Fox's Chris Wallace falsely claimed that President Obama has proposed a plan where Congress would give up its power to control the debt limit. In fact, under the proposal Congress would still have a role in authorizing debt ceiling increases, while making it more difficult for legislators to cause economically harmful and potentially disastrous crises by holding up necessary increases in borrowing authority.
Wallace claimed on Fox News Sunday that the White House is proposing "in effect that Congress gives up its power over the debt limit." He also said to House Speaker John Boehner that Obama and Democrats "want you, Congress, to give up any powers over voting an increase in the debt limit forever."
In reality, according to reporting from The Washington Post's Ezra Klein, the administration's proposal maintains a role for Congress in approving debt limit increases. The proposal would subject attempts by the president to raise the debt limit to a congressional vote. The president can veto a resolution denying the increase in borrowing authority, and Congress can still prevent the ceiling from rising by overriding the veto.
According to Klein, the proposal "could do more to protect our economy than anything else in the debt deal." That's because a fight over the debt limit, like the one that occurred in the summer of 2011, can have negative economic consequences even if the issue is resolved before the administration loses the ability to finance government spending.
The Bipartisan Policy Center estimated that that episode cost taxpayers nearly $19 billion in additional interest costs. If Congress doesn't allow the debt limit to rise, and the U.S. was unable to pay the interest on its debt, "financial markets would unravel and the U.S. and global economy would enter another severe recession," in the words of economist Mark Zandi.