The President gets low marks for his handling of the economy, sure to be the primary issue during the 2012 presidential election. The latest CNN Poll delivers the bad news:
But only 34 percent approve of how the president is handling economic issues, with 65 percent saying they disapprove of how he’s handling the economy. Thirty-three percent give him a thumbs up on the budget deficit and 37 percent approving of how he’s dealing with unemployment.
"Two-thirds of Democrats continue to approve of Obama’s economic record, but seven out of ten independents disapprove. Not surprisingly, more than nine out of ten Republicans also disapprove of how Obama is handling the economy,” adds Holland.
The important part of those numbers is found in the second paragraph where “seven out of ten independents disapprove”. As we all know, independents are where elections are won or lost. When you’re down 70% with that group on an issue as important and personal as the economy, you’re in trouble. Also note that only 66% of Democrats are happy with his record on the economy.
While Obama gets higher marks in other areas such as foreign affairs, few think such areas are going to be major factors in how people vote in the upcoming election. When it comes to his record for handling economic issues, the vast majority of the country finds his performance to be subpar.
So the week before a “major jobs speech”, the numbers are in and they’re not good. As I’ve mentioned any number of times, Obama has a problem for the first time in his elected life – he has to run on his record. And to this point his record has a number of "records" in it – record deficits, record debt, record unemployment and now, record discontent.
Turning this around will be no easy feat. Especially before November of next year. So as he pivots yet again to focus on jobs (something he’s supposedly been focused on since the beginning of his presidency), he has some implacable opponents he can’t spin, namely numbers, facts and statistics. And those numbers, facts and statistics translate into the poll numbers like those above.
Finally, despite all his efforts to do so, it appears that his days of being able to blame shift his “inherited” problems to Bush are over. These poll numbers say that the majority of Americans have rejected that and are not pleased with his performance, not Bush’s.
Must be tough to actually finally have to take responsibility for something when you’ve spent your entire life attempting to slip responsibility for anything that was negative.
I generally tweet the day’s economic statistics, and compile them on Google+. It occurs to me that I can just do that here. Don’t know why I haven’t thought of this before…
Anyway, here’s the day’s economic statistics.
MBA Purchase Applications fell -12.2% in the latest week, led by drops in refinancing applications. The plus to this report is that purchase applications rose
Challenger reports that layoff announcements fell to 51,114 from 66,414 last month. These numbers are not seasonally adjusted, so the monthly comparison is a bit difficult. The trend is down from a year ago, however. Most layoffs were centered in government, especially the military.
ADP is calling for a 91,000 rise in private payrolls for August, down from last month’s 109,000. This implies a weaker Employment Situation than last month’s when we get that report from BLS on Friday.
The Chicago PMI was 56.5, indicating that business slowed slightly in the Chicago area this month. This is generally seen as a predictor of the national index, which will be released tomorrow.
July was a very strong month for the manufacturing sector with factory orders up 2.4%.
Jobless claims again surprised the “experts” with an “unexpected” jump.
The number of people who filed for unemployment assistance in the U.S. last week rose unexpectedly, official data showed on Thursday.
In a report, the U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending August 19 rose by 5,000 to a seasonally adjusted 417,000, confounding expectations for a decline to 405,000.
The previous week’s figure was revised up to 412,000 from 408,000.
Continuing jobless claims in the week ended August 13 fell to 3.641 million from a revised 3.721 million in the preceding week. Analysts had expected continuing jobless claims to decline to 3.700 million.
Tyler Durden provides the Bureau of Labor Statistics justification for the unexpected rise:
Naturally, the BLS is there to provide a justification for the spike, with 8500 jobs apparently "lost" due to the Verizon strike: "Special Factor: As a result of a labor dispute between Communications Workers of America and Verizon Communications, at least 12,500 initial claims were filed in the week ending 8/13/2011 and at least 8,500 initial claims were filed in the week ending 8/20/2011."
