Fox Pushes "Impossible" Claim That U.S. Could Soon Become Like Greece
In recent days, Fox News has fearmongered that the United States could soon experience the economic struggles seen in Greece. But economists have pointed out that the two countries' economies are not comparable and said that it is "impossible" for the United States to experience the same economic problems as seen in Greece.
Fox Figures Repeatedly Claim U.S. Could Experience Similar Economic Problems As Greece
Varney: We Could "Look Like Greece Within Three Years." On the August 2 edition of Fox News' Hannity, Fox Business host Stuart Varney claimed "we're getting to" debt at 200 percent of GDP "very, very soon, and we [could] look like Greece within three years." From Hannity:
VARNEY: The economy is not growing. Consumers are -- contracting this spending.
SEAN HANNITY (host): Do you see the potential depression? And I'll go back to Andrea.
VARNEY: No, that is too strong. You don't want to do that kind of blue stripe forecasting and say...
HANNITY: Hey, if we get 200 percent of GDP, with GDP ratio in 10 years, well, that's a depression. All right, Andrea, take.
VARNEY: We're getting to that position very, very soon and we look like Greece within three years. [Fox News, Hannity, 8/2/11, via Nexis]
Stossel: With Smaller Incremental Spending, "We'll Become Greece A Little More Slowly." On the August 2 edition of Fox News' The O'Reilly Factor, host Bill O'Reilly asked Fox News host John Stossel "if the Democrats win [the next election], then it will be what we have now, just, you know, with littler increments of spending. Smaller increments?" Stossel responded "we'll become Greece a little more slowly." From The O'Reilly Factor:
STOSSEL: What's bad is this doesn't slow the growth of government much. It's still going to grow faster than we can pay for it. We're still on unsustainable course. And they're already screaming about the cuts that haven't been made
O'REILLY: All right. But at this point, doesn't it all come down to the next presidential election and the next senatorial election that, if Republicans get elected, then the government will be, I guess, rehauled [sic], overhauled. But if the Democrats win, then it will be what we have now, just, you know, with littler increments of spending. Smaller increments?
STOSSEL: And we'll become Greece a little more slowly. [Fox News, The O'Reilly Factor, 8/2/11, via Nexis]
Hannity: "America Is Now On A Trajectory To Greece." On the August 1 edition of his Fox News show, Sean Hannity claimed that "America is now on a trajectory to Greece." From Hannity:
[Daily Caller Contributor Jamie] WINESTEIN: [Obama is] not for free trade. I think that's a problem because -- but I think the larger problem is this. Decline is a choice that America can choose to decline or we can choose to lead the 21st Century.
What we're doing here is we're cutting defense. We're not getting our entitlements under control, and that's a choice to decline, and allow other countries to rise up as a social power. I don't think we should be doing that.
HANNITY: In that sense I think that Michele Bachmann is right. America is now on a trajectory to Greece. That's why independents -- forget the fact I knew that this was the Obama that was elected. A lot of people didn't listen to me. Forget Sean Hannity, conservative. The polls, Bob, and you are a big poll reader. The polls are not wrong. [Fox News, Hannity, 8/1/11, via Nexis]
Benkie: "If We Re-Elect Barack Obama ... We Are Greece. We're In Big Trouble." On the August 3 edition of Fox News' Fox & Friends, co-host Gretchen Carlson claimed that the recent default crisis compromise cut "less than 1 percent of our outstanding total public debt" and asked GOP strategist Dee Dee Benkie, "What does it say about where we are down the road 10 years from now with our debt -- 20 years, 30 years?" Benkie replied: "This is very simple. If we re-elect Barack Obama, we're in Greece. We are Greece. We're in big trouble. This guy is taking us to financial ruin. We are doomed." [Fox News, Fox & Friends, 8/3/11]
But Economists Say It Is "Impossible" For U.S. To Experience Problems Seen In Greece
Bartlett: "The Sort Of Problem Greece Is Experiencing Is Impossible Here." In a June 14, 2010, blog post, former Bush Treasury official and conservative economist Bruce Bartlett noted that "the sort of problem Greece is experiencing is impossible here." From Bartlett's blog post:
The recent financial crisis in Greece has led to a lot of discussion about whether the United States might one day have a public debt so large that default becomes a real possibility. While the sort of problem Greece is experiencing is impossible here, we have another problem that, to my knowledge, no other nation on Earth has: a legal limit on government debt that Congress must raise periodically. This peculiarity of our fiscal system could indeed lead to a default on the debt, with repercussions that advocates of default -- yes, they exist -- have absolutely no clue about.
The main reason the U.S. cannot suffer the sort of debt problems of Greece and other eurozone countries is that all our debt is denominated in dollars, of which we essentially have an unlimited supply. Because its monetary policy is controlled by the European Central Bank, Greece can't just print euros the way we can print dollars. And the Federal Reserve will always ensure the success of a Treasury bond auction. De facto monetization of the debt could be inflationary, but default resulting from a lack of demand for Treasury bonds is not really possible. [Capital Gains And Games, 6/14/10 ]
Galbraith: "The Big Kabuki" Is That "The United States Might Face The Fate Of Greece." In a July 11 post on the blog New Deal 2.0, University of Texas economics professor James Galbraith noted:
In the Daily Beast on Sunday, Howard Kurtz wrote in optimistic terms of the prospects for a deficit bargain: "But away from the cameras, even sharp-tongued politicians recognize the imperative of avoiding the fate of Greece. It is a sign of the times that the Kabuki players of Washington may take a bow simply for averting catastrophe."
Kurtz did not say that the big Kabuki here was his own notion that somehow the United States might face the fate of Greece - a small and overmatched member of a currency zone it cannot control. [New Deal 2.0, 7/11/11 ]
Baker: "The United States Could Not End Up Like Greece." In a March 25 post for the Center for Economic and Policy Research titled, "The United States Could Not End Up Like Greece," economist Dean Baker responded to the claim that America could "still end up like Greece" by noting:
Actually this is not right for the simple reason that the United States has its own currency. This is important because even in the worst case scenario, where the deficit in United States spirals out of control, the crisis would not take the form of the crisis in Greece.
Greece is like the state of Ohio. If Ohio has to borrow, it has no choice but to persuade investors to buy its debt. Unless Greece leaves the euro (an option that it probably should be considering, at least to improve its bargaining position), it must pay the rate of interest demanded by private investors or meet the conditions imposed by the European Union/IMF as part of a bailout.
However, because the United States has its own currency it would always have the option to buy its own debt. The Federal Reserve Board could in principle buy an unlimited amount of debt simply by printing more money. This could lead to a serious problem with inflation, but it would not put us in the Greek situation of having to go hat in hand before the bond vigilantes. [Center for Economic and Policy Research, 3/25/11 ]
Krugman: "The United States Needs Fiscal Adjustment," But "We Really Don't Look Like Greece." In a May 12 New York Times blog post, Nobel Prize winning economist Paul Krugman noted:
Basically, the United States can expect economic recovery to bring the deficit down substantially; Greece, which has a larger structural deficit and also faces a grinding adjustment to overvaluation with the eurozone, can't.
Yes, the United States needs fiscal adjustment -- Auerbach and Gale say that we have a long-run fiscal imbalance of 6-plus percent of GDP, although much of that could be closed by reining in health costs. But we really don't look much like Greece. [New York Times, 5/12/11 ]