Obama: “The private sector is doing fine”

President Obama said something that will be a much-replayed sound-bite in the presidential race:

Laying out his economic argument at a morning news conference, Obama said that cutbacks in state and local government spending have slowed the nation’s recovery and that Congress has “no excuse” for not supporting his jobs bill that would provide funding to retain public workers.

“The private sector,” the president added as a point of comparison, “is doing fine.”

The remark struck a discordant political note in the current economic climate, and Republican adversaries pounced on the assertion to lampoon him for being out of touch. And at least politically, Obama played directly into the GOP argument that he does not understand the depths of the economic crisis and that he is too dependent on government to solve the economy’s problems.

via Obama blames Congress for inaction on jobs while Romney calls president ‘out of touch’ – The Washington Post.

Unlike Republican operatives, I refuse to pounce on the remark and am willing to accept it as  careless speech.  But what concerns me about it is the assumption behind the remark and the ideology it demonstrates.  What the president wants is to increase PUBLIC SECTOR jobs.  What he thinks is wrong with the economy is that there aren’t enough GOVERNMENT workers.  Obama’s job plan is to hire more teachers, policemen, and firemen, which may be well and good but they are all government employees.  This orientation helps account for the Democrats’ uprising in Wisconsin when public sector unions were challenged.  (I don’t remember such an uproar when the autoworkers’ union in Racine had its plant shut down.)  The underlying issue, again, is how big government should be.

About Gene Veith

Professor of Literature at Patrick Henry College, the Director of the Cranach Institute at Concordia Theological Seminary, a columnist for World Magazine and TableTalk, and the author of 18 books on different facets of Christianity & Culture.

  • The Jones

    It’s also noteworthy how Obama uses the terms “economy,” “public sector,” and “private sector.” According to his statements, it seems like the private sector plus the public sector equals the economy. The public sector (at the state and local level) is doing bad right now, the private sector is doing fine, so to increase the value of our equation, we need to add more to the public sector. This is the type of thinking I got from his original statement and many other of his “corrections” where he had to make clear that “the economy” is NOT doing fine. None of the corrections I’ve heard have ever said that the private sector is doing bad.

    This is simplistic thinking. I don’t think Obama realizes that the public sector is paid for by property taxes, sales taxes, and income taxes. Those things are IN the private sector and pay for the public sector. It’s not that the private sector is doing fine and the public sector is doing bad. The private sector is doing bad, and the public sector is a symptom of this.

    I’ve been waiting for some commentator to point this out. They haven’t. Maybe I’m just crazy.

  • The Jones

    It’s also noteworthy how Obama uses the terms “economy,” “public sector,” and “private sector.” According to his statements, it seems like the private sector plus the public sector equals the economy. The public sector (at the state and local level) is doing bad right now, the private sector is doing fine, so to increase the value of our equation, we need to add more to the public sector. This is the type of thinking I got from his original statement and many other of his “corrections” where he had to make clear that “the economy” is NOT doing fine. None of the corrections I’ve heard have ever said that the private sector is doing bad.

    This is simplistic thinking. I don’t think Obama realizes that the public sector is paid for by property taxes, sales taxes, and income taxes. Those things are IN the private sector and pay for the public sector. It’s not that the private sector is doing fine and the public sector is doing bad. The private sector is doing bad, and the public sector is a symptom of this.

    I’ve been waiting for some commentator to point this out. They haven’t. Maybe I’m just crazy.

  • Klasie Kraalogies

    What we need to realize is that the public sector should be as big as it needs to be, not smaller, not bigger. IE, if there is a demonstrated need for more firemen, do something about it. The same with teachers etc. Of course this is always going to be limited by budgetary concerns.

    The more interesting debate is what business is government business, and what business is private business. This is entailed upon the national definition of these issues: For instance, in Canada, we have universal healthcare, thus hiring doctors and nurses is government business. If you have a hybridized system, there would be less prerogative for government to hire people. Firefighting is largely a government duty, albeit Municipal government mostly. Therefore etc etc.

