Lately, CNN's Ali Velshi has done a good job of pushing back at some of these Republican politicians when they come on his show and lie. This wasn't one of those times. While Velshi did do a good job of making clear that raising the debt ceiling is paying for spending which has already been approved by the Congress, and that it's not the same thing as a household running up the credit cards, he let Wisconsin Sen. Ron Johnson get away with a whole bunch of whoppers during this segment without much pushback.
He allowed Johnson to lay the blame for our deficits on the Obama administration, even though (as we've pointed out here time after time), most of that deficit is due to Bush policies and the recession and not because of Obama, as this article and its charts clearly point out. And even after Velshi pointed out that we can't just partially default on the deficit as a lot of Republicans have claimed, and that it would likely cause a great deal of economic havoc, he allowed Johnson to just flat-out disagree with him and didn't challenge him after that.
As long as we're allowing these politicians to pretend that Social Security contributes to the deficit when it doesn't, or pretending that raising the age for Medicare and throwing more seniors into the private health insurance market is a rational way to get our health care costs under control, they get to advocate for balancing the budget and paying for tax cuts and defense spending on the backs of the poor, elderly and middle class.
As Chris Hayes and Karoli pointed out here, the conversation we ought to be having is whether the Affordable Care Act is going to do enough to get our health care costs under control -- and if not, what steps we need to take to improve that? (None of our leaders want to talk about single-player, of course) We also need to talk about getting the United States back to full employment and quit allowing Republicans to just mindlessly repeat "job creators" and "tax cuts" in every conversation without rebuttal.
And of course, none of these guys are ever pushed on why we can't cut our bloated defense spending and get rid of the waste. They never seem to be too concerned about how starting another unnecessary war might destroy the future for their grandchildren. No, granny has to take a cut in her Social Security and Medicare benefits. The one word that never gets used here is privatization, because that's what they're advocating. These costs aren't going to go away. They just want to make sure the insurance companies and Wall Street gets their cut.
It would have been nice if Velshi asked Johnson if he really doesn't "want to play brinksmanship", why does he continue to do it? Why does he thinks it's acceptable to threaten our interest rates if that's something he's actually concerned about? Velshi also waited until the following segment when the Senator was off the air to point out the fact that President Obama's budget was never actually voted on, but sadly, even that wasn't done without some false equivalencies and "both sides do it" nonsense:
VELSHI: Why don't we have a budget? Gridlock, basically. In fact, Senate majority leader Harry Reid, a Democrat, says it was not worth trying to go through the process of passing the president's budget. That's why you hear that old Republican saw that Harry Reid won't even present a budge to the Senate. You may have also heard the of repeated claim that President Obama's budget was struck down in the House and the Senate, getting zero votes. Goose eggs from either party.
But those bills were not the budget. They were shell versions of the president's budget put forward by Republicans designed to fail. They were not budgets. They were just politics.
Republicans did put out their own budget plan in the form of Paul Ryan's "Path to Prosperity," but bipartisan bickering resulted in no progress there, either.
Sorry Ali, but it was more than just "bipartisan bickering" which prevented Ryan's budget from being passed. Most Americans hated it, Republicans were backing away from it and even Paul Ryan himself was doing some backtracking on that debacle he put forward. You can read more about Ryan's so-called "Path to Prosperity" here in Jon Perr's post, where Fox was pretending that it doesn't add trillions to the deficit.
Maybe someone can tell Velshi to give it a look before he starts blaming the Democrats for its failure.
Full transcript below the fold.
VELSHI: The dealt ceiling is the next self-inflicted crisis that Congress needs to deal with. The debt limit is not like a credit card. It is simply not. It makes me crazy when Republicans and Democrats alike, including the president, continue to use this misleading analogy. It's also not the same as your household budget with a few zeros taken out.
For those who don't remember the last time Congress pushed us past the debt ceiling, here's how it works. Congress and the president spend money by creating bills and signing them into law. That is when the money is committed. Last year the U.S. government spent $3.8 trillion. Two-thirds of that, the green, came from revenues, mostly taxes. The rest of it, the red, came from borrowing. That's the deficit.
The subtotal of all of these annual deficits plus the interest on it is the national debt.
Today the national debt stands at $16.4 trillion. The Treasury is empowered to borrow money to make up for that shortfall but only up to a certain amount. That's the debt ceiling. Just keep this in mind, the Treasury does not make decisions about how the money is spent. They are simply empowered in this case to borrow the money and write the checks to pay the bills already incurred by your democratically elected Congress.
Today the debt ceiling is $16.3 trillion, which is less than our deficit. The U.S. breached the debt ceiling on December 31st but the Treasury can use what it calls extraordinary measures to raise an extra $200 billion. Those extra funds will only last until about mid -February or early March, according to the Bipartisan Policy Center.
Well, good luck trying to explain this to conservative talk radio show host Rush Limbaugh.