Durden also points out why the unemployment total percentage isn’t worse:
In other news, continuing claims came below expectations of 3700K at 3641K, a number that will be revised higher as was last week’s from 3702K to 3721K. The collapse in extended benefits, as the 99 week cliff claims more and more, means that 20K people fewer collected post Continuing Claims benefits, with those on EUC and extended benefits down from 5.8 million a year ago to 3.6 million: this is 1.2 million Americans that no longer can collect anything from Uncle Sam.
It also means they’re no longer counted among the unemployed in the official numbers.
Yeah, it’s worse than you thought – and getting worse still. Can’t wait to see Obama’s jobs plan — after he has his vacation, of course.
If you don’t believe me, look at the California experience to this point. If there’s any state in the union more amenable to and focused on providing green jobs, it has to be the Golden State. Governor Jerry Brown pledged to create 500,000 of them by the end of the decade.
But as often the case when the central planners make their pledges, they are woefully ignorant of what the market wants. And so rarely does what they envision ever come to fruition. Green jobs in CA is a good example.
Remember Van Jones? Well, when Jones left the Obama cabinet as his “Green Jobs Czar” he landed in California and has been what the NY Times calls an “Oakland activist” apparently pushing for the creation of green jobs. And it’s not like California hasn’t tried. It has simply failed.
A study released in July by the non-partisan Brookings Institution found clean-technology jobs accounted for just 2 percent of employment nationwide and only slightly more — 2.2 percent — in Silicon Valley. Rather than adding jobs, the study found, the sector actually lost 492 positions from 2003 to 2010 in the South Bay, where the unemployment rate in June was 10.5 percent.
Federal and state efforts to stimulate creation of green jobs have largely failed, government records show. Two years after it was awarded $186 million in federal stimulus money to weatherize drafty homes, California has spent only a little over half that sum and has so far created the equivalent of just 538 full-time jobs in the last quarter, according to the State Department of Community Services and Development.
So a “stimulus” program that spent over $93 million dollars to create 538 jobs. Why so little in terms of takers? Well it seems the market wasn’t interested.
The weatherization program was initially delayed for seven months while the federal Department of Labor determined prevailing wage standards for the industry. Even after that issue was resolved, the program never really caught on as homeowners balked at the upfront costs.
“Companies and public policy officials really overestimated how much consumers care about energy efficiency,” said Sheeraz Haji, chief executive of the Cleantech Group, a market research firm. “People care about their wallet and the comfort of their home, but it’s not a sexy thing.”
You don’t say … the government didn’t have a clue at what the market potential of their boondoggle actually had, so they ended up spending $172,862 for each job. And you wonder where the money goes?
Job training programs intended for the clean economy have also failed to generate big numbers. The Economic Development Department in California reports that $59 million in state, federal and private money dedicated to green jobs training and apprenticeship has led to only 719 job placements — the equivalent of an $82,000 subsidy for each one.
“The demand’s just not there to take this to scale,” said Fred Lucero, project manager atRichmond BUILD, which teaches students the basics of carpentry and electrical work in addition to specifically “green” trades like solar installation.
Richmond BUILD has found jobs for 159 of the 221 students who have entered its clean-energy program — but only 35 graduates are employed with solar and energy efficiency companies, with the balance doing more traditional building trades work. Mr. Lucero said he considered each placement a success because his primary mission was to steer residents of the city’s most violent neighborhoods away from a life of crime.
You see you can fund all the job training centers in the world and run umpthy-thousands through it. But if there is no market for the jobs, you end up spending a whole lot of money for nothing. Again, ignorance of the market and its demands means expensive mistakes. Of course Mr. Lucero thinks the program is a success – he got to spend free money, was employed and it didn’t cost him squat. It cost you.
At Asian Neighborhood Design, a 38-year old nonprofit in the South of Market neighborhood of San Francisco, training programs for green construction jobs have remained small because the number of available jobs is small. The group accepted just 16 of 200 applicants for the most recent 14-week cycle, making it harder to get into than the University of California. The group’s training director, Jamie Brewster, said he was able to find jobs for 10 trainees within two weeks of their completing the program.
