Bachmann: W.H. uses "scare tactic" on debt limit

Washington, D.C. -- Republican presidential candidate Rep. Michele Bachmann talks to Bob Schieffer on the eve of her formal announcement in Iowa on the Sunday, June 26th edition of "Face the Nation"
Photo for CBS News by: Chris Usher

Rep. Michele Bachmann, R-Minn., said Sunday it was not true that the U.S. government would default on its loans if the debt limit were not raised, and accused the Obama administration of using "scare tactics" to push its agenda.

In an appearance on CBS' "Face the Nation," Bachmann, who is vying for the Republican presidential nomination, said she has "no intention" of voting for a hike to the limit, and argued that lawmakers should be focused on cutting spending rather than incurring more debt.

"It isn't true that the government would default on its debt," Bachmann told CBS' Bob Schieffer. "Because, very simply, the Treasury Secretary can pay the interest on the debt first, and then, from there, we have to just prioritize our spending."

"I have no intention of voting to raise the debt ceiling," she emphasized.

The Obama administration (along with a number of economists) has urged Congress to raise the debt limit by Aug. 2 to avoid economic catastrophe. The Treasury Department has taken accounting steps to keep the government from defaulting since hitting the ceiling on May 16, but has said the "extraordinary measures" currently underway will only get the country through the August date.

A number of economists, including Federal Reserve Chairman Ben Bernanke, Treasury Secretary Timothy Geithner, and former Federal Reserve chairman Alan Greenspan have issued repeated warnings that failing to raise the debt ceiling could lead to economic catastrophe. Bernanke recently warned that even a short delay in making payments could lead to serious disruptions in the financial markets.

Bachmann argued that raising the debt limit was not necessary, and that the urgency attached to the August 2 deadline was an example of "scare tactics" being employed by the Obama administration to manipulate Congress.

"Experts inside and outside the government say that, if we don't raise the debt ceiling, we face the United States having to default on its financial obligations," said Schieffer. "Are you saying these are scare tactics? Or are you saying that's not true? How can you say that?"

"It is scare tactics," Bachmann said. "Because, Bob, the interest on the debt isn't any more than ten percent of what we're taking in. In fact, it's less than that. And so the Treasury Secretary can very simply pay the interest on the debt first, then we're not in default.

"What it means is we have to seriously prioritize," she continued. "It would be very tough love. But, I have been here long enough in Washington D.C. that I've seen smoke and mirrors time and time again."

Bachmann said that, if elected president, she would respond to the country's deficit crisis by additional budget reductions.

"I would begin very seriously by cutting spending," she said. "President Obama, again, he spent a trillion dollar stimulus program that's been an abject failure. We need to seriously cut back on spending first and foremost, and then prioritize."

When asked what if anything government could do to increase job creation, Bachmann (who described herself as an entrepreneur and business owner) said corporate tax rates must be cut.

"We have one of the highest corporate tax rates in the world; we need to drop that significantly, so that we have a pro-business, pro-job creation environment," she said. "So if we cut back the corporate tax rate, if we would zero out the capital gains rates, allow for 100 percent expensing when a job creator buys equipment for their business, that would go a long way toward job creators recognizing that this is a pro-business environment."

"But right now businesses are looking at the uncertainty," Bachmann said. "They know that 'Obamacare' is coming down the pike. The Congressional Budget Office estimated 'Obamacare' will cost the economy 800,000 jobs."

"That is data that other people would question," said Schieffer.

"That's the Congressional Budget Office. That's not Michele Bachmann. That's Congressional Budget Office figures saying that we have the potential of losing 800,000 jobs. Why in this economy would you put this very expensive, unwieldy program that's going to cost jobs when job creation is our real problem right now?"

In an article posted June 13 about Bachman's 800,000 jobs claim, Politifact rated it as "Barely True," but said her quotation of figures from the CBO was an 'exaggeration" and "leaves out so many qualifiers that it becomes misleading."

Schieffer asked Bachmann to clarify a statement she had made in 2005, in which she recommended the minimum wage be abolished. She said unemployment could potentially be virtually wiped out if there were no minimum wage. "Do you still believe that?" he asked.

"I think again, this is something that I'd want to bring in, a group of economists, we'd take a look at," she said. "We'd have a reasoned discussion, because ultimately my goal is to turn the economy around and have job creation, whatever it takes. That's what we need to do, because we don't want the United States to be the tail. We need to be the head. We're the indispensable nation of the world. Right now our economy is going in the wrong direction."

"But you're not flatly saying you would abolish the minimum wage now, you're saying it's something you would look at?" Schieffer asked.

"I am not saying that I would be doing that," she replied.

"But you still want to look at it. What about farm subsidies? You've benefited from farm subsidies on your family farm. Do you think we ought to think about cutting those back?" he asked.

"I think everything needs to be on the table right now," she said.