The Sunday morning political talk shows from this past weekend had two big pieces of obvious chat-show schtick to choose from: the first being the pageantry of the new Congress taking their seats for the first time, and the second being the transition from the last fight over the fiscal cliff and the next fight with the dangerous psychopaths who are threatening to breach the debt ceiling, default on America's sovereign credit and plunge the global economy into chaos.
Each show settled on its own blend of these two themes (along with a generous dollop of Chuck Hagel nomination speculation), so the issue of the debt ceiling was more fulsomely discussed on some shows than on others. I went back through the transcripts to find out what media figures are starting off on the right foot by correctly characterizing the breach of the debt ceiling as an unthinkably irresponsible thing to do, and what media figures are being dangerous idiots who will coddle lunatics.
Let's begin, however, by remembering what is at stake. Should the United States breach the debt ceiling, there will be a short window of time in which the U.S. Treasury can forestall the worst effects of this insanity by temporarily suspending payments on certain obligations, including benefits to Social Security, Medicare, veterans and federal employees pensions and salaries. Eventually, the Treasury can also hold off disaster by suspending tax refunds, various payments to state governments and vendors, military salaries and student loans. This is all in addition to suspending payments on the interest and principal on the debt.
Even if the Treasury were able to avoid officially defaulting on the debt by prioritizing interest payments, the government would have to immediately cut expenditures by roughly 10 percent of that month's GDP, and more than that as time went on. This means Social Security checks would be cut, doctors would not be reimbursed in full for seeing Medicare and Medicaid patients, and private contractors doing business with the federal government would not be paid. All of this would constitute a massive demand shock to the economy.
And the Treasury has advised Congress that they will not escape the wrath of this calamity through some legislative gimmick:
Suggestions that Congress could somehow evade responsibility for raising the debt limit by passing legislation to "prioritize" payments on the national debt above other legal obligations of the United States are simply not true. This would not prevent default, since it would seek to protect only principal and interest payments and not other legal obligations of the United States from non-payment. Adopting a policy that payments to investors should take precedence over other U.S. legal obligations would merely be default by another name, since the world would recognize it as a failure by the United States to stand behind its commitments. It would therefore bring about the same catastrophic economic consequences.
What's important to remember is this brief period of time when Treasury is frantically plugging holes in the economic firewall and everything is merely terrible is the good period of time after the debt ceiling is breached. Eventually, the Treasury runs out of emergency stop-gap options, and at that point, the harm from the debt ceiling psychopaths goes from widespread economic mishap to full-scale default armageddon. As the folks at Mint.com explain, at that point, the crisis triggers a "chain of events that would bring about a financial crisis worse than the one suffered in 2008."
--Just like missing a payment on your credit card sends your APR through the roof, the U.S. would see its benchmark interest rates rise.
--Borrowing costs for states, municipalities, corporations, and individuals would rise sharply.
--Equity prices and home values would decline and the value of Americans' retirement portfolios would drop.
--Spending and investment would slow.
--Job losses and business failures would result.
--Internationally, U.S.-dollar denominated investments would lose their safe-haven status and the dollar would no longer be the dominant currency of global economic markets, putting further upward pressure on U.S. interest rates and discouraging further investment in the American economy.
This is why the responsible thing to do is to de-weaponize the debt ceiling as quickly as possible. Doing so does not forestall any grand debate on long-term budget trajectories, and it doesn't wreck the GOP's bargaining position in that debate, it only makes their bargaining position more responsible. At any rate, whoever loses the debate can simply campaign against the winners of the debate in these things called "elections" and re-stage the argument with a stronger mandate.
With all this in mind, let's take a look at the Sunday shows and who demonstrated the knowledge of the stakes -- and who got it terribly wrong.
ABC News' "This Week With George Stephanopoulos" and CBS News' "Face The Nation" devoted most of their time on the "new Congress" theme, and thus only touched on the issue of the debt ceiling while interviewing their lead subjects. In the case of "Face The Nation," this was House Minority Leader Nancy Pelosi and Senate Minority Leader Mitch McConnell, while Stephanopoulos got McConnell.
