Treasury Secretary’s Old and Busted Dance Moves
Ever since the debt ceiling was created, both parties have talked about the risk of “default” if America hits it. This ignores reality, in which default only happens if the country fails to pay interest payments. Hitting the debt ceiling would only force a balanced budget.
With the next debt ceiling fight beginning in Washington, it was up to Treasury Secretary Jack Lew to trot out this ridiculous falsehood. From Real Clear Politics’ transcript of Lew’s discussion with Fox News’ Chris Wallace:
WALLACE: What’s your plan to avoid the default — what’s you plan to avoid the default when Speaker Boehner said there got to be spending cuts?
LEW: And 2011 was the first time in American history that you had one side arguing that default was an option. It was not an option and cannot ever be an option. They may know that. They have to do their work. They have to pass it.
The president has made clear: we cannot negotiate about whether or not the government of the United States would default. It was a mistake in 2011 to have that debate. It’s hurt the economy. And I think Congress knows that it has to deal with this.
There are other falsehoods in this statement as well. First, every day there is a debate about negotiations on the U.S. defaulting on her debt. Consider that every dollar of debt added increases the odds of default in the future – and the President is certainly up for a debate on that subject, though he is only willing to debate how much to add to the chances of default, not diminish them.
Second, there is no evidence the 2011 debate hurt the economy. Saying it doesn’t make it any more real than President Obama’s claim of “phony scandals” makes it accurate.
Third, the overspending crowd has held America hostage for years on increasing the size of America’s debt. TARP was a must-pass. The stimulus was a must-pass. Immigration “reform” is a must-pass. Yet the second time in a decade that a real, concerted effort was made to slow the growth of spending – the first being the April 2011 budget debacle – suddenly “it was a mistake to have that debate.”
On the same show, Lew made a number of claims about America’s economy that were misleading. Again from Real Clear Politics:
The truth is the core of the economy is strong, it’s resilient, and we’ve been growing. We’ve been growing for 40 months. We’ve seen job growth for 40 months, GDP growth, economy growth for four years.
It’s not fast enough. We want to do everything we can to speed the pace of economic growth and job creation. That means we need to address the issues that the president laid out this week. We need to do things to help build the foundation for better jobs.
First, what is “the core of the economy?” We have debt increasing, the economy growing anemically, and the nation’s national government in total dysfunction. Taxes are too high, the tax laws are too complex, and regulations are absurdly and distortedly high. Obamacare is set for partial implementation, and Detroit just went bankrupt.
Regarding the growth of the economy, the Democratic Policy & Communications Center has the numbers – 7.2 million jobs added in 40 months as of June 2013. This sounds great, until you do the math: 180,000 jobs added per month, on average, for each of those 40 months. With the replacement rate at 150,000 jobs per month (meaning the economy has to add that many in order to break even) the American economy is making very modest gains. Furthermore, the Bureau of Labor Statistics has data showing – if you change the starting number to 1948 – the employment-to-population ratio is recovering at the slowest rate since post-World War II.
If President Obama’s Administration really wants “to speed the pace of economic growth and job creation,” it could get behind massive deficit reduction. It could put itself behind loophole-eliminating, rate-reducing tax reform. It could get rid of the regulatory burdens hobbling businesses.
Finally, Lew tried and failed to avoid Wallace’s trap on the Keystone Pipeline – a modest job-creating pipeline that President Obama and his allies have avoided approving for years:
WALLACE: Let me ask you one question. If you’re so interested in creating more jobs, why not approve the Keystone pipeline which would concrete tens of thousands of jobs, sir?
LEW: Chris, I think, as you know, the Keystone pipeline is being reviewed. It’s been in the process that was slow down because —
WALLACE: Several years it’s being reviewed. I think, what, three, four years.
LEW: It was — there were some political games that were played that took it off the trail, past its completion. When Republicans put it out there as something that was put on a timetable where it could not be resolved, it caused a delay. We are getting to the end of the review, and we’ll have to see where that review is.
But I think playing political games with something like this is a mistake.
The political games Lew is referencing were done by Republicans because President Obama and his allies have delayed approval to please the environmental lobby. Which is a greater political game – not approving a job-creating pipeline, or trying to force the President to approve the same pipeline the State Department has substantially reviewed?
As the American economy continues to stagger through over four years of recovery, it’s clear the President’s plans are inferior to the challenges facing the nation. Perhaps he should try listening to Tea Party activists, and cut spending in order to a) help America’s economy grow, and b) avoid the debt ceiling in its entirety.