Sen. Lindsey Graham (R-SC) appeared Thursday night on Fox News’ Hannity and proposed a stark measure against the Chinese government: refusing to pay U.S. national debt held by China “because they should be paying us” instead as a result of the coronavirus pandemic.
Graham’s proposal, if congressional Republicans and the Trump administration actually tried to carry it out, would seriously damage America’s standing in international finance — and potentially the entire world economy — and it’s arguably unconstitutional, too.
So where did Graham get this idea? One potential source is Fox News.
On the Monday night edition of Tucker Carlson Tonight, the eponymous host began a segment with author Gordon Chang, a frequent Fox guest and senior fellow at the right-wing and anti-Muslim Gatestone Institute, by claiming, “This pandemic is the direct fault of the government of China,” and stating that “China, of course, should foot the bill for” damages to the United States. (The Fox prime-time host also continued to push the conspiracy theory that “there is some evidence” the COVID-19 pandemic originated in an infectious disease research facility in Wuhan — “accidentally,” as Carlson put it.
The potentially disastrous effects of any U.S. debt default — both to the U.S. economy and to markets around the world — have been explored before, during fights between then-President Barack Obama and House Republicans over the debt ceiling. Furthermore, it has long been argued — even in right-wing circles — that repudiating national debt is unconstitutional under the 14th Amendment, which declares that the “validity” of the federal debt “shall not be questioned.”
And as Vox’s Matt Yglesias points out, there might not even be any conceivable mechanism to just default on government bonds selectively held by a single entity, in this case the Chinese government. After all, China could simply sell the bonds back out on the open market at the first hint of such a policy coming forward in any serious manner.
So even if this scheme was attempted, it would likely not work to its desired end of punishing China. But at the same time, America’s economic health and standing in the world could still be seriously damaged just by the attempt to implement Fox News’ bluster.