default, you have to stop spending. [Fox News, Fox & Friends, 4/13/11 ]
Experts Agree That Failure To Raise The Debt Ceiling Would, Indeed, Be Catastrophic
Politico: U.S. Going Into Default Is "An Unthinkable Idea To Many Economists And Market Participants." From Politico:
Republicans are growing increasingly concerned about the impact a bruising fight over raising the nation's $14.29 trillion debt ceiling could have on U.S. financial markets.
House Speaker John Boehner (R-Ohio) has had conversations with top Wall Street executives, asking how close Congress could push to the debt limit deadline without sending interests rates soaring and causing stock prices to go lower, people familiar with the matter said. Boehner spokesman Michael Steel said Tuesday night that he was not aware of any such conversations.
Treasury Secretary Timothy Geithner has warned Congress that without new borrowing authority, the federal government could hit the statutory debt limit by May 16.
Treasury could then implement emergency measures to continuing making interest payments on existing debut until around July 8. After that, the U.S. risks going into default, an unthinkable idea to many economists and market participants who say such an event could drive scores of large banks into failure, send interest rates skyrocketing as foreign investors abandon U.S. securities and crush the already slow-going economic recovery. [Politico, 4/13/11 ]
MSNBC: If Default Causes Interest Rates To "Rise Too Far, Too Fast, The U.S. Economy Could Face The Risk Of Another Recession." From an April 11 article on MSNBC's website:
Washington is gearing up for a battle over how many trillions the federal government can borrow to pay its bills, and it's shaping up to be an even bigger brawl than the one just resolved over funding the government for the next six months.
While investors viewed last week's budget brinksmanship as a minor event, they are beginning to grow concerned that many lawmakers and ordinary Americans, [sic] fail to grasp the implications of even suggesting the United States would default on its debt obligations.
What is a political football to Congress could end up flattening the economy and hurting consumers by lowering the nation's pristine credit rating and sending interest rates sharply higher.
So far, bond market investors apparently are not very worried; the United States has never defaulted on its debt and many have long thought a default unimaginable. On Monday, amid the rancorous aftermath of the budget battle that nearly shut down the government, bond prices were flat.
But some investors are betting that bond prices are headed lower. As the Federal Reserve wraps up a $600 billion round of bond buying designed to keep interest rates low, many investors are wondering what will replace that program when it expires in June. On Monday, the giant investment fund PIMCO, which recently dumped its holdings of U.S. Treasury securities, disclosed that it has gone even further and is now selling U.S. debt short -- a bet that bond prices have further to fall.
Falling bond prices hurt more than the investors who hold them. As prices fall, interest rates rise. If they rise too far, too fast, the U.S. economy could face the risk of another recession. Without borrowing authority, the government would be powerless to pay all its bills, much less assemble another stimulus package to revive the economy. [MSNBC, 4/11/11 ]
Ex-Treasury Official: "This Would Make the Lehman Brothers Bankruptcy Look Like A Walk In The Park ... They're Really Playing With Fire." From The Huffington Post:
If Congress doesn't raise the $14.3 trillion debt limit by mid-May, the U.S. government will have to resort to emergency measures to avoid default. One missed payment, which could happen as soon as July if the ceiling is not raised, would likely set off a widespread global panic, causing borrowing costs to skyrocket and severely crippling the nation's economy.
But Republican lawmakers have said they will use the debt limit as a means of enforcing fiscal austerity, insisting they won't raise it without winning concessions from Democrats.
Meanwhile, Jim Millstein, the former restructuring officer at Treasury, who helped reorganize AIG, outlined how disastrous the consequences of default would likely be. Speaking on CNBC on Tuesday, he said that a Treasury default would affect investors of all sorts, and he criticized those who downplay the consequences.
"This would make the Lehman Brothers bankruptcy look like a walk in a park on a sunny day," he told CNBC's David Faber. "They're really playing with fire." [The Huffington Post, 4/13/11 ]