Peterson Punk
by digby
I was busy this week-end and didn’t get a chance to watch the new Pete Peterson IOUSA propaganda documentary on CNN, but Bill Sher did and gives you the rundown. And it’s not pretty:
If you watched the “I.O.U.S.A. Solutions” program, you would have simply become stupider.
Allow me to give you the lowlights: 1. We reduced World War II debt levels, but we won’t tell you how! In their attempt to offer a history of U.S. debt levels, CNN and Pete Peterson sometimes referenced the fact that America had a higher amount of debt relative to the size of our economy after World War II than we do today. Yet they saw no reason to mention that not only did our earlier debt fail to destroy the lives of the Greatest Generation’s grandchildren, but that our debt levels were reduced — not by painful austerity — but by investing in our futures. The Peterson-financed “I.O.U.S.A. Solutions” movie, which anchored CNN’s segment, begins on that incoherent note. The narrator fails to reconcile our previously higher debt levels and the lack of any debt-fueled economic crisis:
Since 1789, the year our federal government was formed, we’ve had our ups and downs with the national debt. Wars and the Great Depression created high debt levels, but we’ve always been able to bring that back down to manageable levels, even after World War II, which is when our debt to GDP was at its highest point ever. Then, beginning of the 1980s, the national debt began growing quickly, despite the fact that our country experience relative peace and prosperity throughout that time. Except for a period in the late ’90s and early 2000s, when our government was running budget surpluses, our federal budget has consistently been in the red, and the national debt has been on an upward path as a result. At the rate we are going, we will pass the debt levels we saw at the end of World War II in just 10 years.
The fact that debt levels go “up and down” over the course of our history does not seem to make the hysterics pause. They could have tried to illuminate what we did back in the 1940s and 1950s that made sure there was a down after the up. Instead, Peterson intentionally tried to confuse viewers about post-World War II history. Peterson spent most of his time scapegoating Social Security and Medicare, then manages to cite the great investments of the 20th century, without bothering to connect the dots between investing, growth and reducing debt. His main point was you have to cut “entitlements,” namely Social Security and Medicare.
It’s hard to avoid the entitlements if you do simple math. If you got rid of all the Bush tax cuts, which not many people are proposing, if you got rid of all the earmarks that people keep talking about, if you got out of both wars, you would only solve somewhere between 10 percent and 15 percent of the problem. So it is absolutely essential you get where the money is. It’s very important on the entitlement.
Then at the end of the segment, Peterson has the moxie to laud the G.I. Bill, the Marshall Plan and the national highway system:
I remind you of what happened after the Second World War. Our public debt was twice as it is now, 122 percent of the GDP. The American people … were told the truth. There was great leadership. And what did the American people do? They reduced the debt to something like 20 percent, 25 percent of the GDP by the ’80s. They paid for the biggest infrastructure program in history — highways. They paid for the Marshall Plan. They paid for the G.I. bill. Why? Because they understood … by virtue of the leadership what the truth was.
But of course, Peterson doesn’t connect the dots and tell the truth himself. Those investments did not slash the budget. They grew the economy. As Paul Krugman said on Friday:
…in 1946, the United States, having just emerged from World War II, had federal debt equal to 122 percent of G.D.P … how did the U.S. government manage to pay off its wartime debt? Actually, it didn’t. At the end of 1946, the federal government owed $271 billion; by the end of 1956 that figure had risen slightly, to $274 billion. The ratio of debt to G.D.P. fell not because debt went down, but because G.D.P. went up…
But on CNN this weekend, you never heard that explanation from the nation’s most famous economist, or anyone else for that matter.
Read on if you can stomach it.
Get ready. This is heating up. And if the Democrats don’t get their act together it’s going to burn us all very badly.
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