Over the last two days, many politicians and pundits – including me – have chimed in on the President’s “grand bargain” to increase taxes and spending. In other ways, though, his speech is absolutely critical to understanding the fundamental chasm between the President’s thought processes on economics and taxes, and reality.
Part 1 of this series will focus on the factual inaccuracies and misleading statements from the President. Part II, which will be up tomorrow, will look a particularly important aspect of the President’s mindset on public policy.
The President made a number of questionable statements near the beginning of his speech:
Now, you heard from Lydia, so you know — because many of you went through it — over the past four and a half years, we’ve been fighting our way back from the worst recession since the Great Depression, and it cost millions of Americans their jobs and their homes and their savings. And part of what it did is it laid bare the long-term erosion that’s been happening when it comes to middle-class security.
But because the American people are resilient, we bounced back. Together, we’ve righted the ship. We took on a broken health care system. We invested in new American technologies to reverse our addiction to foreign oil. Changed a tax code that had become tilted too much in favor of the wealthy at the expense of working families. Saved the auto industry, and thanks to GM and the UAW working together, we’re bringing jobs back here to America, including 1,800 autoworkers in Spring Hill. (Applause.) 1,800 workers in Spring Hill are on the job today where a plant was once closed.
Today, our businesses have created 7.2 million new jobs over the last 40 months. This year, we’re off to our best private-sector jobs growth since 1999. We now sell more products made in America to the rest of the world than ever before. (Applause.) We produce more renewable energy than ever. We produce more natural gas than anybody else in the world. (Applause.) Health care costs are growing at the slowest rate in 50 years. Our deficits are falling at the fastest rate in 60 years. (Applause.)
First, the President “took on” our health care system by making things worse – increasing government controls and cost, to name but two.
Regarding “investments” in energy technologies, the level of energy subsidies in renewable energies more than doubled from 2007 to 2010, most of that in the 2009 stimulus. Despite these “investments,” however, total energy grid production by renewables was a mere 10.3%, and solar totaled 0.0% of all energy production. Clearly, this taxpayer “investment” isn’t working.
Repeating a falsehood does not make it true, yet the President continues to state the tax code is “tilted too much in favor of the wealthy.” This ignores data from his own IRS showing that top earners have paid more income taxes – both as a total of federal revenue collected and percentages of income – for decades. In 2009, that split was dramatic: The top 1% made 50 times as much as the bottom 20%, on average, but paid 1,500 times as much in taxes.
“Saving” the auto industry did indeed take place – at the cost of billions to everyone else. However, it did nothing to prevent Motor City for heading to bankruptcy. Perhaps worst of all, the Administration worked with the United Auto Workers, but not to save the auto industry. According to Heritage Foundation labor expert James Sherk, the UAW received special treatment. Without that special treatment, the rest of the taxpaying public would have actually broken even on the auto bailout.
While 7.2 million jobs have been created in 40 months, this totals a mere 180,000 per month, far lower than what is needed for full economic recovery anytime soon. Furthermore, the Bureau of Labor Statistics has data showing – if you change the starting year to 1948 – the employment-to-population ratio is recovering at the slowest rate since post-World War II.
And it’s easy to have “deficits…falling at the fastest rate in 60 years” when your Administration presided over the largest federal spending – as a percentage of the American economy – in American history. Furthermore, even with deficits dropping now, the Congressional Budget Office projects this to change shortly after President Obama’s second term ends.
The President also repeated the ridiculous “phony scandals” claim:
But so far, for most of this year, we’ve seen an endless parade of distractions and political posturing and phony scandals.
He touted “the chance to pass on a better future for our kids.” This definitely won’t happen if he keeps leading Washington towards greater levels of overspending. And his claim that he’s working for “a secure retirement even if you’re not rich” ignores how Medicare’s Trust Fund will be exhausted by 2024, and Social Security’s Trust Fund by 2033, according to intermediate projections.
Possibly the silliest part of the entire speech is this one:
So I’m challenging CEOs to do more to get these Americans back on their feet….
And at the same time, I’m calling on our businesses to do more for their workers….That’s the kind of approach that we need from America’s businesses. Offering training programs, health care, retirement plans, paying better wages — that’s not just the right thing to do, it’s actually good for your bottom line. A recent study shows that when a company makes the list of the “100 Best Companies to Work for in America,” its share price outperforms its competitors, because the stock market and investors, they know if a company has employees that are motivated and happy, that business is more likely to succeed. That business is more likely to succeed.
Somehow, a former constitutional lawyer with a background in community organizing thinks he knows how business people can run their enterprises better. And his push for a so-called “need to raise our minimum wage” ignores economic reality on the harm his push will cause for lower income workers.
Moving onto sequestration, the President correctly cites the Congressional Budget Office (CBO) as saying sequestration will cause “900,000 fewer jobs next year.” However, he ignores how the CBO also expects such spending reductions to do more good for the long-term health of the economy. And his statement that “another 700,000 workers at the federal, state, and local levels of government have lost their jobs” in the last four years ignores the growth in government spending at all levels, including state and local governments.
Of course, the most harmful claim made by the President is that his new proposal of corporate tax reform and spending increases is some sort of grand compromise. This ignores, as this blog pointed out yesterday, that his plan consists of a tax increase and spending increases. That’s not a compromise; it’s a slightly rewrapped version of the President’s long-known goals.
Tomorrow, Part II will look at the President’s self-absorbed view of public policy and Alinsky-style attacks on Republicans,and how both played a part in his speech.