Huelskamp: White House Is ‘Fear Mongering’ on Debt Limit
Dozens of economists have warned that a failure by Congress to raise the debt ceiling could have catastrophic economic consequences, but Rep. Tim Huelskamp continues to read the situation differently.
Asked on Saturday about the effect of Congress not raising the debt limit, the Kansas Republican said Moody’s Investors Service does not think the debt limit will have a major impact on the economy.
“That is not what Moody’s says,” Huelskamp said.
“Have you read the report?” he asked after being challenged by reporters. “They said ‘absolutely no impact on Oct. 17.’ I read the report! I just read it last night, give me your email address. I’ll send it to you.”
As another reporter began asking a question, Huelskamp added: “Do not agree with what the president is telling you. Fear mongering.”
What Moody’s said was the Treasury Department would likely continue paying interest on the government’s debt with incoming revenue even if the debt limit was breached. The problem may be semantics. Moody’s memo basically says the U.S. would not be in a technical default situation, if as they predict, the government continues to service the debt.
But Moody’s Chief Economist Mark Zandi has said the economic effect of failing to raise the debt limit would be “an unmitigated catastrophe.”
Asked about the memo on CNN, Zandi said:
“I’m not part of the rating agency, so that’s from a different part of my organization. In my view, if the U.S. government does not make a payment, either whether it be on U.S. Treasury debt, that would certainly be a default. If it didn’t make its payments on other obligations, in my view, that would be a default in anything perhaps but name, be almost semantic, clearly either way, it would be very hard on the economy and it would be the prescription for a very deep recession.”
The memo was part of a larger document, but its relevant section — titled “United States Government Shutdown and Debt Limit: Answers to Frequently Asked Questions,” which can be found here on page 27 — made its way around Capitol Hill this week. Many Republicans have touted it as a refutation to the White House and the Treasury Department’s claim that exceeding the nation’s borrowing authority would be, as White House Press Secretary Jay Carney put it Friday, “catastrophically damaging to the economy and the American people.”
Moody’s does suggest, as others have, that Oct. 17 might not be the hard-and-fast deadline for debt default.
Regardless of what the Treasury Department can do, investors on Wall Street have already shown that they are likely to have a pessimistic reaction if Congress fails to raise the debt ceiling this week.
But a number of House Republicans have made comments recently that a debt default would not be so bad, and many seem to think the Moody’s memo is a license to go over. Huelskamp seems to be just the latest in a crowd.
CQ Roll Call later sought clarification from Huelskamp on whether he actually meant there would be no economic effects come Oct. 17 if the debt limit is not raised; he made his position quite clear.
“Actually, that’s what Moody’s says, son,” Huelskamp said.
Pressed on the effect a default would have a on the stock market, Huelskamp was unfazed.
“It went up, it goes down, it moves around, and, you know,” Huelskamp said.
Further pressed for clarification, Huelskamp seemed to suggest the White House was responsible for whatever impact a debt default would have on the stock market.
“Depends how well [Treasury Secretary Jacob J.] Lew does his job, which is to fear monger, which is what he did on five Sunday weekend shows,” Huelskamp said. “He went around and warned people, says, ‘Gosh, the world will end on October 17. Moody’s disagrees. [Vice President] Joe Biden disagrees, which is why they don’t want Joe Biden in the room.”
Asked if he felt the administration had “overplayed” the potential effects of not extending the debt limit, Huelskamp was unequivocal.
“Overplayed? They have misled folks, just like they did on Aug. 2 when they had $65 billion cash on hand and, as Joe Biden said on Aug. 21, 2011, ‘We’re not going to default.’ And so you ought to play that,” Huelskamp said. “But you know, you notice you haven’t heard from Joe Biden in a while on these things.”