    These definitions depend on the national consensus, whether we like it or not. A possible way of splitting them is is you could add the adjective “universal” to the service, then it is largely/exclusively a government function (safety, law and order etc). I say largely, because in some cases, a dual government/private system exists – education for instance. In these scenario’s, hiring or not becomes more tricky. But coming back to the theme – when something is universal, ie, you should have a right to it no matter where or who you are, then it is government business – clean water, emergency services, policing etc.

    But it does not mean that when something is governmentally run, it is inefficient. Though that is more often than not the case, IT NEED NOT BE. Maybe we should send our senior bureaucrats to Sweden / Germany / Switzerland or some other places, and show them what it means when we say the system should WORK.

  • Klasie Kraalogies

    What we need to realize is that the public sector should be as big as it needs to be, not smaller, not bigger. IE, if there is a demonstrated need for more firemen, do something about it. The same with teachers etc. Of course this is always going to be limited by budgetary concerns.

    The more interesting debate is what business is government business, and what business is private business. This is entailed upon the national definition of these issues: For instance, in Canada, we have universal healthcare, thus hiring doctors and nurses is government business. If you have a hybridized system, there would be less prerogative for government to hire people. Firefighting is largely a government duty, albeit Municipal government mostly. Therefore etc etc.

    These definitions depend on the national consensus, whether we like it or not. A possible way of splitting them is is you could add the adjective “universal” to the service, then it is largely/exclusively a government function (safety, law and order etc). I say largely, because in some cases, a dual government/private system exists – education for instance. In these scenario’s, hiring or not becomes more tricky. But coming back to the theme – when something is universal, ie, you should have a right to it no matter where or who you are, then it is government business – clean water, emergency services, policing etc.

    But it does not mean that when something is governmentally run, it is inefficient. Though that is more often than not the case, IT NEED NOT BE. Maybe we should send our senior bureaucrats to Sweden / Germany / Switzerland or some other places, and show them what it means when we say the system should WORK.

  • http://www.brandywinebooks.net Lars Walker

    I think that when the president thinks of the private sector, the picture in his mind is not of businesses of various sizes, and the people who own or work for them, but of the Monopoly Man. Obviously, the Monopoly Man is doing fine. He’s got his top hat and his monocle; he’s sitting on a pile of money lighting cigars with $1oo bills. This is reality for our president. Actually businesses, and the people who depend on them, are theoretical, in his conception.

  • http://www.brandywinebooks.net Lars Walker

    I think that when the president thinks of the private sector, the picture in his mind is not of businesses of various sizes, and the people who own or work for them, but of the Monopoly Man. Obviously, the Monopoly Man is doing fine. He’s got his top hat and his monocle; he’s sitting on a pile of money lighting cigars with $1oo bills. This is reality for our president. Actually businesses, and the people who depend on them, are theoretical, in his conception.

  • rlewer

    How did it happen that the federal government is now in charge of paying for local teachers, firemen, and policemen?

  • rlewer

    How did it happen that the federal government is now in charge of paying for local teachers, firemen, and policemen?

  • http://theoldadam.com/ Steve Martin

    You guys need to get off of Obama’s back.

    Don’t you realize that you shouldn’t criticize anyone on the left?

    Their good intentions outweigh any amount of damage that they might do.

  • http://theoldadam.com/ Steve Martin

    You guys need to get off of Obama’s back.

    Don’t you realize that you shouldn’t criticize anyone on the left?

    Their good intentions outweigh any amount of damage that they might do.

  • http://www.bikebubba.blogspot.com bike bubba

    Exactly, Steve! :^)

    Seriously, I’m not willing to let Obama off the hook for this one because (just as in the “Polish death camps” case, Fast and Furious, and the cases of numerous classified terror war leaks) he’s got to either (a) be expected to know instinctively that the economy is not fine or (b) be expected to apologize profusely for an egregious screw-up. He’s done neither.

    And wanting to increase government jobs in a time when government spending as a portion of GDP is higher than almost any other time? What on earth? Are there really that many public goods?

  • http://www.bikebubba.blogspot.com bike bubba

    Exactly, Steve! :^)

    Seriously, I’m not willing to let Obama off the hook for this one because (just as in the “Polish death camps” case, Fast and Furious, and the cases of numerous classified terror war leaks) he’s got to either (a) be expected to know instinctively that the economy is not fine or (b) be expected to apologize profusely for an egregious screw-up. He’s done neither.