Schieffer, in general, correctly characterized the matter as grave. The only time he even wobbled was in this phrasing, to Pelosi: "Well, let me tell you, here are the big dates that are coming. End of February, Congress has to raise the debt ceiling to keep the country from going into default, as you say." It should be pointed out that the dire circumstances that arise from the debt ceiling aren't merely something that Nancy Pelosi "says" will happen: they are irrefutable facts. But chances are, Schieffer's teensy bit of equivocation is more related to an interviewer's tic than some larger derangement.
Stephanopoulos, perhaps informed by his experience as a presidential adviser, was pretty clear on correctly characterizing the circumstances that would arise if the debt ceiling was breached, and was largely willing to press McConnell on the matter. A representative question:
STEPHANOPOULOS: I accept that that's your point of view, but the division still seems to be there. So I'll go back to my original question: How far are you willing to take this strategy? Is it acceptable to you that the government default if the president won't agree to discuss spending cuts over the debt limit?
Stephanopoulos doesn't try to advocate here, he just refuses to concede the very obvious point that holding the debt ceiling hostage is a tacit threat of default.
From there, the remaining Sunday shows featured a greater focus on fiscal fights than the brand-new Congress, so the discussion of the debt ceiling was more prominent. Unfortunately, so was the stupidity.
On "Fox News Sunday," fill-in host John Roberts started off okay, correctly characterizing a debt ceiling showdown as "a danger going forward," but from there started to slip.
ROBERTS: So does the country need this debate? I mean, two years ago, we went from $14 trillion to $16 trillion debt ceiling. And everybody said how horrible that was. Now, we're talking about going from $16 trillion to $18 trillion, and that only takes us through 2014, in which point we're going to be talking about going to $20 trillion. So a lot of people are rightly asking, I think, when does this stop?
"Raising the debt ceiling" has nothing to do with permitting future spending. It is a weird ritual in which Congress publicly reaffirms that they will honor the obligations they have already made. So if we already know that in two future instances, another raising of the debt ceiling is scheduled to happen, then there is no real way of stopping that, short of using a time machine to return to the past and prevent laws from being enacted and money from being appropriated. Over the long haul, it's entirely possible to slow the rate of spending and bring down the deficit, but that's a debate that's best had without debt ceiling psychopaths holding sway over the discussion.
In other words, it is one things to say that irresponsible levels of spending should stop, and another thing to say that raising the debt ceiling should stop. The former position is arguably correct. But it is never a good thing to stop paying your bills. Roberts is courting disaster by framing the question this way.
Still, Roberts is just filling in here, and when it comes time to interview Sen. Ted Cruz (R-Texas), he's back to presenting the matter correctly, "Senator, are you willing to risk default on our debt by taking the debt ceiling battle right to the limit?"
Unfortunately, eventually Brit Hume gets to start talking, and he is just wrong as the day is long on the matter:
HUME: We hit the debt ceiling, we can't borrow anymore. Tax receipts continue to flow. They cover about 60 percent of the federal spending. Debt service is about 6 percent or 7 percent. So there'd be plenty of money, as Sen. Cruz pointed out, to cover the debt service. So what you'll hear, John, in the weeks ahead, is that we'll be defaulting on our obligations. That doesn't -- that's not reference to the kind of default you'd have if you didn't make payments on the national debt. That means you can't pay for all federal spending. And there would be, no mistake, major, major disruptions. But we need to be careful about the use of the term "default" because it's -- it really is scare talk.
As I've explained above, it is anything but scare talk. And Hume is taking the rosiest possible view of what the U.S. Treasury and Congress can do, in terms of temporary stop-gaps, once the debt ceiling is breached. This is dangerous, ignorant talk.
Hume went on to caution the GOP, on the grounds that holding fast to debt ceiling hostage taking was going to lead them to be "accused of shutting the government down." This is something you'll want to watch for, going forward: commentators who either characterize the worst effects of a debt ceiling breach as a "government shutdown" or who suggest that a "government shutdown" is somehow worse than defaulting on our credit. I assure you, a mere government shutdown is a walk in the park compared to a debt ceiling breach. The two are not equivalent. And if Hume is worried that the GOP will lose out politically because the government closes for a temporary period of time, then he should really be able to understand that they'll get a lot worse when they are blamed for torching the economy.
