Fox News Misrepresents Fitch's Downgrade Threat
Rating Agency Calls Threats Not To Raise The Debt Ceiling "Ineffective and Potentially Dangerous," But Fox Wrongly Says Fitch Blames Obama
Blog ››› ››› REMINGTON SHEPARD
Fox News distorted Fitch Rating's threat to potentially downgrade credit rating for the U.S. government, blaming the threat on President Obama's proposal to avoid a government default by raising the debt ceiling. In fact, Fitch threatened to downgrade the U.S. credit rating if Congress uses the debt ceiling as leverage to exact spending cuts, which is what Congressional Republicans have proposed.
During America's Newsroom, co-host Martha MacCallum and Fox Business host Stuart Varney claimed that Fitch threatened to downgrade its U.S. credit rating because the company did not like Obama's January 14 press conference, in which he said he would not negotiate with Congress over whether to raise the debt ceiling.
Contrary to Varney and MacCallum's claims, Fitch stated in a press release that it would consider downgrading the U.S. credit rating if Congress delayed raising the debt ceiling in order to enact its preferred policies. In its January 15 press, Fitch stated that explained that threatening not to raise the debt ceiling "is an ineffective and potentially dangerous mechanism for enforcing fiscal discipline":
In Fitch's opinion, the debt ceiling is an ineffective and potentially dangerous mechanism for enforcing fiscal discipline. It does not prevent tax and spending decisions that will incur debt issuance in excess of the ceiling while the sanction of not raising the ceiling risks a sovereign default and renders such a threat incredible.
Fitch did say that if the United States did not come up with "credible medium term deficit reduction plan" after the raising of the debt ceiling, it would also consider downgrading its rating of U.S. credit worthiness, but Fitch made it clear that Congress should not use the debt ceiling as leverage to enact such a plan.