    And wanting to increase government jobs in a time when government spending as a portion of GDP is higher than almost any other time? What on earth? Are there really that many public goods?

  • Dr. Luther in the 21st Century

    I really don’t get how increasing tax burden is supposed to help the private sector, but I don’t live in DreamLand formerly known as Washington D.C.

  • Dr. Luther in the 21st Century

    I really don’t get how increasing tax burden is supposed to help the private sector, but I don’t live in DreamLand formerly known as Washington D.C.

  • http://www.facebook.com/mesamike Mike Westfall

    What Obama meant by that is that Big Evil Corporations are still making a little bit of money, which needs to be confiscated and redistributed to bungling bureaucracies.

  • http://www.facebook.com/mesamike Mike Westfall

    What Obama meant by that is that Big Evil Corporations are still making a little bit of money, which needs to be confiscated and redistributed to bungling bureaucracies.

  • http://fivepintlutheran2.wordpress.com/ David Cochrane

    Yes St Stephen we have to give the Left lots of credit. So they can borrow more money to stick in their pockets.

    I credit any health in the private sector to the stubborn refusal of said private sector to not cave into O and his henchmen on both sides of the aisle.

    @rlewer. SARCASM ALERT!!!! It happened over time. This is thanks to FDR and all presidents since then. I mean how can we not see the logic in having the local government send it up to the state. Have them take a good portion to support that ever growing empty stomach. Send the rest to the Fed. And the Fed keep 97% and return the remaining 3% to the state. Calling it aid. I mean man who would think that does not make the best sense?

  • http://fivepintlutheran2.wordpress.com/ David Cochrane

    Yes St Stephen we have to give the Left lots of credit. So they can borrow more money to stick in their pockets.

    I credit any health in the private sector to the stubborn refusal of said private sector to not cave into O and his henchmen on both sides of the aisle.

    @rlewer. SARCASM ALERT!!!! It happened over time. This is thanks to FDR and all presidents since then. I mean how can we not see the logic in having the local government send it up to the state. Have them take a good portion to support that ever growing empty stomach. Send the rest to the Fed. And the Fed keep 97% and return the remaining 3% to the state. Calling it aid. I mean man who would think that does not make the best sense?

  • DonS

    A couple of things to note here. One is that Obama did not walk back his original comment that “the private sector is doing fine”. His supposed walk back was that “the economy is not doing fine.” That’s not the same thing — he never retracted his original statement about the private sector. His original statement was not just “careless speech”. He meant every word. He clearly believes that money should be extracted from the private sector to prop up the public sector.

    rlewer @ 4 makes a vital point. The Obama stimulus package in 2009 was used to protect the public sector from the massive job losses that were occurring in the private sector at that time, by using borrowed federal money to subsidize local governments so that they could retain their employees. Now, that supposedly temporary stimulus is running out, and because the private sector is still not doing fine, local governments are now having to cut the employees that they would have cut in 2009. In Obama’s world, we need another stimulus — more borrowing from our kids to make what was supposed to be a temporary subsidy a more or less permanent structural change to our government — permanent heightened federal spending levels to subsidize and enable bloated inefficient unionized local government work forces. Protect the special interest unions and stave off the public employee reforms that are sorely needed.

    Since the public sector is unproductive, by definition, to increase its funding necessarily decreases the private sector. That is Obama’s world view.

  • DonS

    A couple of things to note here. One is that Obama did not walk back his original comment that “the private sector is doing fine”. His supposed walk back was that “the economy is not doing fine.” That’s not the same thing — he never retracted his original statement about the private sector. His original statement was not just “careless speech”. He meant every word. He clearly believes that money should be extracted from the private sector to prop up the public sector.

    rlewer @ 4 makes a vital point. The Obama stimulus package in 2009 was used to protect the public sector from the massive job losses that were occurring in the private sector at that time, by using borrowed federal money to subsidize local governments so that they could retain their employees. Now, that supposedly temporary stimulus is running out, and because the private sector is still not doing fine, local governments are now having to cut the employees that they would have cut in 2009. In Obama’s world, we need another stimulus — more borrowing from our kids to make what was supposed to be a temporary subsidy a more or less permanent structural change to our government — permanent heightened federal spending levels to subsidize and enable bloated inefficient unionized local government work forces. Protect the special interest unions and stave off the public employee reforms that are sorely needed.