CNN's Candy Crowley also really struggled with the debt ceiling issue, to the point of embarrassment. After getting high marks for her performance as a presidential debate monitor, this past Sunday's outing was a dispiriting drop of the ball.
Here is one of the lowlights, a question she put to Sen. Dick Durbin (D-Ill.):
CROWLEY: [to Durbin] A final question for you, Senator. President Obama has said, 'Look, I'm not going to do any kind of negotiating over this debt ceiling. You all have spent this money,' -- and he points to Congress -- 'so you have to raise this debt ceiling.' He is, and we expect him to appoint Senator Chuck Hagel whom you know, a Republican senator, to be defense secretary. He's quite controversial amongst some of your Democratic colleagues, but especially among Republicans. What do these two stances by the president, his decision to go forward on a nomination that he knows will be controversial, and his decision not to deal at all on the debt ceiling with the Republicans. What does it tell you about President Obama's tone in this second term?
Aside from being just an amateurish attempt to link two issues of the day into one awkward interrogative, this is all just warped. Former Sen. Chuck Hagel, as a nominee for the Secretary of Defense position, absolutely comes with attendant controversies, depending on your perspective. He is deemed by many to be insufficiently favorable to the interests of Israel; he is deemed by others to be hostile to LGBT rights. If you are a neocon, you don't like his opposition to militarism. If you are a liberal, you don't know why Democratic presidents have to keep going to the GOP side for Defense secretaries.
In short, Hagel's fitness for the job can be argued. But there is nothing at all controversial about refusing to accept anything other than a clean raise to the debt ceiling. It is failing to raise the debt ceiling that's controversial. Think about it: Is it "controversial" to pay your landlord on time, as you promised to do? Because Crowley is suggesting that when your landlord tells you that you have to pay a set amount of money by a set date, this is a "controversy" that should, at the very least, cause one to question your landlord's "tone."
She also lets a debate between Neera Tanden of the Center for American Progress and the Wall Street Journal's Stephen Moore get way out of hand. At one point, she normalizes the behavior of default fanatics as the mere use of "leverage."
MOORE: Should we have an unlimited credit card?
TANDEN: No, you should pay your bills.
MOORE: That's what Tim Geithner said, 'Give the president an unlimited credit card.'
TANDEN: And what I would say to Republicans is that we have dealt with issues of default and all these issues about raising the debt limit without actually threatening a default for decades.
CROWLEY: But it's called leverage, right?
Later, she even fails to correct Moore for claiming that "there is no default," which is just a disastrous outcome for CNN viewers.
"Meet The Press" was not on my schedule to watch this weekend, and that was a huge mistake: this past week, the show that almost always disappoints me defied my expectations and just led the way on debt ceiling coverage. Granted, it did not get off to a great start, introducing the matter thusly: "Republicans have vowed to use upcoming votes such as the debt ceiling as bargaining chips to get more spending cuts and reforms to entitlement programs like Medicare -- some are even threatening another government shutdown."
Like I said, you have to sort of watch out for instances in which people mischaracterize a "government shutdown" as something that is either the main impact of a debt ceiling breach or somehow worse than a debt ceiling breach. But from there, Gregory constantly framed the idea of debt ceiling derangement as something irresponsible and dangerous. With McConnell, he characterizes it as "hostage ransoming":
DAVID GREGORY: Here's something you said in August of 2011 that I wanted to show our viewers and have you respond to. You said then, "I think some of our members may have thought the default on paying America's bills issue was a hostage you might take a chance at shooting. Most of us don't think that. What we did learn is this: It's a hostage that's worth ransoming." Is that the strategy for the coming fight over the debt ceiling?
