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Debt ceiling: What voters think about a potential U.S. default

Yahoo Finance’s Rick Newman joins the Live show to discuss U.S. job security, the debt ceiling, and the expectations for President Biden’s State of the Union speech.

Video transcript

RACHELLE AKUFFO: Well, the wider US economy watching not just the Fed this week, but Congress for whether the debt ceiling fight is likely to have an effect, but do Americans even care? Well, a new poll from CBS News shows us more. Joining us now, Yahoo Finance's Rick Newman. So, Rick, do Americans care about this?

RICK NEWMAN: They say they care. I'm a little bit dubious. And CBS has this poll out that I think has some contradictory findings. So just a couple of examples, 55% of people in this poll say no, Congress should not raise the debt ceiling, but then when asked if Congress should raise the debt ceiling, if that means the United States would default on debt, that drops to only 32%. So, if you don't raise the US debt ceiling and allow the Treasury Department to borrow more money, by definition, the US is going to default. And that level of awareness does not seem to show up in these numbers, Rachelle.

So, you know, my takeaway on this is I don't fault voters if they don't completely understand all the arcane elements of how the US government borrows money and Congress's role in that. I think when you do a poll, you're sort of forcing people to state their case and to have an opinion. But I just don't think this is something most people are talking about. I'd like to see a poll that says, do you even care about what happens with the debt ceiling in Washington? How much are you paying attention to this? Of the top 10 things you talk about with your family, where does the debt ceiling fall in? And I bet for most American families, it would not make the top 10.

However, look, we have to talk about the debt ceiling. We're going to have to do something on this later in the year. As we've been saying all along and we will continue to say, Congress is going to raise the debt ceiling. It's just a question of how ugly it's going to be leading up to that. And that's going to turn off voters.

RACHELLE AKUFFO: And I mean, it is natural when you see both sets of sides of politics sort of wrangling over this and at a standoff. That's going to catch the attention of your average viewer. But of course, speaking of political maneuvers, we're also coming up on President Biden's State of the Union address. What can we expect him to hone in on?

RICK NEWMAN: Biden is going to be taking credit for a lot of things he thinks are going right in the United States. I'm sure we're going to hear him bragging about the almost unbelievable job numbers from last week, 517,000 new jobs in January alone. This economy just cannot get enough workers and cannot put enough people to work. So Biden's going to take credit for that.

He's going to say we're getting inflation under control. He's probably going to remind everybody that he has signed a bunch of bills during the last two years that generally do things American want to do-- fund green energy, fund infrastructure, fund semiconductors. He'll say this is all going to bring jobs back to the United States.

Not going to matter a whole lot. I mean, most Americans don't watch the State of the Union speech. It's actually pretty boring as speeches go. We have to talk about it in the media because it's a big media event. But this does not move markets. And it doesn't really move voters very much. But Biden is going to be laying out the case for what could be his re-election run if he decides that he is going to run for a second term as president. So we'll get some clues about where he might be headed with that, at least in terms of the rhetoric in the speech tomorrow night.

RACHELLE AKUFFO: And I love that you never sugarcoat it, Rick. It's one of my favorite things about you. I want to ask about this general sentiment from Americans. So then, do they care, or are they too glum to really take on something else right now?

RICK NEWMAN: I've been puzzling over this for the last 12 to 18 months. I mean, by some measures, the US economy is in good shape. I mean, the main thing is the job numbers. I mean, people feel like they have job security. The data tells us they do, in fact, have job security, and even some of the tech layoffs we've been talking about. I mean, four-digit and five-digit tech layoffs. There's also data that suggests that people getting laid off at Microsoft or Amazon or whatever big tech company are quickly finding new jobs in those tech-- those layoffs in tech are not showing up in the overall data.

And yet, Americans are very glum. Confidence levels are practically recessionary. President Biden's approval rating is still relatively low. It's only 45%. That is not at all consistent with a strong economy. And one thing you can take from that is inflation just really bums people out. People do see inflation happening. It gives them this sense that something's just going wrong. And as inflation has come down during the last six months, attitudes have improved a little bit, but not very much.

So Americans are glum. Maybe that's just what they say when pollsters bother them by calling them up and saying how do you feel about the country. Maybe they just would rather not be talking to pollsters, and that puts them in a bad mood. But yeah, Americans are kind of bummed out.

RACHELLE AKUFFO: Well, that's certainly a theory as to why they're glum over the phone. Great stuff. Yahoo Finance's Rick Newman. Thank you for joining me--

RICK NEWMAN: See ya, Rachelle.

RACHELLE AKUFFO: --this morning.