The Corner

Yes, Joan Walsh, It’s a Bailout Bill

There’s lots of actual lying in politics, so it’s annoying when Joan Walsh, who’s kind of a blackbelt expert in getting it wrong, uses the word “lie” to characterize that with which she simply disagrees:

The Republican Party seems to have a new strategy for the Sunday shows: Use them to float the week’s big political lie. Last Sunday, Senate Minority Leader Mitch McConnell used his slot on CNN’s “State of the Union” to claim the Democratic bank reform bill would commit the federal government to future “bailouts” of toxic banks, when in fact the bill outlines a new process to place such banks in bankruptcy, not bail them out. The proposed $50 billion fund to restructure such banks was called “a bailout fund,” when in fact it is funded by fees on big banks, not the government.

If the Dodd bill were simply for putting firms into bankruptcy, then the government wouldn’t need things like new powers for loan guarantees and liquidity facilities. But in the Dodd bill, we find … new powers for loan guarantees and liquidity facilities. If those new powers aren’t for stepping in and bailing out distressed creditors, then what are they there for? To give lawyers prose-writing exercise?

And “funded by fees on big banks, not the government” isn’t exactly accurate, either: Those “fees” are treated under the Dodd bill as tax-deductible business expenses, meaning that money spent on them means tax dollars not going into the Treasury, i.e. that they come at an expense to the goverment. Now, under Walsh’s own standard, her statement is a “lie,” but in the real world, it’s just her either not knowing what she’s talking about or being too lazy to deal with the complicated facts at hand. I await her enthralling clarification.

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