Barack Obama and Joe “Smiley” Biden need to take a rudimentary course in economics. Sarcastic laughs and Big Bird moments aside, both seem to have a strong misunderstanding of basic economic metrics through either ignorance, or stupidity. Take, for example, a statement by Obama that should be hammered over and over by the Romney campaign: “The private sector is doing just fine.” One need only ask the 23 million Americans looking for adequate paying jobs whether the private sector is doing just fine. The ostensible reason for the Obama stimulus- which Biden unabashedly defends- was to increase employment through so-called “shovel ready” projects which the government soon discovered were not that shovel ready. They now claim that those nagging high unemployment figures are wholly attributable to the decline in public sector employment because, well…the private sector is doing just fine.
During the worst part of the recession, private sector employment decreased by 7.6% and has now only started to creep back. Yet, it is still 4% below its levels before the recession hit. Put another way, “recovery” in the private sector is barely halfway there and that does NOT a recovery make. That is why the overall unemployment figures are still naggingly high- job creation, when it exists, is not keeping pace with the normal initial entrants into the job market let alone taking in those who lost employment during the recession. State and local public employment, by contrast, continued to increase during the recession and has now only begun to decrease over the past two years by a total of 4.1%. In other words, the cuts in public employment roughly equal the gains in private sector employment over the past two years, but private employment is nowhere near where it needs to be. And there is a reason public sector employment increased in the first two years of the Obama Administration- it takes a lot of government bureaucracy to cut and administer those stimulus payments and to figure out what exactly Obamacare means. Hence, even though there is a recent decline in public employment, since the beginning of the recession, just federal public employment is up 11.6%. Additionally, there are about ten times as many state and local public employees as there are federal employees. Overall, there are five times as many private sector employees as public employees. Hence, it becomes obvious- if you have a modicum of commonsense which leaves out Obama and Biden- that private sector employment is considerably weaker. Public sector jobs are down by a net total of about 200-300,000. Meanwhile, private sector employment is down 4.5 MILLION!
It becomes obvious how Obama and Biden can stand there and make preposterous statements. First, their definition of “public worker,” at least as they present it to the electorate, stops at teachers and first responders. But, public workers are also those eight men you see looking at a pothole as one person fills it in, or the sarcastic city hall worker taking your water bill payment. They also fail to mention the initial surge in federal hiring after passage of the stimulus. They only take into account the changes in public (weak decreases) and private sector (weak increases) employment since the beginning of the recovery, defined as the official end of the recession. In essence, they tell only half the story where the private sector lost jobs by the millions while public employees not only kept their jobs, but saw their ranks swell.
Obama apologist Paul Krugman is a perfect example of their fuzzy math. For example, he states that if we had “normal public sector job growth,” there would be an additional 800,000 employees. He then inflates the number of public sector jobs lost to 600,000, adds these phantom 800,000 never created jobs, and comes to the conclusion the public sector “lost” 1.4 million jobs as a result of the recession. This makes it appear as if the public sector lost jobs at a comparable rate as the private sector and therefore their numbers need to be bolstered. This is exactly the rationale used by both Obama and Biden to tout the alleged success of the stimulus- phantom jobs not actually created equals jobs saved equals jobs “created.”
Jonathan Cohn, another Obama apoligist/”economist” says that the solution is simple. The federal government can simply write checks to state and local governments to retain and hire new employees. Note that they count these jobs “retained” as a job “created.” Think about this on a more personal level. If you are a homeowner in financial distress, instead of cutting your spending here and there or trying to negotiate with your creditors, under this Cohn line of thinking, increase your spending by just writing more checks. The problem is the federal government borrows money to write those checks. Another economist, Josh Bivens, says that another “stimulus” would be desirable since there is no upward pressure on interest rates. That is, we can afford to borrow money now because interest rates are at historic lows. But when interest rates are so low- currently near zero- there is nowhere to go but up in the future. While the Fed has signaled they have no intention of increasing interest rates any time soon, this current state of affairs will not always exist. Unfortunately, when they do (and they will) increase, there is so much debt accumulated that the government then has to divert a greater percentage of revenue they take in just to service the interest on that accumulated debt. It is like the homeowner with an Adjustable Rate Mortgage getting caught with their pants down when the interest rate adjusts upwards. The result is either an increase in taxes on everyone since simply raising taxes on the “wealthy” will never bring in enough revenue, OR dramatic and draconian budget cuts especially in entitlement spending.
Now, compare this to the situation in Europe today, especially Greece since they are the most glaring example although the same mechanisms are in action in Italy and Spain. Greece followed- almost to the letter- the “suggestions” of Krugman, Cohn and Bivens. They expanded the public workforce/bureaucracy, wrote checks, and there was no upward pressure on interest rates. But when interest rates increased just nominally, the result is Greece today. Krugman, Cohn and Bivens can today look in a camera and say there are differences in the dynamics between Greece and the United States, but Greece remains a real world example of their policies gone awry and, contrary to their assertions, it can happen here also. Biden and Obama follow this line of thinking which indicates that they have a basic misunderstanding of the real world, or they are just stupid. The theories of Krugman, Cohn and Bivens look fine and dandy on paper and with computer models, but they fail miserably in the real world. If anything, this is proof that the Nobel Committee should just disband since Krugman touts his Prize in the field of economics. Of course, the Nobel Committee has also awarded prizes to Al Gore (discredited global warming panic), Barack Obama (the reasons still defy explanation), and most recently the European Union (probably the same people who voted to give the award to Obama for the same reasons, whatever they are).
When the point is made that this is the slowest recovery in the history of recoveries, Biden snickers, laughs, smirks and flashes his pearly whites while Obama continues to cry about the situation he inherited. No matter how you look at this- and Krugman can make all the apologies he wants- this IS the slowest recovery on record despite the cause of the recession.
And what is Obama’s solution? Let the Bush tax cuts expire on those making over an amount that changes by the month. Fact: Even if this was done, it would be but a drop in the financial bucket towards debt reduction and it would most likely would not be used for those purposes, but to prop up public sector employment. Both Obama and Biden like to trot out the regulatory framework of Obamacare or Frank-Dodd as some kind of panacea. They ignore the fact that no one- not even Obama’s own bean counters- can put a definitive price tag on Obamacare alone. We do know that because of the mandate, it will be an effective tax increase primarily on middle class taxpayers. As for Frank-Dodd, estimates of compliance costs cannot be ascertained because the regulators have not even formulated the regulations required. Both “laws” have missed several deadlines.
Businesses- the private sector- cannot properly function, thrive, grow and add jobs in an uncertain environment. They require regulatory and, more importantly, tax policy certainty. That is clearly not the case. Instead, we get obtuse statements, half truths, class warfare, ignorance, smirky smiles and sarcastic laughs, and, of course, visions of Big Bird. It is truly amazing that the polls are still as close as they are right now. The Obama cult of personality has certainly clouded the vision of the American electorate. If voters were required to take a rusimentary course in macroeconomics before casting a vote for President or answering a poll question, Obama would have been long buried.