"The truth of the matter is that, as I said, we've created 4.3 million jobs over the last 27 months, over 800,000 just this year alone. The private sector is doing fine. Where we're seeing weaknesses in our economy have to do with state and local government—oftentimes, cuts initiated by governors or mayors who are not getting the kind of help that they have in the past from the federal government and who don't have the same kind of flexibility as the federal government in dealing with fewer revenues coming in.
"And so, if Republicans want to be helpful, if they really want to move forward and put people back to work, what they should be thinking about is, how do we help state and local governments and how do we help the construction industry." (Highlights added)
What struck me and a lot of other people was how fundamentally wrong the President's perceptions are on the economy.
"We've created 4.3 million jobs" - No economy, even this moribund one, is static. Based on population growth of our society, one would expect that the economy would create jobs. The problem is that this economy is not creating enough jobs. 8.2% unemployment (you will remember that when the first stimulus was adopted the President's advisors argued that if we passed the measure unemployment would not rise to 8%). Half the recent college graduates in the country are unemployed or underemployed. The weak jobs numbers earlier in the week are a clear testament to the Administration's failures in this area.
"The private sector is doing fine. Where we're seeing weaknesses in our economy have to do with state and local government.." - So the President believes that state and local government employment is the driver of the economy? Part of the reason for the declines is that a lot of the stimulus artificially increased the number of public employees. The President goes on to blame fewer revenues coming in on this situation - but what would he say about 40% of the federal budget coming from borrowed money?
"And so if Republicans want to be helpful, if they really want to move forward and put people back to work, what they should be thinking about is, how do we help state and local governments..." I have left off the sop to the construction industry because the President's conception of helping the construction industry is in "shovel ready" projects. We've tried that and it did not work. The way to build the economy is to enlarge the public sector? Really??? So how is growth in the Euro zone?
Many people are appalled by these comments. I was pleased. Although the President tried to cover his blunder at the end of the day - expect his words to come back to him many times before November. In 2008, for a lot of reasons, the President was able to shield his views on the economy. Yesterday, he presented a clear and unambiguous view of how the economy should grow - a higher fraction of resources being dedicated to the public sector. It is pretty clear that in all of his education the President never thought much about supply and demand and other basic economic concepts. That lack of knowledge is troubling. As he tried to do yesterday afternoon he will try to get the rabbit back in the hat. This time I do not think that will be possible.