The Crucial Question David Gregory and Bob Schieffer Didn't Ask Timothy Geithner Sunday
Treasury Secretary Timothy Geithner was the featured guest on both CBS's "Face the Nation" and NBC's "Meet the Press" Sunday.
For some reason, hosts Bob Schieffer and David Gregory didn't ask the most important question every person in the world currently following the debt ceiling is dying to know the answer to:
Are there enough tax revenues coming in during August to cover whatever costs are associated with our Treasury bonds, notes, and bills so that America doesn't default on its debt if the ceiling isn't raised?
Pretty simple question, right?
It's also a pretty simple answer: Yes or no.
Wouldn't take a lot of time, and it would settle the disagreement that Democrats and Republicans have on this crucial issue.
As you likely know, the Left and their media minions claim that the only way to prevent a default on our Treasury paper is to raise the debt ceiling. The Right, on the other hand, believes there is more than enough in tax receipts to cover such outlays.
NewsBusters reported Thursday the Treasury is expecting $172 billion in tax receipts next month. From what I can estimate based on Treasury data from this and previous years, it is unlikely that August interest payments will exceed $35 billion, thereby leaving $137 billion for other bills such as Social Security, Medicare, and military salaries.
Yet, this didn't surface during a 16-minute interview Geithner had with Gregory Sunday. Here's the relevant section:
DAVID GREGORY: All right, now, the specific consequences of inaction and potential default, that August 2 date is coming. You know, this is a big issue not only in Congress , but also among those running for president or perhaps running for president. Sarah Palin gave an interview to Newsweek , and she says, "Look, this debt limit business, this is not the apocalypse here." I'm asking you, specific consequences to the United States of getting to August 2 without raising the debt limit.
SEC'Y GEITHNER: Let me make this clear , David . The United States is not going to default. We are a country that pays its bills. We're going to meet our obligations. And the leadership in Congress , Republicans and Democrats , House and Senate , understand that. Speaker Boehner , to his credit, said from the beginning we are not going to default as a country because he understands it would be catastrophic for the American economy . So let me explain what happens. The longer we go into July, the more risk there will be in financial markets , more concern the risk that America cannot get its act together to figure out how to solve this problem. And you'll see that reflected in higher interest rates and more concerned loss of confidence. And let me explain what happens on August 2 . On August 2 , at that point we run out of the ability to borrow to meet our obligations. Remember, we spend -- we have to borrow now 40 cents for every dollar we spend. Now, on August 2 , if Congress hasn't acted, we're left with the cash we have and the cash we're going to take in. And every week starting the week of August 2 , we have to go out and finance roughly $100 billion in maturing obligations of the government. We make 80 million checks a month to Americans , 55 million people on Social Security benefits , millions more Americans on veterans benefits , Medicare , Medicaid , people who supply our troops in combat. Eighty million checks a month. So on August 2 , we're left with the cash on hand and the cash we take in. And we have to convince people to come and refinance $500 billion in maturing principal payments that come due in August
MR. GREGORY: Does that affect our credit rating potentially?
SEC'Y GEITHNER: Absolutely. And for that reason the credit rating agencies around the world have said if Congress doesn't act by the 2nd they will put our -- they will downgrade our credit, first time in history, and if that happens, you're going to see catastrophic damage across the American economy and across the global economy . It's not something we -- failure is not an option and the leaders to their credit -- the leaders to their credit understand this.
MR. GREGORY: But that's a...
SEC'Y GEITHNER: And let me just say...
MR. GREGORY: Yeah.
SEC'Y GEITHNER: ...there is no credible way to give Congress more time. There's no constitutional option . There's no delay option. There's no creative financial option. They have to act by the 2nd.
MR. GREGORY: It's a significant consequence that you're outlining here that America 's credit rating could be downgraded without a deal by August 2nd .
SEC'Y GEITHNER: And it's much worse than that. Again, just remember, that, that itself would be very damaging...
MR. GREGORY: Mm-hmm.
SEC'Y GEITHNER: ...because that will affect the cost of cost......for all Americans , the value of all American savings , the capacity of businesses to borrow to put people more back to work. But remember, 80 million checks a month we write, including people who depend on those checks to go out and buy food to meet their basic needs.
MR. GREGORY: Who would you pick first?
SEC'Y GEITHNER: This is not a -- this...
