Debunking Obama’s ABC claims
Yesterday, Obama went on ABC and made a series of statements that didn’t quite ring true:
“The auto industry, which has now created 160,000 jobs, and sees GM as the number one automaker in the world again, that didn’t just happen by accident,” he said. “We had a little something to do with it, to help that industry restructure and save about a million jobs, that would’ve had ripple effects all across the country. The Recovery Act — what, you know, Republicans referred to as the stimulus package, well, most economists — almost every economist — will tell you that had we not put that in place we could’ve tipped into a great depression.
Needless to say, the intrepid researchers at ABC, NBC, and CNN set immediately to work trying to assess whether the claims were valid . . . oh wait, no they didn’t.
They won’t, so long as Obama is president. So new media has to do the job that “traditional” journalists no longer feel compelled to do: seek the truth. We’ll take the claims one at a time:
The auto industry, which has now created 160,000 jobs
(Inaccurate and misleading)
I am sure that one of Obama’s economic advisers found some way to calculate things in order to come up with this number. Not knowing the specific methodology used, or what starting date they cherry picked, it’s hard to handle directly. However, InformthePundits has done some solid work on this claim.
First, they separate the question into auto manufacturing jobs . . .
Under durable goods, which includes both motor vehicles and parts, the BLS lists 684,500 jobs when President Obama assumed office in January 2009. As of December 2011 that number was 733,300 jobs (preliminary) … about 48,800 more jobs than when Barack Obama assumed office.
. . . and auto retail jobs:
Under retail trade, including motor vehicle and parts dealers, the BLS lists 1,659,500 jobs when President Obama assumed office in January 2009. As of December 2011 that number was 1,689,200 (preliminary)… about 29,700 more jobs than when Barack Obama assumed office.
Adding those numbers together, we get 78,500, a far cry from the 160,000 cited. That number is from Obama’s inauguration, not from the start of the GM takeover, but it is certainly close enough.
Moreover, the citation is, in its broader sense, misleading. There has been a slight recovery in the auto sector from its absolute low, but it is a dead cat bounce so far. Claiming that as a victory is premature. And claiming it as a victory that came as a result of the GM takeover or the Recovery Act has no basis in reality.
GM as the number one automaker in the world again
This claim was labeled a “half truth” by Politifact.com. It is possible Obama to make that claim if you count sales of GM’s affiliates in China, but not everyone agrees that that is the right way to do the accounting. And if you do include affiliates, then Volkswagen rivals GM for the top spot worldwide. Based on that and a variety of other caveats, Politifact is not prepared to sign off on this claim.
that didn’t just happen by accident,” he said. “We had a little something to do with it
(Unprovable . . . and worse)
There is no way to prove that what little recovery there has been in the auto industry had anything to do with the takeover of GM or the Stimulus. The government can harm the private sector by interfering with it or help it by getting out of its way, but government is not the private sector. The private sector is a collective, unconscious-but-vibrant entity produced by the voluntary interactions of millions of people. Government cannot control it, and there is no way to extract the organic nature of the private sector from any assessments of its performance.
What we do know, however, is that the GM bailout was not a good deal. Here’s John Lott via Dan Mitchell:
The always superb John Lott has a good explanation at Foxnews.com, and here is an excerpt.
Only the government would consider it a success to buy stock at $43.84 a share and sell it at $33. — But President Obama and those who supported his bailout of General Motors and Chrysler are claiming just that… It simply doesn’t account for the over $50 billion in direct bailout funds and the tens of billions of dollars in other breaks President Obama gave the company and its unions. It also ignores that GM’s stockholders and particularly its bondholders had their wealth stolen from them when the government took over ownership of the company. Traditional property right protections were shredded by the Obama administration, making corporate investments in America riskier as a result.
The GM bailout was unconstitutional, quasi-totalitarian cronyism in which political friends were rewarded at the direct expense of political foes. Oh, and it was all funded by taxpayers, and it wasn’t even a good deal:
Currently there is still $42.52 billion of that debt outstanding and the Treasury Department estimates a total loss of $14.33 billion.
Taxpayers took a shellacking from their TARP bailouts of GM and Chrysler.
most economists — almost every economist — will tell you that
Seriously? He said this?
There is virtually nothing that “almost every economist will tell you.” In fact, there are not only individual economists who would not tell you this, there are entire SCHOOLS of economics that would not. Maybe in Obama’s left-wing coffee klatsch, all the economists say the same thing, but out here in the real world, they are all over the map.
What was the biggest feature of the Great Depression, the thing we always think of when we think of the 1930s?
For the some on the left, I am sure they remember the decade as the glory days, when a Democratic president broke that silly old tradition of only serving two terms and united the nation with martial efficiency. Where Americans accepted their diminished lives with grace and gathered together to sit and listen to fireside
The rest of us think of crushing unemployment. (And some of us understand that the unemployment was largely government’s fault.)
So let’s take a look at the results wrought by Obama’s vaunted “Recovery Act.” And—oh look!—here’s an economist now, with some handy charts:
Whatever little downticks we have seen in the unemployment rate are not the result of lots of new jobs being created nearly as much as they are from drops in the participation rate. In other words, people give up looking for work, and then they are no longer counted in the unemployment rate. Wow, problem solved!
The claim that the stimulus (the so-called Recovery Act) prevented tipping into a great depression is not provable, and it may be better described as false.We are, however, experiencing something that IS similar to the Depression:
- a situation where natural business cycles are prevented from fueling a recovery, leading to a much longer period of economic doldrums, and
- a president who claims credit for whatever little recovery there has been, and cites it in his reelection effort as proof that things are headed in the right direction.
Unfortunately, the president and his allies are the ones that are holding things back, and what little upward motion there has been has come in spite of, not because of, their actions.
Here’s a little help from Cato scholars on claims like these made in the the president’s State of the Union Address: