Tuesday, December 04, 2012

Sorry Sarah

Sarah Palin is sorry- sort of.   Initially dismissive of mildly right-wing Republicans for their comments about debt and taxes, she now says "Well, I guess I shouldn't call politicians names, so I apologize for calling the wobbly ones wusses.  Because that distracts from the point that has to be made, and the point is that we are a bankrupt country."

Calling people "wusses" prompts an apology (or at least a statement that she is making an apology) while lying about the economic status of the nation is quite acceptable. Palin now condemns Treasury Secretary Tim Geithner's opening proposal on the deficit talks as "Let the president have free rein on raising the debt ceiling to whatever level he wants it.  That's a very scary thought because Barack Obama is a socialist." 

Bankruptcy is described by Wikipedia as "a legal status of an insolvent person or an organization, that is, one who cannot repay the debts they owe to creditors. In most jurisdictions bankruptcy is imposed by a court order, often initiated by the debtor."   Long-term interest rates on Treasury bonds are at near-record lows- and investors the world over still are flocking to buy the instruments.  As a country with its own currency and the ability to print money or borrow, the U.S. has defaulted on no debts- now, in the past, or in the foreseeable future. The interest rate on Treasury bonds is dubbed the "riskless rate of return" because there is no chance of default.

Republicans, balking at raising the debt ceiling in 2011, did attempt to turn into a deadbeat nation the country they claim to love.     Standard and Poor's responded by slamming "the political brinkmanship of recent months" (which was supported by Palin) and lowering the government's credit rating to AA+.    If the debt ceiling were not raised, Ezra Klein wrote at the time

The drop in demand, when coupled with the turmoil in the markets and the general financial uncertainty, would undoubtedly throw the economy back into a recession. Also keep in mind that we have to roll over $500 billion in debt that month, and if there was uncertainty about how we were going to pay our bills, it is not clear we could find buyers for our debt at anything less than an exorbitant rate.

It is not clear that, had Congress chosen this course, the federal government would have been able to pay its debts, which would make it a lot closer to "a bankrupt country" than it is now or ever has been.

Geithner's debt ceiling proposal is more complicated than Palin lets on because details are for suckers- or Democrats- in Palin's world.  According to the New York Times, Gethner has

proposed permanently ending Congressional purview over the federal borrowing limit, Republican aides said. He said that Congress could be allowed to pass a resolution blocking an increase in the debt limit, but that the president would be able to veto that resolution. Congress could block a higher borrowing limit only if two-thirds of lawmakers overrode the veto. 

Barack Obama is no more a socialist than is Sarah Palin, who as governor once bragged "And Alaska—we’re set up, unlike other states in the union, where it’s collectively Alaskans own the resources. So we share in the wealth when the development of these resources occurs."   Scratch that- Barack Obama is less of a socialist than is the ex-governor of Alaska.  Still, the latter does not understand, as Matt Yglesias explains

Every dollar the federal government spends is spent according to laws Congress has passed. Every dollar of tax revenue that comes in does so because of taxes Congress has enacted. The Treasury Department's borrowing of money to make up the gap between Congress' spending and Congress' taxing isn't any additional authority to spend or do anything.

Corporate and individual tax rates are at a post-war low while corporate profits are at an all-time high and wages at an all-time low.  It's a good thing Sarah Palin doesn't believe she should be calling politicians names.  Otherwise, she would be calling the President proudly presiding over this state of affairs a 'socialist.'

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