Mr. Brewster said huge job losses in construction had made it nearly impossible to place large numbers of young people in the trades. Because green construction is a large component of the green economy, the moribund housing market and associated weakness in all types of building are clearly important factors in explaining the weak creation of green jobs.
Market timing is pretty important too, isn’t it? If you introduce a product into a market in the middle of a market downturn, chances are slim you are going to be successful. While it may all look good on paper and sound good in the conference room, the “buy” decision is still made in the market place, and in this case it is obvious that the market has no room for these workers. Something which should have been, well, obvious. In fact, there is precious little market for traditional construction jobs in a “moribund housing market”. Yet there they are spending money we don’t have on job skills that are simply not in demand.
Finally there’s this bit of word salad to feast upon:
Advocates and entrepreneurs also blame Washington for the slow growth. Mr. Jones cited the failure of so-called cap and trade legislation, which would have cut carbon pollution and increased the cost of using fossil fuel, making alternative energy more competitive. Congressional Republicans have staunchly opposed cap-and-trade.
Mr. Haji of the Cleantech Group agrees. “Having a market mechanism that helps drive these new technologies would have made a significant difference,” he said. “Without that, the industry muddles along.”
You have to admire someone who tries to cloak central planning jargon in “market speak”. Imposing a tax on thin air to drive, from above, a behavior government wants is not a “market mechanism”. And beside, California passed it’s own version of this “market mechanism” with AB 32 in 2006. How’s that working out?
This is how:
A SolFocus spokeswoman, Nancy Hartsoch, said the company was willing to pay a premium for the highly-skilled physicists, chemists and mechanical engineers who will work at the campus on Zanker Road, although the solar panels themselves will continue being made in China. Mayor Reed said he continued to hope that San Jose would attract manufacturing and assembly jobs, but Ms. Hartsoch said that was unlikely because “taxes and labor rates” were too high to merit investment in a factory in Northern California.
Irony … central planning fails in CA while jobs end up in increasingly capitalistic China. Again, ignorance of the market causes disappointing results. Somehow I feel this came as a surprise to Mayor Reed … after he’d spent whatever of your money he’d committed to this project.
One of the key worries about the Federal Reserve’s policy of Quantitative Easing has been the fear that it would result in hyperinflation at some point. But, Mike Shedlock, writing at Business Insider, asserts that inflation is not what we should be fearing: deflation is. Despite his rather self-centered, Ooh-look-what-a-cool-boy-I-am writing style, he makes an excellent point, and provides some valuable insight.
Shedlock actually has a rather different definition of inflation and deflation than most do, as he doesn’t concentrate primarily on the money supply or price levels, but rather the state of credit markets.
Inflation is a net increase in money supply and credit, with credit marked-to-market.
Deflation is a net decrease in money supply and credit, with credit marked-to-market.
Complete loss of faith in currency.
The first two definitions have nothing to do with prices per se, the third does (by implication of currency becoming worthless).
To determine whether we are currently experiencing inflation or deflation, he uses the following criterion:
Symptoms of Deflation
- Falling Credit Marked-to-Market
- Falling Treasury Yields
- Falling Home Prices
- Rising Corporate Bond Yields
- Rising Dollar
- Falling Commodity Prices
- Falling Consumer Prices
- Rising Unemployment
- Negative GDP
- Falling Stock Market
- Spiking Base Money Supply
- Banks Hoarding Cash
- Rising Savings Rate
- Purchasing Power of Gold Rises
- Rising Number of Bank Failures
He then goes through all 15 criteria and shows fairly persuasively that—according to his definition, at least—we are in the middle of a credit-led deflation, despite the fact that consumer prices are rising. certainly, asset prices are declining.
Which, I think just means we’re having stagflation, if today’s CPI numbers are to be beleived.
In any event, as I’ve been saying since 2008, the danger of our policy mix is not inflation in the short-term, but rather a recreation of the Japanese response to the currency crisis/deflation of 1992 that brought about the "Lost Decade". We’ve actually doubled down on the Japanese policy, and are experiencing the same economic result.
So, businesses and consumers are holding tight to their wallets, adjusting their balance sheets…and waiting. Yes, there’s tons of cash sitting in banks right now that isn’t going anywhere, and as long as banks have a shortage of credit-worthy customers seeking loans, all of that cash is gonna keep sitting there are excess reserves.
Meanwhile, the one thing that has kept the dollar buoyed as the world’s reserve currency is that there’s really nowhere else to go. As attractive as the Euro might have seemed a couple of years ago, there’s a real chance that the Euro is on it’s way out, except perhaps as the joint currency of France and Germany.
What I would point out, though, is that Shedlock’s definition of hyperinflation is a state that exists as a result of a psychological event, not the result of something one can forecast via some predictive empirical measurement. That’s unsettling, because you can never quite predict when a psychological breaking point in public trust is reached. No matter how deflationary credit might be at the moment, if we begin seeing a serious, sustained rise in price levels for consumer goods, I’d be a little worried. A steep fall of the dollar’s price in the FOREX market would be worrisome, too. If hyperinflation is the result of a psychological shock disconnected with any sort of statistical measurement, then I’d be careful finding too much comfort in statistics.
The numbers say that deflation is our biggest problem right now, though, and I’d say that’s generally right. If the economy picks up and those excess reserves begin to flow into the hands of consumers though, I’d be looking very hard at the Fed as the velocity of money picks up, to see how they plan to sterilize the excessive growth in the monetary base they’ve created.
Secretary of Agriculture Tom Vilsack is excited. He’s bullish on jobs. The reason is because the Administration has a fantastic job creation program already in place: Food Stamps. You see, 1 in 7 Americans are now on food stamps. And this triumph of the American economy means more jobs for everyone. Having 14% of Americans receiving food stamps, you see, is an Administration economic success story!
Well, obviously, it’s putting people to work. Which is why we’re going to have some interesting things in the course of the forum this morning. Later this morning, we’re going have a press conference with Secretary Mavis and Secretary Chu to announce something that’s never happened in this country — something that we think is exciting in terms of job growth. I should point out, when you talk about the SNAP program or the foot stamp program, you have to recognize that it’s also an economic stimulus. Every dollar of SNAP benefits generates $1.84 in the economy in terms of economic activity. If people are able to buy a little more in the grocery store, someone has to stock it, package it, shelve it, process it, ship it. All of those are jobs. It’s the most direct stimulus you can get in the economy during these tough times.
Here’s the video of Sec. Vilsack’s exciting statement:
Why, I now wish I was on food stamps. Then every dollar I spent would add $1.84 to the economy. Unlike now.
I mean, sure if I was some sort of racist doubter, I might wonder why, as food stamp use has increased over the past couple of years, GDP growth has declined or been very anemic. I might wonder why, if I was cynical and racist, huge increases in unemployment and millions added to the food stamp rolls were formerly a sign of economic failure, not a jobs program to be touted.
But I’ve learned so much in the past day! I’ve learned that increasingly large rolls of unemployment recipients, and an increasingly large population of food stamp recipients grow the economy and create jobs. I’ve learned that these are signs of success rather than failure. I’ve learned that if every American was on Food Stamps, we’d grow the economy by 84%. I’ve learned we have always been at war with Eastasia.
Learning is fun.
I now hate all of you who use your un-American paychecks to by food with your un-American earnings, instead of helping the economy out by getting food stamps. Now I know you hate America. And freedom.
By the way, I’ve started picking up these odd radio signals from somewhere in the vicinity of Fomalhaut B. I just thought somebody should know about that…Maybe give Krugman a call.
In addition to what Bruce wrote below, I’d like to point you to Political Math’s analysis of Texas’ job performance. In this analysis, he takes the criticisms we’ve been hearing for the last two days and refutes them, point by point, using actual BLS statistical data. It’s a great job of analysis, with, like, charts, and stuff. They key takeaway:
My advice to anti-Perry advocates is this: Give up talking about Texas jobs. Texas is an incredible outlier among the states when it comes to jobs. Not only are they creating them, they’re creating ones with higher wages.
