Obama’s statement at his weird press conference Friday has been the topic of much discussion since he said it, and then “walked it back” four hours later.
President Obama’s comment Friday that the “private sector is doing fine” continued to dominate television political debates Sunday, with surrogates trying to minimize the impact of his remarks, and opponents seeking to take maximum advantage, despite Obama’s retraction of the comment Friday afternoon.
The defense of his statement is odd and shows ignorance of how the economy works.
Jonathan Cohn, writing in TNR, is right about one thing.
Following three months of disappointing job reports and with unemployment still above 8 percent nationally, critics are likening Obama’s statement to Romney’s statement in January of “I like being able to fire people” and, perhaps more ominously, to John McCain’s statement in the fall of 2008 that the “fundamentals of the economy are strong.”
The Romney comment was not a gaffe, although he opened himself to creative editing, when he said, ““I want people to be able to own insurance if they wish to, and to buy it for themselves and perhaps keep it for the rest of their life, and to choose among different policies offered from companies across the nation. I want individuals to have their own insurance. That means the insurance company will have an incentive to keep you healthy.
“It also means if you don’t like what they do, you can fire them. I like being able to fire people who provide services to me. If someone doesn’t give me the good service I need, I’m going to go get somebody else to provide that service to me.”
Of course, the news media and the Democrats clipped the quote to the “I like to fire people.” He should have seen that and restructured the sentence to “I like to see people able to fire those who provide bad service.” But he didn’t and now knows better. It has nothing to do with his beliefs in economics, except he likes the free market.
The Obama quote is different. He means just that. The full quote:
The private sector is doing fine. Where we’re seeing weaknesses in our economy have to do with state and local government. Often times cuts initiated by, you know, Governors or mayors who are not getting the kind of help that they have in the past from the federal government and who don’t have the same kind of flexibility as the federal government in dealing with fewer revenues coming in.
The “flexibility” he mentioned involves the fed’s ability to print money. The states can’t do that. Thank God. The “help” that the state and local officials were getting was the misnamed “stimulus” from 2009. Now it has run out. States are starting to reform, as in the Walker recall rejection by voters in Wisconsin. Also, even in California, voters are using the ballot box to rein in public union pensions and fringe benefits. The left does not understand that public employees do not create wealth. They are “overhead” on the economy. When a business sees a decline in revenue, it cuts overhead, if possible. If not, it will eventually go out of business. Government doesn’t go out of business.
Cohn’s reply ?
Broadly speaking, the analysis is correct. The private sector has been creating jobs at a steady pace, but the public sector has been shedding them, slowing growth. And there is no reason why that has to happen. Stabilizing the public sector workforce or, better still, increasing it would be among the very easiest things for the federal government to do: It can simply write checks to state and local government, as it did with the Recovery Act and has traditionally done during times of economic distress.
Republicans disagree. Downsizing the public sector is very much their goal and Romney said as much in his quick response:
[Obama] wants to hire more government workers. He says we need more fireman, more policeman, more teachers. Did he not get the message of Wisconsin? The American people did. It’s time for us to cut back on government and help the American people.
The economic theory behind this seems rather questionable: I’ve yet to see the study suggesting that the recent decline in government workers has been good for growth or jobs.
There are so many fallacies here that I will take them one by one.
The population is growing and new workers are entering the job market each month. Retired and dead (and those who have given up looking for a job) are leaving it and the difference is what sets the unemployment rate. What is the steady state for monthly jobs ?
It is about 150,000 per month. In fact, that was what was expected in May.
Employers are expected to have added 150,000 new workers to
their payrolls, according to a Reuters survey of economists,
after creating a meager 115,000 new positions in April, the
fewest in six months.
So, what happened in the economy that is doing “fine?”
The job creation rate fell off a cliff.
Employers created a paltry 69,000 jobs last month, the Labor Department said on Friday, the fewest since May last year. Economists polled by Reuters had expected nonfarm payrolls to increase 150,000.
In addition, employers added 49,000 fewer jobs than previously estimated in March and April. The unemployment rate rose to 8.2 percent from 8.1 percent as people flocked into the labor market.
So the private economy is “fine.” When Obama says the economy added 800,000 new jobs, he doesn’t understand that the economy has to add 250,000 new jobs every MONTH to stay even. Recovery from the present unemployment rate will require more. The left also doesn’t understand that public employees are a net loss to the economy as they have to paid from taxes paid by everybody else.
Keep in mind, too, that a downsized public sector is one with fewer teachers and firefighters, not to mention civil servants who may go by the ugly name “bureaucrats” but provide more essential government services than most people seem to realize. Sometimes we need fewer of these workers, but sometimes we actually need more of them.
They just don’t understand. We don’t need more, especially if they are unproductive. Picking up garbage needs to be done. Lots of public employee jobs don’t need to be done. The TSA replaced thousands of private security jobs. The air traffic controllers could be privatized and provided by the airlines in a private company paid for by the airlines. There is little doubt that it would be more efficient. The millions of federal employees could be cut in half with no loss of productivity. Most of what they do impedes the economy.
The left, including Obama, thinks “capitalism doesn’t work”.