Friday, June 8, 2012

Doing "fine"

 Listen to the whole press conference, and then try to tell me that President Obama doesn't have a firm appreciation of our economic situation, and its relationship to the situation in Europe, which was the focus of the president's remarks today. True, at one point, when President Obama was challenged about whether the failure of his own policies has caused the situation in Europe, he reacted by defending his policies, which have stabilized the U.S. financial system, and created more than 4 million new private sector jobs. That is a record that any European country would envy, and the Europeans cannot and do not blame this country for their lackluster recovery, because they know that the United States has in fact been leading the way out of economic crisis. The problem in Europe is that the weaknesses in their own political and economic union have thus far impeded them from taking the steps that have been so successful in the United States.

In the course of explaining that, President Obama might not have used the best choice of words (one word actually) to describe the superior performance of the American private sector in creating jobs. What he said (about 21 minutes into the press conference) was that the private sector was doing "fine," but that the public sector and the construction industry still could use more help. Earlier in the press conference (about 13 minutes in), President Obama said the same thing using somewhat different phraseology. He explained that the private sector has been doing a good job creating jobs, and generating record profits, but that there is still a problem with the loss of jobs in state and local governments, and in the construction industry. Obviously and unquestionably, his later reference to the private sector doing "fine" was meant to reiterate this comparison to the public sector. And I have not seen anyone who criticized the president's statement today challenge his point that continued losses of jobs in the public sector have been a major drag on the recovery. That is simply a fact.

For someone who is generally so careful about choosing his words, this was a very rare example of choosing a word that might not have been the best possible word the president could have chosen. And President Obama clarified his statement later in the day. So give the guy a break.

UPDATE: For those who like charts, here's a link to Business Insider, which put up a bunch of charts that prove that what President Obama said was exactly correct.


  1. Joe, I am a moderate who agrees in tax reform, increased taxes, defense cuts and spending control.

    Still, it's hard to describe how uncomfortable the President made me with his vision. I am in the private sector and so is my wife. We are getting killed. There are 23 million Americans unemployed, unemployment is at 8.2 percent and there are 500,000 fewer jobs today than when Obama took office.

    His mantra seems to be that he has created four million jobs. Why isn't unemployment lower? The fact that more and more people have dropped the search for jobs and are underemployed and don't even show up as statistics anymore is evidence of just how bad the situation is.

    Meanwhile, he wants a stimulus from Congress to send off billions to local cities?! Did he not witness the results in Wisconsin and those of propositions in San Diego and San Jose?

    Thanks for the chart. What the does that have to do with normal people in the private sector struggling to make ends meet? A majority of Americans are in private sector jobs and are equally concerned about trillions of dollars in assets sidelined by massive corporations; as well as ass-hat criminal behavior on Wall Street. I have been talking about it here on your blog for years.

    Here is what the President might consider, as should city mayors and managers: the majority of Americans recently woke up and realized we are losing our jobs, our savings and our homes while, at the same time financing public worker union retirements and medical insurance at rates we could never ever imagine having. As well, Wall Street greed, supported by a diseased culture in Washington that crosses party lines. If each of us doesn’t hammer away at that culture we are part of the problem. There is transformation coming alright. It's going to happen from the bottom up.

  2. It's hard to see how your program of increasing taxes and cutting government spending even more would create more jobs. Even Mitt Romney admitted that if we did that, GDP would actually shrink dramatically. It's also really hard to understand how firing more teachers and policemen and nurses and firefighters will create more jobs. Doesn't it make more sense that if we fire more public service employees, we will actually increase unemployment? That's why the president is saying that the private sector is on the right track, at least as far as increasing profitability, and that they are slowly (too slowly), creating more jobs. It is the public sector that needs help. The public sector doesn't need more of what we have been doing so far.

    I agree with you that one of the problems is that banks and private companies are still sitting on a lot of cash. But they are not going to start investing that cash until they see a greater return on investment. That's why the government still needs to pick up the slack for now, otherwise we will be heading for the double dip that Europe appears to be in.

  3. I didn't advocate firing teachers, policemen, nurses or firefighters. Why are these people's benefits considered untouchable? I, and most reasonable people, see that they need to pay into their pensions and medical plans at a 5-10% scale. Instead, they are forcing their own lay offs. Cities cannot print money. It is unbelievably short sighted of the unions. Well all know it is coming.