He doesn't give up the correct characterization after McConnell responds, saying, "But leader, you said that that was a strategy, that's what you learned. So I want to come back to the question -- 'It's a hostage that's worth ransoming,' the debt ceiling of the United States government." He goes on to present the responsible view on the matter to McConnell, citing the analysis of Business Roundtable president and former Republican governor of Michigan John Engler, who told Bloomberg News that the debt ceiling was a "a terribly blunt, clumsy instrument to try to use," and "not a good weapon for anything except destroying our own credit rating."
Once "Meet The Press" got to its panel discussion, things got even better. Everyone seated at the roundtable recognized the rabid insanity of breaching the debt ceiling. Newt Gingrich, who referred to threatening the debt ceiling as "different, because it triggers all of these international financial problems and triggers [sic] the credit of the United States," suggested that a responsible debate could transpire without the looming threats to the economy.
NEWT GINGRICH: The House has no obligation to pass a C.R., a continued resolution, on the president's terms. It has no obligation to pass a sequester in the president's terms. I think those are both much better fights than the debt ceiling. And the debt ceiling guarantees a crisis. It guarantees that the markets will cave in on the Republicans. And the Republicans in the end will give up.
Note that Gingrich understands that debt ceiling threats do not, at all, have to constitute all or part of the "leverage" that the GOP can deploy, reasonably, in a fair negotiation over the long-term budget trajectory. Carly Fiorina, while maintaining the position that she supports a serious debate that results in "progress" toward resolving the deficit trajectory, concurred: "I also agree that it is not wise to fool around with the debt ceiling." And newly elected Maine Sen. Angus King gets merit points for bringing this underdiscussed fact to the Sunday airwaves: "David, it's important to talk about what the debt ceiling really is: The debt ceiling has nothing to do with the future, it has to do with the past. The debt ceiling is allowing us to borrow money to pay money that we've already borrowed. It's as if we spend money on our credit card, at the end of the month say, 'Well, I'm not going to pay it.' And that wrecks your credit."
In the end, E.J. Dionne and King summed up the matter thusly:
E.J. DIONNE: I want to underscore something that both Ms. Fiorina and Newt Gingrich said, which is let us right now, why don't the Republicans announce, "We will take the debt ceiling off the table. We've got other power we can use. Let's get rid of that issue right now." That would be great for the economy, because there would be some certainty.
SEN. ANGUS KING: I bet if Sen. McConnell had said that this morning, the markets would have gone up 200 points.
E.J. DIONNE: Right. And then we could deal in a rational way. We would argue with each other. Newt Gingrich and I probably disagree quite radically on what needs to be done, because I think we need more revenue than we got in this deal.
Aside from the fact that the markets were not open on Sunday morning and thus could not have spiked on a statement from McConnell, this is all pretty fantastic. "Meet The Press" instructed viewers:
1. Breaching the debt ceiling is irrational and dangerous.
2. It would be optimal of both sides would agree, right now, to de-weaponize the threat of a debt ceiling breach. It would offer some economic certainty and remove the demands of the delusional and the psychotic.
3. It doesn't really adversely effect anyone's bargaining position or prevent a big debate on the matter of long-term budget trajectory. Republicans and Democrats will have a big fight about what to do. That's what they are supposed to do! And to varying degrees, they'll be happy and angry -- probably simultaneously -- over whatever accord they come to, and they'll go back to their constituents seeking more support for their respective position in the next election.
That's something that has to be underscored here. There are a lot of ingredients in a legitimate governing process and a legislative debate on the matter of the deficit, and then there is threatening the full faith and credit of the United States -- which has no place in a legitimate governing process.
So, in a final analysis, I'll say that "This Week" and "Face The Nation" are tentatively off to decent starts. "Fox News Sunday" will hopefully return Chris Wallace soon, and he will hopefully to a better job than the fill-in host from this Sunday. Candy Crowley and "State Of The Nation" are tragic disappointments who have only aided the efforts of the debt ceiling lunatics. Brit Hume is a dangerous, idiotic hack on this issue. And "Meet The Press," a show I'm rarely fond of, actually did the best job of presenting the issue, framing it in the objectively correct way and fostering a discussion that led to a whole set of refreshingly rational contentions and suggestions.
We'll see how they do next week.
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