O'Reilly's Comparison Of California To Cyprus Wraps Old Lies In New Fearmongering
Fox News host Bill O'Reilly endorsed the idea that the state confiscation of money from private bank accounts currently underway in Cyprus is likely to come to America, agreeing with a viewer's suggestion that “California will be America's Cyprus.” His fearmongering is based on misrepresentations about how debt works in general, and about California's budgeting realities specifically.
According to O'Reilly, California will inevitably default on its debt, and when that happens the state will simply start taking private property from Californians to settle up what it owes. From the March 27 edition of Fox News' The O'Reilly Factor:
But debt does not work the way O'Reilly suggests. California can continue to service its debt, avoiding default even without reducing the principal amount owed, provided it stabilizes its debt levels. And it's doing exactly that, with a projected surplus in the current fiscal year after a combination of steep spending cuts and significant tax increases. Standard & Poor's upgraded the state's debt as a result, which should help further reduce the state's cost of borrowing (which is already half of what it was when Gov. Jerry Brown took office in 2011).
Furthermore, according to CNNMoney, “California should have enough money next year to increase funding for education and pay down debt, while setting aside $1 billion in a reserve fund." O'Reilly failed to mention the state's recent, hard-won fiscal discipline, which belies his portrayal of the state's fiscal outlook.
The Cyprus comparison would remain ludicrous even if California were not exhibiting increased fiscal health, as former Federal Deposit Insurance Corporation chair Sheila Bair has explained that such an arrangement "would never happen in the U.S. because we respect the rule of law and we have a strong agency called the [FDIC] that stands up for insured depositors and protects them." But O'Reilly's factual errors served an additional purpose that's common in the right-wing media.
O'Reilly used the Cyprus fearmongering as a pivot to familiar falsehoods about the origins of California's debt. As Media Matters has repeatedly shown, the state's red ink stems not from union greed, but from budget laws that tie legislators' hands and ballot measures that simultaneously depressed tax revenue and increased the state's obligations. The conservative media's misdirection of blame for fiscal issues almost always ignores the cyclical, recession-driven nature of those balance sheet problems. But O'Reilly went further, ignoring the widely-reported end of Californian deficits to advance the same old canards about public finances.