A Downgrade Heard Around the World
How has the international community reacted to S&P's downgrade of the U.S. credit rating?
This is a rush transcript from "On the Record," August 9, 2011. This copy may not be in its final form and may be updated.
GRETA VAN SUSTEREN, FOX NEWS HOST: All right, this economic crisis is not just here in the United States. Europe is swooning! The European central bank is scrambling to stabilize Italy and Spain. Meanwhile, new concerns about France with its high debt and it's weak growth, and France is now facing the risk of a downgrade. So how bad is it? And more importantly, how contagious?
Joining us is former United States ambassador to the U.N., John Bolton. Ambassador, nice to see you. You know, we were the stabilizing force, the United States. We were supposed to be the stable government and everything else stable from it. Now we're not so stable.
JOHN BOLTON, FOX NEWS CONTRIBUTOR/FORMER U.S. AMBASSADOR TO THE U.N.: Well, I think the policies that we've pursued not just in the past two-and-a-half years, but at the end of the Bush administration, as well, have put us on a course toward Europe. And the issue for us is a huge philosophical issue. It goes well beyond government spending and budget deficits. It's a question of how big a role in our lives do you want the federal government to be? Do you want the government to be as big comparatively as it is in European countries, or you want to shrink it back to where it historically was? That's what the issue is.
VAN SUSTEREN: Well, but to the extent that we are rattled -- and I know that many say that, you know, we're still strong, we're still good, but the fact is we do have a high unemployment. We do spend a lot. We don't have the revenues. I mean, it's sort of hard to do that sort of rah- rah-rah cheer thing when you look at the cold facts. It isn't as cheery as someone might think.
But it has national security considerations. It has an impact on -- on people around the world, on even things like our wellbeing. It has so much. It's not just an insignificant matter.
BOLTON: Well, that's what troubles me most of all about the debate we've had in Washington over the past month or so, is that people have not seen the linkage between a strong economy and strong national security. This is not just about budgetary bean counting. This is about American grand strategy. And the real fundamental issue is, do you think you have a stronger economy by having a larger government or by trusting in the private sector to grow the economy as a whole? The more assets you transfer into the government, the less growth you're going to get in the private sector.
VAN SUSTEREN: All right, we have an impact on Europe. And right now, Europe has got a very bad situation with Italy and Spain. And France is not in a great shape, and Germany, which is probably the strongest country, has got problems, as well. I mean, it is bleak. Do they have an impact back on us?
BOLTON: Well, sure they do. But the European problem is one they've basically created on their own, their common currency, the euro. They did something nobody else I think has ever done, they created a currency without a government. Some would say cynically, ultimately, they expected to be in a position where this would decrease the power of the national governments, increase the power of Brussels. But by creating the euro, they subsidized, in effect, profligate spending policies we've seen in Greece, in Spain, Portugal, Ireland, maybe in the other countries, as well. So their whole largely political experiment to create the euro is in real trouble.
VAN SUSTEREN: All right, where -- where's the U.N.? I mean, does the U.N. have any role of this? Is the U.N. sort of feckless in this whole thing? Should it be doing something? Can it being something?
BOLTON: No, it has no role whatever, as in...
VAN SUSTEREN: Could it be? Should it be?
BOLTON: No. No. The...
VAN SUSTEREN: (INAUDIBLE) political dynamics to them, all these -- all these economic (INAUDIBLE)
BOLTON: But nothing of consequence gets resolved in the U.N. The international organization that does -- that has played a role is the IMF. And I think their American policy has been wrong. I think if the euro is in trouble, it's for the Europeans to resolve. They created that currently in part to be a poll alternative to the U.S. dollar. God bless them, if that's what they want to do. But when it runs into trouble, they shouldn't call on our resources through the IMF, they should solve it themselves.
VAN SUSTEREN: What do you predict is going to happen in Europe?
BOLTON: Well, I don't see how the euro can survive in its present form. You can have purchases of sovereign debt from countries that run into trouble, but eventually, this all comes back to Germany. And the Germans are saying to themselves, Why are we subsidizing these ridiculous fiscal policies everywhere else at our expense?
So I think there's going to be a political crash her. And if France really runs into the trouble that's now being forecast, it's inevitable. I don't see the euro surviving.
VAN SUSTEREN: And then -- and then I go back to the U.N. The U.N. just sort of sits there and watches.
BOLTON: It is completely useless in this case.
VAN SUSTEREN: Totally?
BOLTON: Total.
VAN SUSTEREN: Well, that's rather bleak.
BOLTON: But accurate, I think.
VAN SUSTEREN: All right. Anyway, nice to see you, Ambassador.
BOLTON: Thank you.
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