And he has the actual statistical work to back that claim up. For instance, here are two of the charts he presents, that I have superimposed to create a single chart showing the employment level in the US, compared to Texas. It’s most instructive:
This single chart says a whole lot.
And, of course, leading the parade is none other than liberal economist and New York Times hack, Paul Krugman. His thesis? Well, it’s the state of McJobs, of course. And the reason for all this misunderstanding about the “Texas miracle”. People don’t understand the impact of population growth. Paul Krugman stands ready to explain why Texas’ growth is just no big deal and certainly nothing we want to emulate . Let’s let him explain:
For this much is true about Texas: It has, for many decades, had much faster population growth than the rest of America — about twice as fast since 1990. Several factors underlie this rapid population growth: a high birth rate, immigration from Mexico, and inward migration of Americans from other states, who are attracted to Texas by its warm weather and low cost of living, low housing costs in particular.
And just to be clear, there’s nothing wrong with a low cost of living. In particular, there’s a good case to be made that zoning policies in many states unnecessarily restrict the supply of housing, and that this is one area where Texas does in fact do something right.
But what does population growth have to do with job growth? Well, the high rate of population growth translates into above-average job growth through a couple of channels. Many of the people moving to Texas — retirees in search of warm winters, middle-class Mexicans in search of a safer life — bring purchasing power that leads to greater local employment. At the same time, the rapid growth in the Texas work force keeps wages low — almost 10 percent of Texan workers earn the minimum wage or less, well above the national average — and these low wages give corporations an incentive to move production to the Lone Star State.
So Texas tends, in good years and bad, to have higher job growth than the rest of America. But it needs lots of new jobs just to keep up with its rising population — and as those unemployment comparisons show, recent employment growth has fallen well short of what’s needed.
If this picture doesn’t look very much like the glowing portrait Texas boosters like to paint, there’s a reason: the glowing portrait is false.
Why is it “false”? Here’s Krugman’s explanation:
What Texas shows is that a state offering cheap labor and, less important, weak regulation can attract jobs from other states. I believe that the appropriate response to this insight is “Well, duh.” The point is that arguing from this experience that depressing wages and dismantling regulation in America as a whole would create more jobs — which is, whatever Mr. Perry may say, what Perrynomics amounts to in practice — involves a fallacy of composition: every state can’t lure jobs away from every other state.
In fact, at a national level lower wages would almost certainly lead to fewer jobs — because they would leave working Americans even less able to cope with the overhang of debt left behind by the housing bubble, an overhang that is at the heart of our economic problem.
While I’d love to take the time to research and tackle the nonsense in Krugman’s column, I don’t have too. Kevin Williamson at NRO has done so and done so brilliantly. He does so by comparison … something Krugman intentionally avoids. For instance:
What, indeed, does population growth have to do with job growth? Professor Krugman is half correct here — but intentionally only half correct: A booming population leads to growth in jobs. But there is another half to that equation: A booming economy, and the jobs that go with it, leads to population growth. Texas has added millions of people and millions of jobs in the past decade; New York, and many other struggling states, added virtually none of either. And it is not about the weather or other non-economic factors: People are not leaving California for Texas because Houston has a more pleasant climate (try it in August), or leaving New York because of the superior cultural amenities to be found in Nacogdoches and Lubbock. People are moving from the collapsing states into the expanding states because there is work to be had, and opportunity.
