From the Washington Post, by Glenn Kessler, today....
"Former Alaska governor Sarah Palin has spent this week taking a high-profile bus tour up to New Hampshire, in what may or may not be a prelude to a presidential run in 2012. She spent half an hour the other day chatting with Fox News’s Greta van Susteren. The full interview is posted on Palin’s Web site, but we watched all of it so you don’t have to.
Much of the interview consisted of fluffy stuff, but every so often van Susteren diverted into asking about policy issues. Palin responded with her trademark style of making broad assertions with only a shaky command of the facts. We’ll go through the key statements in the order in which she said them, which allows us to begin and end with some absolute whoppers.
“We don’t have the $2 billion [to give to Egypt]. Where are we going to get it? From China? We are going to borrow from foreign countries to give to foreign countries. … We want to know to know where those dollars are going because we don’t have the money to be providing foreign countries, not in this day and age when we are going broke.”
Palin managed to get almost everything wrong in this comment. She clearly was not listening too closely to President Obama’s speech on the Middle East, because otherwise she would have realized that he was not talking about spending more taxpayer dollars.
Obama proposed to forgive up to $1 billion of Egypt’s $3.6 billion debt (money that was spent buying American farm products). The forgiveness, which would take several years, would take the form of a “debt swap,” in which the money saved will be invested in designated programs in Egypt.
The other $1 billion would consist of loan guarantees by the Overseas Private Investment Corporation (OPIC), which are structured at no cost to the U.S. taxpayer. So none of this would involve new debt issued by the Treasury.
Palin appears to assume that the United States simply hands out dollars with little idea about what happens to the money. This is a common misnomer. Actually, there are often strings attached.
Under the terms of the 1978 Camp David peace accords between Egypt and Israel, the United States gives about $2 billion in direct aid to Egypt every year, making it one of the largest foreign-aid recipients. But most of this aid — about $1.3 billion a year — is financing to buy U.S. military hardware and services.
Egypt, for instance, has used the U.S.-supplied funds to replace aging Soviet-supplied equipment with at least 220 F-16 aircraft, 880 M1A1 tanks and 36 Apache helicopters. So Egypt ends up with weapons — but the money actually goes to U.S. firms and helps create U.S. jobs.
Palin is also wrong to assume that every dollar of foreign aid would be borrowed. The budget deficit is high, but the U.S. government still takes in substantial revenues. According to the latest Congressional Budget Office forecast, about 40 percent of the federal budget is financed through new debt — and that percentage is projected to drop significantly as the economy improves.
Finally, while China is the largest foreign holder of U.S. debt, foreign countries actually hold only about 28 percent of the $14 trillion debt. The latest Treasury bulletin shows that the biggest holder is the U.S. government itself (i.e., Social Security and Medicare), while U.S. pension funds, mutual funds, insurance companies and state and local governments hold almost as much as foreign investors.
“If you have more recipients than you have payers into the [Social Security] system, it is like a Ponzi scheme that’s going to be upside down in no time at all. We are going to be underwater with Social Security.”
Palin correctly identifies a potential problem for Social Security — that as the Baby Boom generation retires, there will be fewer workers paying into the system. But she overstates the case by calling it a “Ponzi scheme,” in which money from new investors is used to pay off old investors.
You cannot just look at the number of workers. You also have to look at productivity and technological change — which over time has allowed the nation’s economic output to greatly exceed population growth. That’s why the system has worked so well for so long.
As for being “underwater with Social Security,” the latest trustees report says that Social Security’s trust fund reserves will be exhausted in 2036; after that point, tax income would be enough to pay 75 percent of scheduled benefits through 2085. That’s certainly a problem, but not an insurmountable one — and clearly not a Ponzi-like collapse. (For those who do not believe the trust funds exist, please see our previous article on this issue.)
“Look at the debt that has been accumulated over the past two years. It is more debt under this president than all those other presidents combined.”
Rep. Michele Bachmann (R-Minn.) is sometimes described as a possible Sarah Palin rival in the presidential sweepstakes. In this case, Palin is virtually repeating a claim for which Bachmann had previously earned Pinocchios.
As we noted then, the numbers simply do not add up.
To keep it simple, we will look at the historical tables on the White House Web site, which lists the debt totals by fiscal year.
The national debt (including bonds held by U.S. government agencies) stood at just under $10 trillion a few months before Obama took office. The United States recently reached the debt ceiling of $14.3 trillion, more than two years after Obama took office. Last time we checked, $4 trillion is much less than $10 trillion.
[Note by Georgette: Ms. Palin needs to brush up on her basic logic. Duh.]
“[Obama passed] a trillion dollars in stimulus package projects that still have resulted in record-setting unemployment, a heartbreaking number of home foreclosures, crashed markets left and right.”
Obama’s stimulus plan was actually $800 billion, not $1 trillion. The bill also included more than $200 billion in immediate tax breaks, so it is incorrect to suggest it was all spending projects.
We’re not sure one can make a direct link between the stimulus bill and home foreclosures and “crashed markets left and right,” whatever that means. But “record-setting unemployment”?
Perhaps Palin is referring to raw numbers, but given population growth, that’s a silly way to look at it. The most relevant figure is the percentage of workers who are unemployed.
During the Great Depression, the unemployment rate reached 23.6 percent in 1932. In the modern era, the rate topped 9.7 percent in 1982, when Ronald Reagan was president. It reached 9.6 percent in 2010, which is certainly pretty close, but it’s not a record.
“[Look at] the impacts of that [drilling permit] moratorium [in the Gulf of Mexico], where 97 percent of our offshore has been locked up. What we are looking at now is 150,000 barrels less per day next year, and 200,000 barrels per day less being able to be developed from the Gulf the year after. …We are going to be looking at $8 billion a day that we are going to be pouring into foreign countries in order to import that make-up fuel that we are going to need to take place of what we could have gotten out of the Gulf.”
When Palin started talking about oil — and the “drill baby drill” decal over the gas tank of her bus — she became very emphatic, slicing the air and hitting the table with one of her hands. But once again her facts were wrong.
We’re not sure where she comes up with the notion that 97 percent of the offshore area has been “locked up,” though this is a phrase she has used before. In any case, the relevant figure would seem to be the precentage of technically recoverable oil that was affected by the drilling permit moratorium, imposed by the Obama administration after the Deepwater Horizon explosion. The independent Energy Information Agency (EIA) pegs the number at 20 percent (18 billion barrels), with 4 billion barrels in the Gulf of Mexico.
Palin’s figures on the production decline are not far off, but the EIA last month cited the moratorium as a secondary factor in the decline: “EIA expects production from the Federal Gulf of Mexico (GOM) to fall by 130,000 bbl/d in 2011 and by a further 190,000 bbl/d in 2012 because of production declines from existing fields and the impact of last year's drilling moratorium and the subsequent delay in issuing new drilling permits.”
In fact, the Interior Department this week issued its 15th drilling license for the deepwater region of the Gulf of Mexico, so that 2012 figure may well improve.
Meanwhile, Palin’s claim of $8 billion a day in additional imports is absurd. That amounts to 80 million barrels a day at $100 a barrel—and the entire world's consumption is about 85 million barrels a day. If Palin took out a calculator, she would see that her own estimate of 200,000 barrels a day amounts to just $20 million a day.