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09 June 2012

Clueless: The President on Growth


(Liberties taken w/lyrics)

Never knowing.
Shocking, but I'm nothing.
I'm just moments.
I'm clever, but I'm clueless.
I'm just human
Amusing, but confusing.
But, the truth is
All I've got is questions
I'll never know.
Never know.
Never know.


An instructive Friday press conference.

That sure was a revealing White House press conference with President Obama Friday morning, and not for the reason that Republicans are saying. Mr. Obama said at one point that "the private economy is doing fine," and Mitt Romney and others quickly ripped him for being "out of touch." A few hours later, Mr. Obama corrected himself by saying at another event that "It is absolutely clear that the economy is not doing fine. That's why I had a press conference."

Assistant editorial page editor James Freeman on President Obama's prescriptions for growth. Photo: Getty Images

This is all good campaign fun, but Mr. Obama's presser was far more revealing for what it said about how he thinks an economy grows. His line about "the private economy doing fine" was followed immediately by a complaint that America's real growth problem today is shrinking government. Here's the complete context:

"The truth of the matter is that, as I said, we've created 4.3 million jobs over the last 27 months, over 800,000 just this year alone. The private sector is doing fine. Where we're seeing weaknesses in our economy have to do with state and local government—oftentimes, cuts initiated by 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.

"And so, if Republicans want to be helpful, if they really want to move forward and put people back to work, what they should be thinking about is, how do we help state and local governments and how do we help the construction industry."

Mull that one over. GDP growth in the first quarter was a measly 1.9%, revised down from an initial 2.2%. The President's response is to say as his first policy priority that the federal government should borrow or tax more so it can then finance more hiring by state and local governments. Spur the economy by growing the size of government.

It's true that government spending is part of GDP, and spending more can boost reported GDP for a time. But the lesson of the stimulus—which spent hundreds of billions of dollars in aid to the states—is that this boost is temporary and fades when the spending ends.

Mr. Obama also misdiagnoses state and local government layoffs. They aren't the result of falling state and local revenues, which have increased by 6% over the last two years, according to the Census Bureau. The problem is that the cost of worker benefits is growing faster than revenues. Governments are having to lay off workers to pay for their rising pension and health bills.

That's especially true in states that haven't followed the example of Wisconsin's Scott Walker and altered their benefits or reformed collective bargaining. Think California and Illinois. Mr. Obama is asking Congress to tax Americans from every state more, and borrow more from China, to send money to states that have been the most spendthrift.

If the President really wants to help state and local governments, he'd campaign with Chicago Mayor Rahm Emanuel for pension reform. Or he'd join Mayor Chuck Reed in San Jose to praise that city's voters for passing a reform referendum this week. Both mayors are Democrats.

The fair if depressing takeaway from Mr. Obama's press conference is that he continues to believe, despite three and a half years of failure, that more government spending is the key to faster growth and that government really doesn't need to reform. This is how you get a jobless rate above 8% for 40 months and the weakest economic recovery in 60 years. 

A version of this article appeared June 9, 2012, on page A12 in the U.S. edition of The Wall Street Journal, with the headline: The President on Growth.

Related Reading:

No, Krugman, Reagan Was Not The "Keynesian" And Obama Is Not The "Anti-Keynesian"

The Left's Epic Crash & Burn

After Wisconsin: Denial Ain't Just A River In Egypt 

Progs' Mouths Write A Cheque Their Asses Can't Cash

Wisconsin’s Peter Pan Progressivism

Union Thugs: Your Wisconsin Cheddar* Or Your Life!!!

Pic of the Day: At Least She's (?) Honest..


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Never Know - Jack Johnson

I heard this old story before
Where the people keep killing for the metaphors
Don't leave much up to the imagination,
So I, wanna give this imagery back
But I know it just ain't so easy like that
So, I turn the page and read the story again
And again and again
It sure seems the same, with a diff. name
We're breaking and rebuilding
And we're growing
Always guessing

Never knowing
Shocking but we're nothing
We're just moments
We're clever but we're clueless
We're just human
Amusing but confusing
Were trying but where is this all leading
Never Know

It all happened so much faster
Than you could say disaster
Wanna take a time lapse
And look at it backwards
From the last one
And maybe that's just the answer
That we're after
But after all
We're just a bubble in a boiling pot
Just one breath in a chain of thought
The moments just combusting
Feel certain but we'll never never know
Just seems the same
Give it a different name
We're beggin' and we're needing
And we're trying and we're breathing

Never knowing
Shocking but we're nothing
We're just moments
We're clever but we're clueless
We're just human
Amusing but confusing
Helping, we're building
And we're growing
Never know

Knock knock on the door to door
Tell ya that the metaphor is better than yours
And you can either sink or swim
Things are looking pretty grim
If you don't believe in what this one feeding
Its got no feeling
So I read it again
And again and again
Just seems the same
Too many different names
Our hearts are strong our heads are weak
We'll always be competing

Never knowing
Shocking, but we're nothing
We're just moments
We're clever, but we're clueless
We're just human
Amusing, but confusing
But, the truth is
All we got is questions
We'll never know
Never know
Never know

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