    Since the public sector is unproductive, by definition, to increase its funding necessarily decreases the private sector. That is Obama’s world view.

  • Bob

    Talk about preaching to the choir here…

    I’m amazed that so many of you are fortune tellers. Why don’t you quit your current job (if you have one) and start being Romney advisors. You seem to know the President’s mind so well.

    I’ve never seen so much sloppy and nonthinking in one thread (except Klasie, who presented some sound ideas. After his post, well, it was all downhill). Apparently people on here can’t engage in a real debate.

    Congratulations all.

    B-bye.

  • Bob

    Talk about preaching to the choir here…

    I’m amazed that so many of you are fortune tellers. Why don’t you quit your current job (if you have one) and start being Romney advisors. You seem to know the President’s mind so well.

    I’ve never seen so much sloppy and nonthinking in one thread (except Klasie, who presented some sound ideas. After his post, well, it was all downhill). Apparently people on here can’t engage in a real debate.

    Congratulations all.

    B-bye.

  • DonS

    “Apparently people on here can’t engage in a real debate.”

    Apparently, not, Bob @ 11. They just come in, make a snarky insulting comment about those who actually presented a cogent and substantive thought, and then disappear. B-bye yourself.

  • DonS

    “Apparently people on here can’t engage in a real debate.”

    Apparently, not, Bob @ 11. They just come in, make a snarky insulting comment about those who actually presented a cogent and substantive thought, and then disappear. B-bye yourself.

  • Helen K

    DonS @12
    +1 Ditto

  • Helen K

    DonS @12
    +1 Ditto

  • SKPeterson

    Part of Obama’s problem is that he is a committed Keynesian. As such he believes in these giant amorphous aggregates, where you have an undifferentiated mass of Income made up of equally undifferentiated parts called Consumption, Investment and Government. Thus, he can say the private sector is doing fine if consumption and investment, however loosely measured, are growing. It does not matter that even the aggregate growth is anemic and uneven – it is still growth. However, if Government spending declines, then Income itself will fall, or not be as large as it could be.

  • SKPeterson

    Part of Obama’s problem is that he is a committed Keynesian. As such he believes in these giant amorphous aggregates, where you have an undifferentiated mass of Income made up of equally undifferentiated parts called Consumption, Investment and Government. Thus, he can say the private sector is doing fine if consumption and investment, however loosely measured, are growing. It does not matter that even the aggregate growth is anemic and uneven – it is still growth. However, if Government spending declines, then Income itself will fall, or not be as large as it could be.

  • http://Www.Toddstadler.com tODD

    SK (@14), you of all people should know better! Obama is NOT a Keynesian! He has published his birth certificate for everyone to see that he was born in Hawaii! When will these ludicrous rumors st…I’m sorry, what’s that? … Oh, *Keynesian*? … Never mind.

  • http://Www.Toddstadler.com tODD

    SK (@14), you of all people should know better! Obama is NOT a Keynesian! He has published his birth certificate for everyone to see that he was born in Hawaii! When will these ludicrous rumors st…I’m sorry, what’s that? … Oh, *Keynesian*? … Never mind.

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg

    “What we need to realize is that the public sector should be as big as it needs to be, not smaller, not bigger.”

    Klasie makes a really important point here. We have a certain image of how our country should run. The more people are able to manage their own affairs well, the less need there is to arrange for someone else to do it for them so that we can maintain the kind of place where we want to live. One example is crime. If you have Japanese levels of crime, you save a tremendous amount of money because you don’t have all that wasted managing crime and criminals by police, justice system and corrections department. Or if a high percentage of the children are living in households where the parents are married and take good care of them, etc.

    Some think that fiscal and social responsibility are separate and different, but they are very closely connected. The fiscally and socially responsible keep trying to find ways to encourage these behaviors in others. This leads to lots of public spending because there is this expectation to maintain a certain kind of society. It can be done fairly cheaply if pretty much all the people see it as their duty to make it happen. But no amount of public expenditure can squeeze it from the unwilling.