    Please, don't use the tired old phrases about firing these sacred workers. They don't do anymore for the whole of the community than you (I hope) and I do. We educate, we do pro bono work, we protect and save lives. I see patients for free and I am eating shit financially. I expect you see clients in need. I expect sacrifice from them. They are cannibalizing themselves by not renegotiating contracts.

    Example: in San Diego out of 7000 teachers, 1500 got pink slips. They have until June 30th to agree to pay 10% of the medical package and take a 5% pay cut. If the union fails to agree, 1500 teachers are gone. What is so hard to understand? My wife and I have taken a 30% pay cut and have a 10% increase in cost for health care.

  4. For us, a 10% increase in health care cost is not 10%. We now pay about $1000 dollars a month. These teachers are not well served by the union heads. The problem has been that they play chicken with the states and cities and at the last moment the federal government steps in and sends cash to the states. It's over. The Ponzi scheme is over. The rest of us woke up. It is time for the deep sleepers, the dreamers, to awaken.

  5. I get what you are saying about public employee union benefits, and in some cases they probably do need re-structuring to make them sustainable. But that is a long term problem. Unfortunately, cities and states are treating those issues as short term problems, because in the short term they have to balance their budgets, and they have lost a tremendous amount of revenue due to the recession which they have to make up somehow, usually by cutting spending.

    My point is that doing that makes the recession worse in the short term. And unless we can get private businesses and banks to loosen up and get the economy moving (which they won't until after they see things getting much better), or unless we can get consumers to loosen up and spend more (which they won't because everyone is scared), increasing federal spending (or cutting federal taxes, which doesn't work quite as well) is the only way in the short term to get the economy moving again.

    And all the people suggesting the opposite do not have any valid economy theory behind them.

    It sounds very fine and moral to say that we have to change our profligate ways and live within our means and all that, but now is not the time to be doing that if we want to get the economy rolling. And the people saying that we need the federal government to help the states prevent more layoffs are not dreamers. They are very practical and they have sound Keynesian theory behind them. It is the people who are saying that cutting spending and shrinking government is the solution who are dreamers. They have no good empirical evidence to support what they are saying. They just have an ideological agenda that they have been pushing for decades, in good times and bad.

  6. You are correct, turning this economy and our profligate ways around is a long term problem. However, in the example I gave above, the teachers union has about three weeks. I would call that a short term problem. As I described it, there doesn't have to be any layoffs, only benefit concessions to the tune of 5-10%. I find that reasonable.

    You keep praying to the federal government for help; meantime local and state governments are rowing toward shore; taking control because the federal government is mired in ideology. Locally, we are forced to move beyond ideology. I am doing more, for less, with less.

  7. The state and local governments are coping as best as they can. Unfortunately, what they are doing is making unemployment worse, and slowing down the economy. That's not entirely their fault. It's just the constraints under which they must operate. Meanwhile the federal government has the ability to borrow huge sums at practically no interest, and without any real risk of causing inflation. The federal government could help the situation out much more than it has so far, if we had the political will to solve this problem. And the state governments would be happy to have that help.

  8. << if we had the political will to solve this problem >>

    I certainly understand your point. Lets start with some political will when it comes tax reform, trade, Wall Street reform, repatriating trillions of dollars that are overseas, etc.

    << The state and local governments are coping as best as they can. Unfortunately, what they are doing is making unemployment worse >>

    Remember Joe, in the example I gave above, nobody is losing their job _if_ they choose to contribute to the solution.

  9. In the example you gave above, the city gave people the option to take a pay cut so they could avoid layoffs. That certainly sounds kinder to an employee who has the choice between getting laid off and taking a pay cut. But the negative impact on the economy is exactly the same. If those city employees have less money to spend, that reduces the income of every business they would have patronized. Remember that your spending is my income. And my spending is your income. Reduce anyone's income, and you force them to reduce spending, and then you reduce everyone's income. And that's how the downward spiral works. Why would we want to accelerate that by cutting government spending during a recession?

  10. Yes, I have heard that arguement. That's why I have been waiting for my $100,000 check from the federal government. I am beginning to think they don't consider health, fitness and saving lives a green job :-)

    Keep that arguement up and you may get a Nobel Prize.

  11. Kevin, your problem is that you are thinking too small. You need to ask the government for at least a billion dollars for your clean energy project. They don't take numbers less than that seriously.

  12. Ha! I am writing my letter now :-)