The president’s news conference belly-flop Friday was a killer on two levels. Obviously, the private sector is not doing fine, as Obama admitted later in the day when he tried to walk back the remark. (But if it’s not doing fine is he to blame? No! That’s 2E and 2F.) But the rest of his message — that it’s good to keep growing the public sector — won’t be walked back. That is what he believes and why his comments, coupled with Wisconsin Gov. Scott Walker’s victory in last week’s recall election, spell big trouble for him.
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.
President Obama seems unaware that we need the private sector to generate wealth (you know, make things, sell things, etc.) or that we face in the near future a fiscal crisis when we can no longer off-load our debt. Where does he think the money to pay for an ever-expanding public employee workforce comes from? (“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.”)
The lesson in Wisconsin was entirely lost on the president. There, the taxpayers figured out that paying for (with rising taxes) the cushy salaries and lavish benefits of government employees is not the way to put the state’s fiscal house in order. If you want to lure business, increase economic activity and return prosperity you cannot keeping growing government — all that borrowing, spending and taxing eventually catches up with you.
New Jersey Gov. Chris Christie grasped this point when he spoke in Chicago:
Christie argued that New Jersey has more government workers per square mile than any other state, but said the trend is reversing under his leadership. Midway through his first term, the state now has fewer people on its payroll than it has since Republican Christie Todd Whitman was governor more than a decade ago, he said.
“That’s the right direction, Mr. President, not the wrong direction,” Christie said.
“It is an outrage to have the president of the United States stand up and say to hardworking governors — Democrats and Republicans in this country — that state and local government hiring is moving in the wrong direction, and we’re to blame,” Christie said.
The president has learned nothing in the past four years. In his book we haven’t enlarged government enough, borrowed enough, hired enough civil servants and taxed wealth-creators enough. If the entire electorate thought like Paul Krugman, this philosophy would be hailed. But in the real world, Americans simply don’t buy this.
The left blogosphere has predictably pulled out from the excuse matrix two defenses for Obama’s Friday meltdown: “It is a communications problem” (Obama didn’t say what he meant), and “The voters don’t care.” But are they going to defend the preposterous notion that what is holding us back is too few government workers? The president is sinking, but the entire Democratic Party and liberal punditocracy need not go down with the ship. For now, however, the lefty blogosphere seems determined to do precisely that.