Friday, April 22, 2011

Not Challenging Dishonesty

Lawrence O’Donnell does not tolerate lying or peddling bullshit on his show. He erupts into a tirade of outrage and anger when anyone tries to do that, shouts them down and browbeats them into telling the truth. Well, he does unless they are supporting his agenda, apparently.

He asked Dr. Alice Rivlin, a member of President Obama's Fiscal Commission. About the deficit, and she replied that it has been caused by “promises made, by both parties, to fund entitlement programs, Medicare, Medicaid and Social Security at a time when we have a lot more old people, we have the baby boom generation and we have rapidly rising cost of medical care.”

Social Security has never added a single dollar to the federal deficit and will never do so. It is a self funded program with its own, separate revenue stream which is currently taking more money in than it is paying out to beneficiaries.* It may fail as a program and be unable to pay the promised benefits, but that is a subject entirely separate from the federal deficit. Lawrence O’Donnell knows that very well, and he says absolutely nothing to her about that.

She doesn’t mention the effect on the deficit of cutting taxes without reducing spending, which Obama has done more than once, and O’Donnell doesn’t ask why she failed to include that in her explanation of the deficit. Nor does she mention defense, pardon me, “national security” spending increases by Obama, an oversight which doesn’t seem to bother O’Donnell in the slightest.

She then goes into a fairly lengthy discussion of increasing borrowing and says the “people won’t lend to us” and that we could wind up being “unable to market our bonds” which would lead to a “debt crisis and plunging into a deep recession.” Ask Paul Krugman about the “bond vigilantes” some time. Debt is undoubtedly a problem, but not in the manner that she describes, which is sheer scare mongering.

When he asks her what should be done about the deficit her first item is to correct the imbalance in Medicare, and her second is to “put Social Security on a firm foundation.” Once again O’Donnell, totally incorrectly, accepts Social Security as part of the deficit issue.

He asks her if we should cut spending at this time, with economic recovery so poorly established, and she says we should not cut for the next year or two, but that we could “freeze spending now” because we “can’t risk a debt crisis, that would be worse.”   Debt crisis, debt crisis, debt crisis...

It gets worse when he turns to the subject of raising the debt ceiling. He asks her what would happen if we fail to do so and her immediate reply is, “The first thing you do when you know you can’t pay your bills is stop paying them. Contractors would not get paid, Social Security recipients would not receive their checks, doctors who are doing medical care under Medicare would not be paid…”

The government borrows 40% of what it spends so why, if it cannot pay 40% of its bills, does it stop paying the 60% of the bills that it can pay? And she includes Social Security again, which is independent of the federal government revenue stream and could certainly continue paying benefits from the payroll taxes which it is collecting. O’Donnell has nothing to say about any of her nonsense.

She goes on to say that, “Even worse would be that we would instantly be known as a deadbeat nation. We take on obligations and refuse to pay them.” What? We make a statement that we are not going to borrow any more money and that is equivalent to “we are not going to pay our existing debts.” O’Donnell does not ask her to explain that. Nor does he ask her to explain the statement that “No one will lend to us,” when we will have announced that we will not be asking anyone to be doing so.

Pretty much the entirety of her discussion is nonsensical on the face of it, and O’Donnell challenges none of it, merely thanks her for being on his program.

*Due to the economy Social Security might be operating at a small deficit now, but it is holding a significant surplus, so it is not in a position to need to borrow money any time in the near future in order to pay promised benefits, at least not in terms of this discussion.

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