Obama also talked a "balanced approach to deficit reduction", including working class Americans and seniors "shouldering their fair share" with the wealthy to get revenue. Seriously? And not a single mention of stimulus, just a bit of talk on infrastructure spending.
Overall, I'm disappointed in the unnecessarily-bipartisan vision on economic issues that really needs leadership from the President. And how many times did President Obama mention austerity and warn against policies of austerity, citing the numerous worldwide examples of its failures? Zero, none, nada. Shame, Mr. President.
But, thankfully, Marco Rubio made an even bigger ass of himself on economic issues in his delivery of the GOP response to SOTU. And so I've decided to write an entry analyzing his SOTU response instead of Obama's speech. Rubio's ignorance eclipsed Obama's shortfalls on economic issues with such authority that I couldn't help but direct my rage toward the bigger problem: Teahadist economic illiteracy.
There's plenty to focus in on here, so click below and I'll highlight a few contradictory statements and show that Rubio's overall message is one of austerity, not of prospertiy, and it's rooted in his general ignorance of economic theory and empirics.
I'll be quoting from Rubio's full text throughout, which can be read here.
Rubio's first econogaffe was here:
Presidents in both parties – from John F. Kennedy to Ronald Reagan – have known that our free enterprise economy is the source of our middle class prosperity.Obama believes the free enterprise economy is the cause of our problems? Ouch, what a straw man.
But President Obama? He believes it’s the cause of our problems...
This idea – that our problems were caused by a government that was too small – it’s just not true. In fact, a major cause of our recent downturn was a housing crisis created by reckless government policies.Reckless government policies caused the downturn? Greenspan's "too low for too long" rate policy could certainly be a valid criticism, but we know that Rubio's not talking about that. After all, he has demonstrated that he doesn't even understand how the Federal Reserve operates.
Instead, we know he's making a reference to CRA and other government programs that Republicans routinely cite as the true causes of the crisis (you can read the dissent to the FCIC for more on that discussion).
But, that's not what the actual Financial Crisis Inquiry Commission report stated in its conclusion:
We conclude widespread failures in financial regulation and supervision proved devastating to the stability of the nation’s financial marketsThe Federal Reserve has also already studied the CRA link in depth, only to find:
The Federal Reserve Board has found no connection between CRA and the subprime mortgage problems...Our analysis found that only six percent of all higher-priced loans were made by CRA-covered lenders to borrowers and neighborhoods targeted by the CRA.The independent agency, the Federal Reserve, has written this. It's not Obama's White House cheerleading for government programs, it's an independent analysis.
As for the HUD, GSE connection -- that's more of a problem of privatization of those entities, without removing the implicit government guarantee, which created a moral hazard. The argument then in the dissent of the FCIC is about as strong for privatization causing the crisis as it is for saying government policies caused it. This is why the failed "government caused the crisis" line doesn't make it into the general report by the FCIC, instead it's stuffed back into the incoherent rambling dissent by right-wing Chicago-school discredited nuts.
So Rubio started off with a bang there, contradicting numerous government reports and general conventional wisdom and accepted historical narrative that deregulation and poor supervision were proximate to the financial crisis. Hey, even Greenspan admitted as much. What is Rubio getting out of trying to revise history and say that government intervention caused the crisis, not unsupervised private risk unchecked? Ideological masturbation, nothing more.
Next, I'll let Rubio debunk Rubio, starting with his serving up of this right-wing talking point about how useless government is at doing anything good for people economically:
More government isn’t going to help you get ahead. It’s going to hold you back.And here he is providing a nice refutation of this ignorant talking point later in his speech:
More government isn’t going to create more opportunities. It’s going to limit them.
I believe in federal financial aid. I couldn’t have gone to college without it.And again:
One of these programs, Medicare, is especially important to me. It provided my father the care he needed to battle cancer and ultimately die with dignity. And it pays for the care my mother receives now.Good point, Rubio! Government really CAN do good things! You really put that dopey Rubio in his place! You should really ask mainstream Rubio to tell teahadist Rubio about these experiences, it might open him up to new ideas.
Anyway let's fast forward a bit through his anti-Obamacare section (since he's right, Obamacare is designed to fail to force a public option, in my opinion, but that's a different story). Here is economist Marco Rubio discussing his model on middle class job creation:
The tax increases and the deficit spending you propose will hurt middle class families. It will cost them their raises. It will cost them their benefits. It may even cost some of them their jobs.Tax increases on the rich hurting middle class families? Deficit-spending hurting them? Where to start...oh yea, the Congressional Reserve Service report that detailed how tax increases on the rich don't harm growth. This is the same report that Republicans tried to kill and prevent the public from seeing.
As for the deficit-spending hurting the middle class? We already know that's bull. The deficit spending from the automatic stabilizers which has helped provide food to the lower class as well as unemployment income and healthcare and plenty of other worthwhile social services. Would it have been better to not spend that money in the name of balancing a budget? Of course not, so this point is totally absurd, as are the vast majority of Rubio's talking points.