Think again of the Krugman statement “every state can’t lure jobs away from every other state”. Then kick it up a level. “Every nation can’t lure jobs away from every other nation”. Really? Isn’t that what we’ve been complaining about for years when the word “outsourcing” is used. Of course “every state can lure jobs from every other state” … just look at the rust belt and try to say that again with a straight face. People go where there is economic opportunity and jobs. That will stabilize when and if other states treat the issue the way Texas is. That’s why legislators from all over the country are traveling to Texas to learn how they’ve accomplished what they have, despite the unfounded caterwauling of the Krugmans of the world,
Point two from Williamson about “McJobs”. Again, the devil is in the details, facts in which Krugman seems to have no interest:
Krugman points out that New York and Massachusetts both have lower unemployment rates than does Texas, and he goes on to parrot the “McJobs” myth: Sure, Texas has lots of jobs, but they’re crappy jobs at low wages. (My summary.) Or, as Professor Krugman puts it, “low wages give corporations an incentive to move production to the Lone Star State.” Are wages low in Texas? There is one question one must always ask when dealing with Paul Krugman’s statements of fact, at least when he’s writing in the New York Times: Is this true? Since he cites New York and Massachusetts, let’s do some comparison shopping between relevant U.S. metros: Harris County (that’s Houston and environs to you), Kings County (Brooklyn), and Suffolk County (Boston).
Houston, like Brooklyn and Boston, is a mixed bag: wealthy enclaves, immigrant communities rich and poor, students, government workers — your usual big urban confluence. In Harris County, the median household income is $50,577. In Brooklyn, it is $42,932, and in Suffolk County (which includes Boston and some nearby communities) it was $53,751. So, Boston has a median household income about 6 percent higher than Houston’s, while Brooklyn’s is about 15 percent lower than Houston’s.
Brooklyn is not the poorest part of New York, by a long shot (the Bronx is), and, looking at those income numbers above, you may think of something Professor Krugman mentions but does not really take properly into account: New York and Boston have a significantly higher cost of living than does Houston, or the rest of Texas. Even though Houston has a higher median income than does Brooklyn, and nearly equals that of Boston, comparing money wages does not tell us anything like the whole story: $50,000 a year in Houston is a very different thing from $50,000 a year in Boston or Brooklyn.
So obviously purchasing power, not wages, is the key. If you make less money than someone in NY but can buy twice the stuff with what you earn, who has the low paying job in terms of purchasing power? Which would you rather have?
Case in point:
In spite of the fact that Texas did not have a housing crash like the rest of the country, housing remains quite inexpensive there. The typical owner-occupied home in Brooklyn costs well over a half-million dollars. In Suffolk County it’s nearly $400,000. In Houston? A whopping $130,100. Put another way: In Houston, the median household income is 39 percent of the cost of a typical house. In Brooklyn, the median household income is 8 percent of the cost of the median home, and in Boston it’s only 14 percent. When it comes to homeownership, $1 in earnings in Houston is worth a lot more than $1 in Brooklyn or Boston. But even that doesn’t really tell the story, because the typical house in Houston doesn’t look much like the typical house in Brooklyn: Some 64 percent of the homes in Houston are single-family units, i.e., houses. In Brooklyn, 85 percent are multi-family units, i.e. apartments and condos.
Tell me again whose getting the best bang for their buck?
Williamson covers much more in his fisking of the Krugman claims and it is worth reading it all. What becomes evident in the Williamson piece is how thoroughly Paul Krugman has sold out. The word has gone out that the Texas success story must be destroyed. And naturally the lead attack dog responds to the bell in Pavlovian fashion in a fact free mélange of disinformation. Williamson draws the correct conclusion from the Krugman piece:
All of this is too obvious for Paul Krugman to have overlooked it. And I expect he didn’t. I believe that he is presenting willfully incomplete and misleading information to the public, and using his academic credentials to prop up his shoddy journalism.
Or, you’re supposed to take his word for it, not fact check him.
As insty would say: “Indeed”.
It’s true that to be a progressive, one has to have the ability to believe nine impossible things before breakfast. But, surely even progressives have some limits to credulity. I’d like to think so, but then I see something like this, that even the barely literate should recognize as foolishness.
President Obama has lately been pushing a number of policies that he says will create jobs, including extending unemployment benefits. This is puzzling, since new benefits obviously will not create jobs for unemployed people, who after all are the ones who need work. But White House Press Secretary Jay Carney explained Thursday that paying out unemployment checks “is one of the most direct ways to infuse money directly into the economy because people who are unemployed and obviously aren’t running a paycheck are going to spend the money that they get. They’re not going to save it, they’re going to spend it.” True, they probably will spend the money, on their mortgages, on food, and other necessary expenses. But Mr. Carney attributed miraculous qualities to these government handouts, saying “every place that, that money is spent has added business and that creates growth and income for businesses that leads them to decisions about jobs, more hiring.”
