To a lot of conservatives, these six words by Obama are believed to be some sort of massive gaffe that will help them overcome daunting electoral math and get Romney elected. On one hand, economic confidence in the face of weak data doesn’t look good. When McCain echoed a Hoover line said “The fundamentals of our economy are strong” just as things were crashing, he looked pretty out of touch. The GOP seems to think that this is the same sort of error on Obama’s behalf.
There are a couple differences between Obama’s line and McCain’s. First, Obama is more or less right. The private sector isn’t doing fantastic—but it’s at least fair-to-middling. McCain, on the other hand, sounded a bit like the guy on the Titanic saying, “I’m pretty sure that crunching, flooding noise is supposed to happen.”
The other problem is that this criticism requires the Republicans to sacrifice any shred of ideological coherency they have left. If Obama says the private sector is doing fine as it is, the Republicans seem to be saying that the private sector sort of sucks and needs a bit more government interference. That’s a bit off message.
Wait, wait, wait. You think the Private sector is doing okay? What world do you live in? Obama is absolutely not right here. The private sector can’t even create enough jobs to keep up with population growth let alone make up the numbers we’ve lost over the last 5 years.
Obama’s gaffe is on the same level as McCain’s. McCain had no clue how the economy works so he was completely out of touch with what the actual fundamentals are and how they should be doing. Obama’s out of touch because he’s still pushing to punish the private sector and the top earners and he truly believes that they are doing fine and that they need to pay their “fair share”.
As for your final point, you couldn’t be more wrong. The solution for fixing the private sector doesn’t involve more government, it involves less of it. You seem to think that most Republicans want to dump billions into bailouts, but that’s not the typical stance of the average conservative. In fact, that goes against our beliefs. We don’t want more gov’t. Heck, most of us don’t want any government involvement.
Here’s Ron Paul explaining what the CBO thinks of the economy:
Last week the Congressional Budget Office (CBO) issued its annual long-term budget outlook report, and the 2012 numbers are not promising. In fact, the CBO estimates that federal debt will rise to 70% of GDP by the end of the year – the highest percentage since World War II. The report also paints a stark picture of entitlement spending, as retiring Baby Boomers will cause government spending on health care, Social Security, and Medicare to explode as a percentage of GDP in coming years.
While the mainstream media correctly characterized the CBO report as highly pessimistic, they also ignored longstanding errors of methodology in CBO estimates. And those errors tend to support arguments for higher taxes and government spending, when in fact America needs exactly the opposite.
As Paul Roderick Gregory explained in a recent Forbes column, CBO has always applied wrongheaded assumptions inherent in Keynesian economics when forecasting future deficits – no matter how many times both history and economic theory have proven such assumptions incorrect. In particular, CBO seems wedded to two enduring Keynesian myths: First, that higher taxes necessarily increase federal revenue and have no negative effect on the economy; and second, that lower government spending hurts the economy. Neither is true, of course.
CBO also fails to factor in unexpected wars and expensive foreign entanglements, and we should not assign too much validity to predictive models based on peace. Judging from the actions and rhetoric coming from both parties in Washington, new military entanglements in Syria and Iran may well spike military spending in coming years.
Despite these sobering budget realities, the CBO report suggests that a solution is possible with merely a few minor adjustments in the way Congress handles economic issues. But what we need are not minor adjustments, but rather a fundamental shift in our philosophy of government. If we could come to our senses about the proper role of government in America, and what level of government interference is appropriate in a free economy, we would quickly find that there is no reason for government to spend so much, borrow so much, and tax so much.
If we simply allowed markets to work free of governmental or Federal Reserve interference, bad debt would be liquidated relatively quickly and malinvestment would be curtailed. Scaled-back regulations would encourage businesses to expand. Lower taxes would jump start investment and spur job creation.
This is not rocket science, it is Economics 101. All it would take is for government to get out of the way. There would be some short term pain, of course, but only by allowing the bubble to burst and bad debt to liquidate can we ever hope to begin building a real economy again.
The CBO report was alarming to most simply because they know neither party will take the steps necessary to avoid eventual fiscal calamity. Instead, despite their rhetoric, both parties want to maintain the fantasy that “deficits don’t matter.” But the CBO report, combined with what is happening in Greece and the European Union, should finally make the undeniable case that economic realities apply even to industrialized first world economies. We must take concrete steps today to avoid having America become the next Greece.