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Palin has no clue how entitlements work.

Tonight in an ABC interview, host Charlie Gibson asked Gov. Sarah Palin (R-AK) if she would cut entitlements — such as Social Security, Medicare, and Medicaid. Palin, however, began talking about spending by government agencies, demonstrating a fundamental ignorance on economics:

GIBSON: Do you talk about entitlement reform? Is there money you can save in Social Security, Medicare and Medicaid?

PALIN: I am sure that there are efficiencies that are going to be found in all of these agencies. I’m confident in that.

GIBSON: The agencies are not involved in entitlements. Basically, discretionary spending is 18 percent of the budget.

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Last weekend, Palin also tried to explain the recent federal bailout of Fannie Mae and Freddie Mac by saying that they had “gotten too big and too expensive to the taxpayers.” The companies, however, aren’t taxpayer funded but rather operate as private companies.

Transcript:

GIBSON: So let me break some of those down. You talk about spending. How much smaller would a McCain budget be? Where would you cut?

PALIN: We’re going to find efficiencies in every department. We have got to. There are some things that I think should be off the table. Veterans’ programs, off the table. You know, we owe it to our veterans and that’s the greatest manifestation that we can show in terms of support for our military, those who are in public service fighting for America. It’s to make sure that our veterans are taken care of and the promises that we’ve made to them are fulfilled.

GIBSON: So you’d take military off the table, the veterans’ benefits. That’s 20 percent of the budget. Do you talk about entitlement reform? Is there money you can save in Social Security, Medicare and Medicaid?

PALIN: I am sure that there are efficiencies that are going to be found in all of these agencies. I’m confident in that.

GIBSON: The agencies are not involved in entitlements. Basically, discretionary spending is 18 percent of the budget.

PALIN: We have certainly seen excess in agencies, though, and in — when bureaucrats, when bureaucracy just gets kind of comfortable, going with the status-quo and not being challenged to find efficiencies and spend other people’s money wisely, then that’s where we get into the situation that we are into today, and that is a tremendous growth of government, a huge debt, trillions of dollars of debt that we’re passing on to my kids and your kids and your grandkids … It’s unacceptable.

Update:

Yglesias has more.

Update:

,Palin used the word “efficiencies” four different times during the interview to refer to money that can be saved in government agencies. She presumably meant “inefficiencies.”