Anyway, he continues:
Economic growth is the best way to help the middle class. Unfortunately, our economy actually shrank during the last three months of 2012.Why did it shrink again, Senator Rubio? Because of a drop in government spending. While our economy is adding private sector jobs, we're slashing public sector jobs. Drops in spending are the major contributor to these contractions and a weak job market.
Federal outlays over the past three years grew at their slowest pace since 1953-56, when Dwight D. Eisenhower was president.Rubio repeats the private-government polarity meme:
Raising taxes won’t create private sector jobs. And there’s no realistic tax increase that could lower our deficits by almost $4 trillion.Someone should tell him that austerity through spending cuts won't produce jobs either. If only he would listen to the IMF (among others):
While economists expected that cutting a euro from the budget would cost around 50 cents in lost growth, the actual impact was more like 1.50 per euro.Maybe Rubio thinks our experience will differ from austerity failing all around Europe, the United Kingdom and Japan. Or maybe he just doesn't give a shit. Yes, that's more likely.
In actuality, he's saying he doesn't want cuts, doesn't want taxes, just wants growth. Well where's the growth going to come from? We can't afford to buy into Rubio's faith-based economics where you just hope that the private sector will exponentially grow to pull the economy out of the rut. Instead, his calls are implicitly for austerity.
Rubio's wrong on tax increases on the wealthy hurting growth. He's wrong on cuts being a viable alternative to tax increases to reduce deficits but preserve growth. And he's wrong on every other economic principle under the sun.
He can't possibly make himself look any dumber, can he?
All these measures are key to helping the economy grow. But we won’t be able to sustain a vibrant middle class unless we solve our debt problem.I knew the confidence fairy and the debt bogeyman would make an appearance. Rubio mentioned the word 'debt' seven times (Obama, in contrast, mentioned it only once, and only to concede that healthcare costs were a long-term driver of the debt: kudos to Mr. President on that one.) And because of how our currency is inflated slowly over time, the nominal values of dollars today are always going to tower over the numbers past, so all future presidents will be adding more debt than the ones before.
Every dollar our government borrows is money that isn’t being invested to create jobs. And the uncertainty created by the debt is one reason why many businesses aren’t hiring.
The President loves to blame the debt on President Bush. But President Obama created more debt in four years than his predecessor did in eight.
So this was yet another vapid attempt at a jab that will surely get a cheer from the Teahadists who couldn't balance a checkbook let alone understand basic macroeconomic flows.
In addition, we know Obama didn't create that debt that was added during his time in office. He inherited a disastrous deficit from Bush thanks to the financial crisis. And austerity, irresponsible deficit-reduction in a time of economic crisis, is not conducive to growth as we have seen. Thus, Rubio is attacking yet another strawman of President Obama.
He then laughably concludes his debt discussion with this absurd tautology:
The real cause of our debt is that our government has been spending 1 trillion dollars more than it takes in every year.Thanks, Rubio. You just may be an economist after all. Spending more than you take in is the real cause of debt. Boy, what would we do without that sort of insight.
He goes on to promote a balanced budget amendment (one of the most horribly flawed ideas ever to be proposed for this country). As anyone who been reading my entries know, abalanced budget would do nothing but destroy the economy, forcing us to fund our reserve currency status/currency account deficit with private borrowing that would be totally unsustainable.
Yet he doubles down on this failed concept:
In order to balance our budget, the choice doesn’t have to be either higher taxes or dramatic benefit cuts for those in need. Instead we should grow our economy so that we create new taxpayers, not new taxes, and so our government can afford to help those who truly cannot help themselves.How exactly does he plan to grow the economy when the private sector is doing everything it can and the public sector is cutting back? Private credit is still not growing fast enough, private employment can't grow any faster given the refusal of government to stimulate more. How long is Rubio willing to sit idly by while the private sector limps along and government stays stuck in time? No sign of any real vision there.
There's no real specific plan outlined at all in this speech, or ever really in Rubio's career. A BS discussion of a few energy policies and education "ideas" is not a real plan. Because it's not about results, it's about ideology with Rubio.
This is confirmed by his final point on the topic of economics in his speech:
And the truth is every problem can’t be solved by government. Many are caused by the moral breakdown in our society. And the answers to those challenges lie primarily in our families and our faiths, not our politicians.Moral breakdown of our society is responsible for the national debt and economic uncertainty? I guess his solution to the lack of prosecution on Wall Street is to just encourage Dick Fuld, Hank Greenberg, Lloyd Blankfein, and Alan Greenspan to pray to Jesus and build a moral backbone.
That's just a blip to the religious crowd who blames any social ill on "moral breakdown", a delightfully vague heuristic that touches the hearts of ever Low Information Voter in the deep south..
When Senator Rubio said in the GQ interview that "I'm not a scientist man," he really should have expanded on it more. Luckily for us, he did exactly that last night.
This entire GOP response was a disgraceful pro-austerity diatribe that could be summed up with, tl;dr: "I'm not an economist, man."