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg

    “What we need to realize is that the public sector should be as big as it needs to be, not smaller, not bigger.”

    Klasie makes a really important point here. We have a certain image of how our country should run. The more people are able to manage their own affairs well, the less need there is to arrange for someone else to do it for them so that we can maintain the kind of place where we want to live. One example is crime. If you have Japanese levels of crime, you save a tremendous amount of money because you don’t have all that wasted managing crime and criminals by police, justice system and corrections department. Or if a high percentage of the children are living in households where the parents are married and take good care of them, etc.

    Some think that fiscal and social responsibility are separate and different, but they are very closely connected. The fiscally and socially responsible keep trying to find ways to encourage these behaviors in others. This leads to lots of public spending because there is this expectation to maintain a certain kind of society. It can be done fairly cheaply if pretty much all the people see it as their duty to make it happen. But no amount of public expenditure can squeeze it from the unwilling.

  • http://steadfastlutherans.org/ SAL

    Klasie Kraalogies: “But it does not mean that when something is governmentally run, it is inefficient. Though that is more often than not the case, IT NEED NOT BE. Maybe we should send our senior bureaucrats to Sweden / Germany / Switzerland or some other places, and show them what it means when we say the system should WORK.”

    I don’t think the problem with our bureaucracy is unintentional inefficiency. The problem is INTENTIONAL inefficiency.

    In small or homogenous nations the citizens can guard over their government and keep it operating in the public interest even if it is powerful and active in creating an economic order.

    In a large nation when a government becomes powerful enough to establish a beneficial economic order, rent seekers will gradually corrupt that government so that it establishes an order that benefits them and not the public interest.

    This is why America has so many special interest subsidies, an inefficient but well-compensated unionized government workforces and a financial sector run for the benefit of rent seekers. Over time US governments have established more subsidies, more regulations that redistribute wealth to rent seekers, and more entitlements to select groups. Once established subsidies and pet regulations are hard to end. Entitlements are nearly impossible to end no matter how small the group benefiting.

    So over time a nation such as America will be incapable of having an activist government that serves the public good. The only lasting remedy for this is to shrink the central government’s power and remove the incentive for rent seekers to control it.

  • http://steadfastlutherans.org/ SAL

    Klasie Kraalogies: “But it does not mean that when something is governmentally run, it is inefficient. Though that is more often than not the case, IT NEED NOT BE. Maybe we should send our senior bureaucrats to Sweden / Germany / Switzerland or some other places, and show them what it means when we say the system should WORK.”

    I don’t think the problem with our bureaucracy is unintentional inefficiency. The problem is INTENTIONAL inefficiency.

    In small or homogenous nations the citizens can guard over their government and keep it operating in the public interest even if it is powerful and active in creating an economic order.

    In a large nation when a government becomes powerful enough to establish a beneficial economic order, rent seekers will gradually corrupt that government so that it establishes an order that benefits them and not the public interest.

    This is why America has so many special interest subsidies, an inefficient but well-compensated unionized government workforces and a financial sector run for the benefit of rent seekers. Over time US governments have established more subsidies, more regulations that redistribute wealth to rent seekers, and more entitlements to select groups. Once established subsidies and pet regulations are hard to end. Entitlements are nearly impossible to end no matter how small the group benefiting.

    So over time a nation such as America will be incapable of having an activist government that serves the public good. The only lasting remedy for this is to shrink the central government’s power and remove the incentive for rent seekers to control it.

  • Fws

    klassie & sg
    +1

    I see something I would like to hear from SG on. And I have never seen data on it:

    State and Local governments seem to be shrinking rapidly in employment. That is because those govts cannot simply print more money. At some point they are forced to balance their budgets this means. Keynesian policy don’t woik at the state and local level.

    So here is what I would like to see if you can give us SG: what is the balance between the shrinkage of state and local govt jobs (which Republicans should just LOVE!) versus the increase in jobs in the “private sector”? See where I am going SG?

    I am willing to bet money that the “private sector” is , indeed, in terms of trending, doing “just fine”.