(BEGIN VIDEO CLIP)
RUSH LIMBAUGH, CONSERVATIVE TALK RADIO SHOW HOST: I think of the debt limit as your monthly credit card limit. You can't go over it on your credit card. And the United States government can't spend more that what it's credit limit or its debt limit.
Now Ali Velshi of CNN says that has no relation to spending.
(LAUGHTER)
(END VIDEO CLIP)
VELSHI: That's right, Rush. The debt ceiling was created so that Congress wouldn't need to constantly authorize the Treasury to borrow more money. Raising the debt ceiling doesn't authorize any new spending. It authorizes payment. It does not increase deficits. It just allows the Treasury to pay for the things that the U.S. government has already bought. If Congress doesn't raise the debt ceiling, Treasury won't be able to pay the bills and the U.S. government will start defaulting on some of its obligations.
Here is what happens, for instance, on February the 15th of this year. The federal government will take in an estimated $9 billion in revenue. That's the good news. But compare that to the $52 billion in bills that it will need to pay, everything from interest on the debt to pay for members of the military.
The Bipartisan Policy Center estimates that roughly 40 percent of the bills for the month would go unpaid.
Now what's the consequence of not paying? The truth is nobody really knows since it's never happened before, but you try telling American Express that you're not paying your bill this month because you spent too much money going out to dinner last month. Even talking about not raising the debt ceiling in 2011 caused the S&P to lower the U.S. credit rating because investing in U.S. debt is so safe. Interest rates are low, 1.58 percent for 10-year bonds. But missing an interest payment could cause those rates to rise.
That's still not enough to sway some members of Congress. They say they need to hold the debt ceiling hostage to get real spending cuts.
Ron Johnson is a Republican senator from Wisconsin. He is the member of the Senate Budget Committee.
Senator, as I just said -- welcome, by the way. As I just said the debt ceiling is not actually about future spending. It is for paying for bills that we already bought. Whether or not you think we should spend less money in the United States, do you agree with my premise?
SEN. RON JOHNSON (R), WISCONSIN: No, I don't, Ali. And hello, by the way. What the debt ceiling is all about is providing the president the authority to borrow more money, put that on the backs of our children and grandchildren. So there's no doubt that we are not going to default on our debt. But what the debt ceiling allows -- what the debt ceiling allows Congress to do is continue to deficit spend. If we would stop incurring deficits we wouldn't need to increase the debt ceiling. But it's not really about paying past bills. You start getting into the cash flow aspect of this thing. But basically what you're talking about is if -- in order to increase the debt ceiling we are actually just basically giving the president the authority to put that debt burden on our children and grandchildren. So it's really not about spending at all.
VELSHI: OK. Let me ask you a couple of questions here. First of all you said --
JOHNSON: It's called deficit spending.
VELSHI: You said there's no doubt we are not going to default on our payments.
JOHNSON: No.
VELSHI: I just -- but the math indicates that if at some point we don't increase the debt ceiling --
JOHNSON: Because, because --
VELSHI: -- why won't we?
JOHNSON: Listen, our interest payment this year is under $250 billion. We're going to bring in $2.5 trillion in tax revenue, so that's 10 times what our interest -- the servicing on the debt is. There is some casual aspects about turning over some debt but basically the only reason we have to increase the debt ceiling is because we continue to deficit spend. We're actually spending a trillion dollars more than we were bringing in --
(CROSSTALK)
VELSHI: But we're not anywhere close to not -- when you say we continue --
JOHNSON: Well, that's why we have to increase the debt ceiling.
VELSHI: When you say we continue to deficit spend, we have deficit spent under this entire administration, under the -- under the entire previous administration, as well. This isn't new. We never don't deficit spend. We've hardly ever not deficit spend. And we're not going to get there anywhere soon. So why would you pick this moment to have that fight?
JOHNSON: We need to stop doing that.
VELSHI: Well, we -- you can't. Can you come up with a budget?
(CROSSTALK)
JOHNSON: Because what --
VELSHI: Paul Ryan couldn't come up with one.
JOHNSON: Well, Paul Ryan did pass a budget in the House. Where we haven't passed a budget is in the United States Senate controlled by Democrats for over three years.
VELSHI: Right.
JOHNSON: So what we need to -- what we need to use the debt ceiling moment as is a moment to educate the American public about all the deficit spending, the fact that we blew through, by the way, a $2.1 trillion increase in the debt ceiling in just 17 months.
VELSHI: Right.
JOHNSON: Now, Ali, it took us 200 years to incur $2.1 trillion from our founding to 1986.
VELSHI: Right.
JOHNSON: We blew through that same amount in 17 months. We have got to start bringing --
VELSHI: But Senator --
JOHNSON: -- reducing spending, reducing our deficit so we don't have to keeping doing that.
VELSHI: The debt ceiling is a technicality. You're talking about the budget, you're talking about federal spending.
Let me just show you a piece of an editorial from "The Wall Street Journal."
