Press

Fact Check: GOP Rep Claims ‘Nothing Happens’ if the US Defaults

In an interview with Politico, Republican Representative John Fleming made the inaccurate claim that “Technically, it’s not possible to default because there’s always enough revenue to cover the interest.” Fleming continued, saying “nothing happens” if the debt ceiling is reached.

Fleming’s comments are not only wrong, they’re dangerous. The GOP’s competing plans to gut ObamaCare by shutting down the government or defaulting on the faith and credit would hurt the economy and take a toll on the economic wellbeing of ordinary Americans. 

Please see the below fact check debunking Fleming’s claim that “nothing happens” if the debt ceiling is reached:

International Business Times: “Failure To Raise The Debt Ceiling Would Require An Immediate Cut In Spending Equal To 4.2 Percent Of GDP.” [International Business Times, 8/20/13]

Investors Lost Their Nerve As The S&P 500 Plunged 17 Percent Amid The Debt-Ceiling Debate. “Although some investors had been willing to take on riskier stocks early in 2011, they lost their nerve in the summer as the Standard & Poor's 500 plunged 17 percent amid the debt-ceiling debate, the downgrade of the U.S. credit rating and the sovereign debt crisis in Europe.” [Chicago Tribune, 1/15/12]

CNNMoney: The Debt Ceiling Brinksmanship Of 2011 Led “To An Epic Washington Fight That Led To A First-Ever U.S. Credit Downgrade And A Major Disruption In Global Markets.” “House Speaker John Boehner has all but promised an ugly fight over the debt ceiling this year unless GOP demands for spending cuts are met. Sound familiar? The GOP took the same tact last year, leading eventually to an epic Washington fight that led to a first-ever U.S. credit downgrade and a major disruption in global markets.” [CNNMoney, 5/16/12]

• Washington Post: “In Its Report Announcing The Downgrade, S&P Was Clear That Blame Rested With House Republicans For Making The Debt Ceiling Increase Conditional On Deficit Reduction.” [Wonkblog, Washington Post, 8/30/12]

• Washington Post Plum Line Blog: “The Downgrade Was The Result Of Republicans Turning A Procedural Vote On Raising The Debt Ceiling Into A Hostage Negotiation.” [Washington Post, Plum Line Blog, 8/8/11]

New York Times: “Economists Warn That A Default Resulting From A Failure To Raise The Government's Debt Limit Could Tip The Economy Back Into Recession” “While the sequester pinches particular constituencies, and a government shutdown would inconvenience millions, economists warn that a default resulting from a failure to raise the government's debt limit could tip the economy back into recession.” [New York Times, 8/15/13]

Chief Economist for the National Association of Credit Unions On Failing To Raise The Debt Ceiling: “We Basically Would Default On Our Debt, Interest Rates Would Go Through The Roof, And We’d Fall Into Another Recession, Kind Of Like The One We Went Through In 2007 And 2008.” [Houston News 92 FM, 9/12/13]

Reuters: “Governments And Policy Makers Around The World Warned Of The Risk Of Financial Disaster If Washington Fails To Raise The U.S. Debt Ceiling.” [Reuters, 7/31/11]

• Chief Secretary To The British Treasury: It There’s A Default “It Has Consequences For Every Family And Every Business In This Country And All Across The World.” “‘If they get this one wrong and there's a default -- we don't expect that, we think that they will sort this out -- but if that were to happen, it has consequences for every family and every business in this country and all across the world,’ said Danny Alexander, Chief Secretary to the British Treasury.”  [Reuters, 7/31/11]