    Has anyone broken out these statistics as state “public sector job creation/loss” vs “Private sector job creation/loss”?

    So then this: If there is net job loss because private sector jobs are growing at a good clip but not as fast as public sector attrition, then would this not be a situation that Republicans should be praising?

    If my analysis is wrong, what is it I am missing here? Data. Where is this data and why aren’t the Republicans focussing on seeking it out and parsing it just as I have suggested?

  • Fws

    klassie & sg
    +1

    I see something I would like to hear from SG on. And I have never seen data on it:

    State and Local governments seem to be shrinking rapidly in employment. That is because those govts cannot simply print more money. At some point they are forced to balance their budgets this means. Keynesian policy don’t woik at the state and local level.

    So here is what I would like to see if you can give us SG: what is the balance between the shrinkage of state and local govt jobs (which Republicans should just LOVE!) versus the increase in jobs in the “private sector”? See where I am going SG?

    I am willing to bet money that the “private sector” is , indeed, in terms of trending, doing “just fine”.

    Has anyone broken out these statistics as state “public sector job creation/loss” vs “Private sector job creation/loss”?

    So then this: If there is net job loss because private sector jobs are growing at a good clip but not as fast as public sector attrition, then would this not be a situation that Republicans should be praising?

    If my analysis is wrong, what is it I am missing here? Data. Where is this data and why aren’t the Republicans focussing on seeking it out and parsing it just as I have suggested?

  • Fws

    By the way:

    I think , as the lesser of two evils even, that it would be far better for the Feds to grant block grant stimulus money to the states and let them shore up their public sector state and local jobs…. as opposed to…continuing the creeping trend of having the Feds take over the services that in the past were provided by the state and local governments.

    This is a matter of efficiency rather than political philosophy. It seems to be a proven dictum in business that it is always best to push decision making on deployment of resources as close to the customers being served as possible.

    Tip Oneil is only sort of right: all politics should be as local as practically possible.

  • Fws

    By the way:

    I think , as the lesser of two evils even, that it would be far better for the Feds to grant block grant stimulus money to the states and let them shore up their public sector state and local jobs…. as opposed to…continuing the creeping trend of having the Feds take over the services that in the past were provided by the state and local governments.

    This is a matter of efficiency rather than political philosophy. It seems to be a proven dictum in business that it is always best to push decision making on deployment of resources as close to the customers being served as possible.

    Tip Oneil is only sort of right: all politics should be as local as practically possible.

  • DonS

    Frank, this Washington Post opinion piece, entitled “It’s the Public Sector That’s ‘Doing Fine’” might help you sort this all out. It has plenty of links to pertinent data.

    http://www.washingtonpost.com/opinions/its-the-public-sector-thats-doing-fine/2012/06/11/gJQAKNpvUV_story.html?hpid=z6

  • DonS

    Frank, this Washington Post opinion piece, entitled “It’s the Public Sector That’s ‘Doing Fine’” might help you sort this all out. It has plenty of links to pertinent data.

    http://www.washingtonpost.com/opinions/its-the-public-sector-thats-doing-fine/2012/06/11/gJQAKNpvUV_story.html?hpid=z6

  • DonS

    And, Frank, this may be even more helpful to you:

    http://www.nationalreview.com/corner/302461/our-public-sector-recession-patrick-brennan

    This article posts data from the St. Louis Fed (FRED). Note the first chart, which clearly shows that government employment was entirely protected, because of the stimulus, presumably, during the height of the recession in 2008-10, while private employment plummeted. Now, private employment is coming back somewhat from the depths, and government employment is slowly declining due to the expiration of stimulus spending. But, the index for government employment is still higher than that for private employment.

  • DonS

    And, Frank, this may be even more helpful to you:

    http://www.nationalreview.com/corner/302461/our-public-sector-recession-patrick-brennan

    This article posts data from the St. Louis Fed (FRED). Note the first chart, which clearly shows that government employment was entirely protected, because of the stimulus, presumably, during the height of the recession in 2008-10, while private employment plummeted. Now, private employment is coming back somewhat from the depths, and government employment is slowly declining due to the expiration of stimulus spending. But, the index for government employment is still higher than that for private employment.


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