(CROSSTALK)
JOHNSON: But if you --
VELSHI: I'm going to get your comment on this. They said, "You can't take a hostage you aren't prepared to shoot." Now that is -- that is charged language these days so I don't certainly want to ask you about hostages and shooting. I want to ask you a question on a different way.
JOHNSON: Right.
VELSHI: Do you -- do you understand that the consequences or what the consequences are of the U.S. even technically defaulting on its financial obligations and are you willing to let that happen?
JOHNSON: Yes.
VELSHI: Because you talk about interest rates, but the U.S. government has a lot more to pay than interest.
JOHNSON: Ali, I don't want to play brinkmanship here. When you start coming to the terms of the fact we cannot continue to run deficits over a trillion dollars per year.
VELSHI: Right.
JOHNSON: Because what's going to happen is our interest rates is going to increase and then interest expense can -- if we just revert to our 30-year average --
VELSHI: Yes.
JOHNSON: -- interest cost from 1970 to 1999 that adds $600 billion in interest costs per year. That is what we are trying to prevent.
VELSHI: Right.
JOHNSON: So what my suggestion would be is we just start increasing the debt ceiling in incremental amounts --
VELSHI: Right.
JOHNSON: -- until we get President Obama to actually get serious about reducing spending.
VELSHI: And will increase it. You will vote to increase it.
JOHNSON: Reducing the increase in the rate of spending. That's --
VELSHI: You will vote to increase it in an incremental amount.
JOHNSON: It -- listen, there's a very good construct in terms of giving, you know, $1 -- increasing the debt ceiling for every $1 in deficit reduction.
VELSHI: Right.
JOHNSON: That's what we have to start using the debt ceiling to -- to impose that spending discipline on this administration. And let's face it, President Obama is saying that we don't have a spending problem. We have a spending problem, this nation. We have a deficit spending problem.
VELSHI: Right.
(CROSSTALK)
VELSHI: We've all -- we've all --
JOHNSON: We should be doing this incrementally. This debate is not going away.
VELSHI: Senator, we've heard all of the -- both sides, bumper stickers. Let me bring you back to my example of February the 15th. OK. On February 15th, we had $52 billion in committed spending, $9 billion in money that we're taking in. And by the way, there isn't a chest of money sitting around for all the extra stuff. So I've got a list there. I've got interest, which is the one you're talking about, it's absolutely the biggest part, it's $30 billion.
OK, so, we're taking in $9 billion, we have $30 billion in interest. You've said that there are other ways to handle that. You've got refunds, tax refunds, $6.6 billion.
JOHNSON: Yes --
VELSHI: Federal salaries -- hang on, sir -- $3.5 billion. Military pay, $2.7 billion, Medicare and Medicaid $2.3 billion, Defense vendors, $1.5 billion, other stuff $4.4 billion.
Which one are you cutting, sir?
JOHNSON: Ali, you're taking a look at one day's --
(CROSSTALK)
VELSHI: I could pick any day. I could pick any day.
JOHNSON: Which is a distortion. Now let's take a look at the year. In a year we will get about $2.5 trillion worth of tax revenue. Last year we spent $3.5 trillion.
VELSHI: Right.
JOHNSON: Now if you actually utilize the Social Security trust fund to make the Social Security payments, that's another $775 billion. So now you're up to revenue of over $3.2 trillion. Basically you're funding all of government. And that's why we need to take a look at this. We -- I don't want to play brinksmanship. We should make sure that we can fund as much of government as revenues coming in.
VELSHI: Right.
JOHNSON: But we have got to start seriously taking a look at how we reduce the rate of growth in spending. And that's what we're talking about. For really nobody is talking about cutting government in total, we're talking about reducing the rate of growth in government so we stop adding this burden of debt to our children and grandchildren.
VELSHI: Sure.
JOHNSON: And that's what this debt ceiling is about. It's how much are we going to allow the president to increase the debt burden on our children and grandchildren. And he says he doesn't even want to have that debate. Listen, anytime we talk about debt it should be a very serious debate. We've got to start coming to --
VELSHI: I get you, I get you, and I hear you. But I'm glad --
(CROSSTALK)
I'm glad that you don't want to play brinkmanship. I guess my point is that the raising of the debt ceiling beyond the money that we're at right now is for money that is already committed. So that is not actually more spending.
JOHNSON: No, it is not. It --
VELSHI: That's fire preventing.
JOHNSON: It is not. It is -- it is to pay for additional deficit spending, which I agree with you, nobody says we can start balancing our budget immediately.
VELSHI: Right.
JOHNSON: But what Republicans are saying is if you're going to increase the debt burden on our children, at least start working with us to restrain the -- the rate of growth in spending over the next few years so we can finally start bringing our budget into balance.
VELSHI: OK.
JOHNSON: So we don't totally mortgage our children's future. That's what this debate should be about.
VELSHI: You were absolutely right. It should be about that. And we're going to discuss that later in the show. The idea about why we don't have budgets and how we can fix that.
Senator, thanks for taking the time to talk to us. We hope to talk to you more in the coming weeks.
JOHNSON: Have a great day.
