President Obama would like to talk about anything — Osama bin Laden, women, George Bush, “Forward” — rather than the economy. And when he does, his major themes are built on shaky facts or out-and-out untruths. Let’s look at five of them.
1. Income inequality worsened, leading to a credit boom and bust and now is slowing our recovery. Jim Pethokoukis quotes from the second study in recent months to debunk this:
Using data from a panel of 14 countries for over 120 years, we find strong evidence linking credit booms to banking crises, but no evidence that rising income concentration was a significant determinant of credit booms.
Narrative evidence on the US experience in the 1920s, and that of other countries in more recent decades, casts further doubt on the role of rising inequality.
Pethokoukis observes: “A long period of economic moderation made people both richer and overconfident about the economy’s stability in the future. So they took too many risks. Oh, and the Fed may have left interest rates too low for too long. So now we have this study. And we have an earlier blockbuster study from researchers at Cornell University that found median household income — properly measured — rose 36.7% from 1979-2007, not 3.2% like inequality alarmists (and White House faves) Thomas Piketty and Emmanuel Saez argue.”
Obama seeks “fairness” and soaking the rich for ideological reasons. It is not a plan for increasing econonic growth.
2. Obama has us on track for economic recovery. The vast majority of Americans believe we are either in a recession or an anemic recovery. They are correct about the latter. This is the slowest and most feeble economic rebound in modern times.
3. Obama has tried to address our looming debt crisis, but Republicans wouldn’t let him. To begin with, he had two years with Democratic House and Senate majorities (with budget matters, you don’t even need 60 votes). He used every bit of political capital to ram through Obamacare (now hugely unpopular and maybe unconstitutional) instead of entitlement or tax reform. He discarded the Simpson-Bowles report. He backed out of the grand bargain negotiations with House Speaker John Boehner (R-Ohio). He demagogued Republicans’s Medicare reform plans and has yet to put in a budget or other public document his ideas for Social Security and Medicare reform.
4. Republicans just want to give tax breaks to th rich. This is flat-out wrong. Both Rep. Paul Ryan (R-Wis.) and Mitt Romney propose cutting rates across-the-board and phasing out deductions for top income earners (“broadening the base”). Both have pledged to achieve revenue neutrality; Romney’s campaign has specifically pledged to keep the tax code’s progressivity
5. Romney would go back to George W. Bush’s policies. Romney is proposing reductions in discretionary spending, a premium-support Medicare plan, a new corporate and individual tax code, and a get-tough policy with China on currency manipulation and intellectual-property theft. He is proposing Social Security reform that does not include individual accounts. He is promising to get tough with Russia and has criticized engagement with North Korea and Iran (all contrary to Bush policies). Whatever you like or don’t like about it, Romney’s agenda is quite different, appropriately so in different times, from Bush’s agenda. Throwing around “Bush” whenever the race gets tough for him is another example of Obama’s fondness for strawmen. It is both intellectually lazy and dishonest.