Gov. Scott On Debt Debate: "Impact Will Be Minimal"
MIAMI (CBSMiami.com) – Governor Rick Scott has weighed in with his thoughts on the federal debt ceiling. Scott is in favor of letting the U.S. default instead of raising the debt ceiling.
"The impact would be minimal," Scott told CBS4 news partner the Miami Herald.
Scott's dismissal of the potential default of the U.S. government is because he feels that it would have little to any impact on state government or the financial markets. I think it's highly irresponsible for any person in elected office to actually state the us should default on it's debt," said Barry University Finance expert Dr. Nichole Castater. " That's exactly what we would be doing."
Gov. Scott continued pushing his argument this morning on CNN's "American Morning" show. The anchors on the show were not buying his argument of simply cutting spending. "Why is this difficult for you to understand, governor?" asked one anchor. "This is what we did in Florida," Governor Scott responded. "We stopped spending money. We prioritized how we're going to spend money." (To see the entire CNN interview click here )
Dr. Castater says raising the debt ceiling and working on a new financial plan are two different issues. She also does not agree with Scott's thought that the effects would be minimal. "If you don't have a loan, if you don't have debt, if you don't have a credit card, if you don't have anything that's based on any type of interest rate, if you have plenty of cash in your account and never have had to take out debt, then ya, your effects are minimal," Castater said. "I'm not quite sure what he's talking about to be perfectly honest. "
Moody's has already threatened at least five states with a credit rating drop if the federal government goes into default. Florida isn't one of those states, but a federal default could bring mass chaos to Wall Street and the bond markets.
The last time bond markets were severely rattled was after Lehman Brothers collapsed in 2008. That event, along with others, is part of what sparked the Great Recession and the jobless recovery.
But Scott isn't fazed by the warnings coming from Wall Street and the Treasury Department.
"I don't think anybody knows, because it's never happened," Scott told the Herald. "I believe the markets understand where the federal government is. They understand where the spending is, so I think the market has already priced it (default) in."
Scott said if he were in charge he would not raise the debt ceiling and instead restructure the government to determine how money is being spent.
(© 2011 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Miami Herald contributed to this report.)
