Appearing on Monday's "Today" to discuss the debate over reducing the nation's debt, CNBC host Erin Burnett declared to co-host Matt Lauer: "The problem is our revenue, what the government takes in, in taxes. What you pay every month out of your paycheck is way smaller, in fact, it's only somewhere around $2 trillion a year."
After Lauer asked about the relationship between government spending and the debt, Burnett acknowledged: "They are related, but really, to tackle this issue, we do have to tackle entitlements. When you look at Medicare and Social Security, it's 40% of our budget." However, she quickly denounced Republican attempts to use a raise in the debt ceiling to cut such spending: "Those are the questions we have to answer, but not through playing chicken on the debt ceiling."
Near the end of the segment, Burnett remarked that the United States is "...a very wealthy country. If you look at our assets, we could pay down the debt tomorrow. We choose to borrow because we can borrow at incredibly low interest rates." By "assets," Burnett seemed to be referring to the income of all Americans (unless she plans to auction off the Statue of Liberty to pay our bills).
Here is a full transcript of the April 11 Today segment:
7:13 a.m. EDT
MATT LAUER: Let's try to explain it more. Exactly what is the debt ceiling and why does it matter to you? Here to explain, CNBC's Jim Cramer and Erin Burnett. Good morning to both of you.
JIM CRAMER: Good morning.
ERIN BURNETT: Good morning.
[ON-SCREEN HEADLINE: Dealing With the Debt Ceiling; How Does Government Borrowing Affect the Economy?]
LAUER: Who wants to take the shot at this? What is the national debt ceiling?
JIM CRAMER: This is how we – our nation pays its bills, but we borrow money to pay our bills. It's not like you and the mortgage, we're you can continue to borrow, you get one shot at it and if we don't raise the debt ceiling, then we're going to default. You just have to look at what Greece is doing, these countries – Portugal. These are countries that are all on the verge of default. And they can't borrow, then high rates.
LAUER: But Erin, the debt ceiling sits at $14.294 trillion, as of just a few minutes ago, the National Debt Clock shows us that right now it's at $14.286 trillion, increasing by the second. Why does it go up so quickly?
ERIN BURNETT: Well, it goes up because of all the obligations that we have, right? I mean, the debt ceiling is really – we've got Social Security, you've got Medicare to pay, all the entitlements, defense. I mean, everything you're spending comes out of there. The problem is our revenue, what the government takes in, in taxes. What you pay every month out of your paycheck is way smaller, in fact, it's only somewhere around $2 trillion a year.
CRAMER: Oh, a fraction, just a fraction.
BURNETT: So that difference is what we borrow.
LAUER: Just so – when people just heard a week worth of talk over this budget battle and they hear now that $38 billion will be cut from the budget and they say, 'Well, why is the debt going up so quickly?' How are they related or not related? Go ahead.
BURNETT: Well, that – I mean, first of all, as you, I think, aptly point out, that's a drop in the bucket.
BURNETT: I mean, the amounts we're talking about are a drop in the bucket. They are related, but really, to tackle this issue, we do have to tackle entitlements. When you look at Medicare and Social Security, it's 40% of our budget. Unless we decide they can't go up so quickly, do we need to do more means testing? What are we going to do? Those are the questions we have to answer, but not through playing chicken on the debt ceiling.
LAUER: Let's keep this to the reality here, Jim. According to a lot of estimates, somewhere in the middle of May we will reach that debt ceiling.
LAUER: What happens the minute we hit it?
CRAMER: What will happen, they'll try to extend it to July, but there'll be these rating agencies – the S&P, Moody's – these determine how much you're allowed to borrow. And they will suggest that you shouldn't invest in U.S. debt if you're Chinese, if you're Arab. That's who pays it, by the way, we don't buy it. The Chinese buy it, the Middle East, that's who buys it. And they will be saying, 'You know what? Why should we do this? Why don't we go buy the debt of the Germans? Go buy the debt of the French?'
LAUER: So then we lose our abily to borrow money.
CRAMER: That's what's going to happen.
LAUER: We lose our ability to pay our bills. What is it – what is the effect on the overall economy at a rather fragile time for recovery?
BURNETT: Well, it would become much more expensive to borrow. And anyone in the past few years who's gone through the financial crisis and realized your mortgage rates go up, or your credit card rates go up. That's what would happen to us as a country. I think one thing that's important to remember, Matt, is we are a very wealthy country. If you look at our assets, we could pay down the debt tomorrow. We choose to borrow because we can borrow at incredibly low interest rates.
CRAMER: It's easy.
BURNETT: Our country, because we are the safest country in the world, has this ability to borrow. And to choose to borrow and pay it down later. Other country's don't have that choice, we have it-
CRAMER: But that can go away.
BURNETT: It can go away.
CRAMER: It can go away.
BURNETT: And that's the risk we're – we have right now.
LAUER: Are we most likely to see some kind of major compromise here?
CRAMER: We have to.
CRAMER: I mean, it's too bad there's so much hatred on both sides, because everyone's playing with fire. Because you don't – we are no better than these European countries that are in trouble if we can't get this debt ceiling.
LAUER: Jim Cramer, Erin Burnett, thank you very much. You can catch their shows on CNBC. Mad Money, weeknights at 6:00 and 11:00 Eastern Time and Erin on Squawk on the Street at 9 a.m. Eastern and Street Signs at 2:00 p.m. Did I get it all in, guys?
LAUER: Okay, good.
— Kyle Drennen is a news analyst at the Media Research Center. You can follow him on Twitter here.