Of course, unemployment benefits do none of those things.
Quite apart from anything else, unemployment benefits are usually far less than than, say, an actual paycheck from an actual job. The very best that might be said about unemployment benefits is that they cause job losses overall to be slightly less severe than they might otherwise be, as the distribution of said benefits ameliorates the chain reaction of job losses as unemployed workers receive some money, rather than no money at all. And, of course, it prevents the jobless from going completely under financially.
But to believe Mr. Carney, one must believe that larger numbers of people receiving and spending substantially less money creates more economic growth. This is magical thinking. If it were true, the obvious solution would be to completely shut down the productive economy, and provide every inhabitant with a government dole check. No doubt economic growth would explode if Mr. Carney were correct, although who would then be available to fill the millions of new jobs is quite beyond me.
Further, it could be argued that for low-skilled—hence, low-income—workers, extended unemployment benefits are a positive disincentive to get a job at all. After all, why work 30 hours a week delivering pizzas, if, in return for an abundance of leisure time, you can simply cash a government check every week? And, perhaps, do a little work under the table to help get by.
It also ignores the reality of where the money for these government benefits is actually coming from. It either has to be extracted from the productive economy in the form of taxes or it has to be borrowed. If it’s the former, it means less money is available in the private sector to, say, invest and create jobs. If the latter, then it adds more debt to the economy, which may not be the most practical solution if the problem is too much government debt in the first place, crowding out private investment and hindering growth.
Seriously, at what point does even the sheep-like herd of White House correspondents rise from their supine positions and tell Mr. Carney that some arguments are too stupid to be presented to their readers with a straight face?
If unsupported claims were currency, Barack Obama would be a rich man. Let’s take apart a recent Obama bus tour statement:
"We had reversed the recession, avoided a depression, gotten the economy moving again," Obama told a crowd in Decorah, Iowa. "But over the last six months we’ve had a run of bad luck." Obama listed three events overseas — the Arab Spring uprisings, the tsunami in Japan, and the European debt crises — which set the economy back.
"All those things have been headwinds for our economy," Obama said. "Now, those are things that we can’t completely control. The question is, how do we manage these challenging times and do the right things when it comes to those things that we can control?"
"The problem," Obama continued, "is that we’ve got the kind of partisan brinksmanship that is willing to put party ahead of country, that is more interested in seeing their political opponents lose than seeing the country win. Nowhere was that more evident than in this recent debt ceiling debacle."
Actually the record doesn’t show anything of the sort. Officially, the recession was pretty much over when he took office. He’s added almost 4 trillion to the debt anyway with no discernable effect except to see unemployment – the one thing he promised would stay below 8% if he was allowed to spend – rocket to a high of 10%.
As usual, Obama tries to lay off the poor economic performance on other events. For instance the Arab spring. As it turns out it had very little effect on oil prices or supplies. Even though the administration tried to make something out of it (remember the desire to release oil from the National Petroleum Reserve?), it was, in reality, a non-factor. And for the most part, at least in terms of the performance of the US economy, so were the other two problems he’s listed.
The not-so hidden premise, of course, is had those things not happened, the economy would be humming like a fine tuned engine. In fact, nothing could be further from the truth. And it hasn’t been “partisan brinkmanship” that has brought us to the economic precipice. It has been a result uncontrolled spending. That drag has translated into a necessity for the economy to produce more growth in GDP just to see the what we considered average growth in previous decades. The new 3% is no probably 4% growth. And this economy, at least now, is just not in the shape to do that.
So in reality, Mr. Obama is spinning like a top when he says things like he says above. What we’ve suffered here is a result of out-of-control spending and excruciatingly poor economic policy. And Obama has been at the forefront of both the spending and the policy decisions. Don’t let him fool you with his usual attempts to blame shift. This mess is all his.