MR. GREGORY: Would you have to make that decision?
SEC'Y GEITHNER: There's no alternative for Congress to act by the 2nd, and they recognize it, and I'm very confident they're going to do that. I think what we're debating, David , is not really that. What we're debating is, can we take advantage of this moment, of this opportunity , grave moment facing the nation to try to get our arms around those long-term fiscal problems in a way that is good for the economy.
Notice that Gregory never asked Geithner how much revenue he expected to come in next month, or exactly how much it would take to cover all associated debt costs so that it wouldn't have to be defaulted on.
Shouldn't this have been the pivotal, most important question to ask the man responsible for such things? How could this not have been asked in sixteen minutes of questioning?
Ask yourself which is more important: that Geithner has to write 80 million checks next month, or how much they total, and how much of it is directly related to our debt?
It's the kind of question that large corporations, small businesses, and heads of households have to answer whenever their credit lines have maxed out and no bank is willing to lend them more money.
What income do we expect in the next 30 days, and exactly how much will we have to pay which creditors in order to keep the company/household from having to file bankruptcy?
Regardless of what the Left and their media minions are claiming, it is indeed that simple.
If he was at all aware of budgets and finances, Gregory should have also asked why the $500 billion in maturing principal payments was relevant.
It is my understanding that much of this $500 billion are short maturity T-bills that will likely get rolled over by those currently holding them. Whatever isn't can be raised through new auctions that don't add to the current debt limit as they'd be replacing existing debt.
There is some fear in the markets that the closer we get to August 2nd, the more we might have to pay for such transactions, but with T-bills currently yielding between 0.01 and 0.20 percent depending on maturity, this seems hardly to be a concern.
So why didn't Gregory bring any of this up? Is it because this issue is really over his head, and he's totally unqualified to be interviewing the Treasury Secretary?
Or would the answers to such questions reveal that there is currently no risk of a debt default because there's far more coming into Treasury in the form of taxes each month than our total debt expense just as the Right is claiming?
As for Schieffer, he spoke with Geithner for thirteen minutes Sunday, and was equally hapless:
BOB SCHIEFFER: Let me ask you this, Mr. Secretary. While these negotiations go on, what about these Republicans who say it's just scare tactics, about doomsday if we don't raise the debt ceiling? Tell me what happens if you don't raise the debt ceiling.
GEITHNER: Well, let's start with this, okay. As we go into July, further into July, the world is going to be progressively more concerned about whether this town, this city, Washington, D.C., can figure out a way to solve this problem. So the risk we face starts to happen in July. But then on August 2, we're left running on fumes. We have no capacity to borrow. I have to write 80 million checks a month to Americans including 55 million Americans who depend on their Social Security check. We have to make principal payments or rollover $500 billion in debt in the month of August. About 87 billion in that first week in august. And so for those reasons, we have to act, Congress has to act ahead of that point. If they don't act, then we face catastrophic damage to the American economy. And the leadership, to their credit -- and I mean Republicans and Democrats -- fully understand that. And they have been very clear to the President and to me, including last Thursday, that they are not going to take that risk.
SCHIEFFER: So, so is August 2 the drop-dead date?
GEITHNER: Oh, absolutely. We've looked at all options, all options my predecessors have looked at, everything past presidents have looked at, and there is no feasible option to give Congress more time, and they don't need to take more time.
Once again, Geithner was allowed to spew the Party line without having to address how much the tax receipts will be and exactly what the costs associated with servicing our debt are.
This should have been paramount in both these discussions Sunday, but neither Gregory nor Schieffer bothered to ask the most important question on the minds of Americans and investors the world over.
That our nation's Treasury Secretary was allowed to face almost 30 minutes of questioning Sunday without either of these moderators asking the most important question of all is what John Ziegler calls media malpractice.
It is exactly this kind of negligence that keeps Americans from fully understanding our budgetary, economic, and financial affairs.
If this is just a matter of ignorance on their part, then someone more qualified should be brought in for such interviews.
If, on the other hand, these questions were intentionally avoided to prevent the public from better understanding the actual risks associated with not raising the debt ceiling, then neither of these gentlemen should be in the position of trust and responsibility he's currently in.
Whatever the reason, Messrs. Gregory and Schieffer should be ashamed of themselves for having so let their nation down Sunday.