Count Obama whoppers in debt-deal speech

Count Obama whoppers in debt-deal speech

by Garth Kant

An analysis of President Obama’s speech following his bitter battle with Congress over the debt deal shows many of the key facts he cited are seriously at odds with the public record.

The president made a number of reflections on the ordeal Thursday morning, including his thoughts on the damage done to the economy, the damage caused by the prospect of a default, restoring civility to the political dialogue and the state of Americans’ trust in government.

Economic Growth

“[N]othing has done more to undermine our economy these past three years than the kind of tactics that create these manufactured crises,” the president said accusingly. “Over the past four years, our economy has been growing, our businesses have been creating jobs, and our deficits have been cut in half. “And remember, the deficit is getting smaller, not bigger. It’s going down faster than it has in the last 50 years.”

Technically, the economy may be growing, but it’s doing so at such a slow rate Forbes called it the “worst economic recovery ever. Deep recessions are supposed to be followed by strong recoveries, but, under Obama, the worst recession since the 1930s has been followed by the slowest economic recovery in the history of the republic. In a very real sense, there has been no recovery at all – things are still getting worse,” wrote Louis Woodhill.  Job creation also has been slow, too slow to keep pace with job losses.

Back in April, when the official unemployment rate was 7.6 percent, Forbes found so many Americans had given up looking for jobs and left the workforce, the real unemployment rate was 14.3 percent.

The CEO of the company that runs the fast-food restaurants Carl’s Jr. and Hardee’s said what’s really killing job creation is Obamacare. Andy Puzder told Fox News his company and others will choose to hire part-time employees instead of full-time employees because of increased costs from the health-care law.

By “cuting the deficits in half,” the president is actually referring to cutting in half the enormous rate of spending his own administration established in his first year in office. The federal deficit in 2008 was $459 billion. Under Obama in 2009, it nearly tripled to $1.41 trillion.

That was followed by years in which the unprecedented spending spree slowly declined.

In 2010, it was $1.29 trillion. In 2011, it was $1.31 trillion. In 2012, it was $1.09 trillion. And in the fiscal year 2013, it was $759 billion. So while the rate of spending has been cut almost in half since Obama took control of the nation’s treasury, it is the enormous amount spent in that time that conservatives say is threatening America’s future and credit worthiness.

The national debt is the total amount America has spent beyond its means. Under Obama, it has skyrocketed from $10.6 trillion to nearly $17 trillion. And now that the debt ceiling has been lifted, that astronomical debt is expected to keep growing.

Default avoided

Obama stated, “The first default in more than 200 years will not happen” because of the debt deal. However, a number of prominent economists and politicians did not consider a default on the nation’s debts an actual possibility. University of Georgia economics professor Jeffrey Dorfman  explained in Forbes, “Reaching the debt ceiling does not mean that the government will default on the outstanding government debt. In fact, the U.S. Constitution forbids defaulting on the debt (14th Amendment, Section 4), so the government is not allowed to default even if it wanted to.”

Dorfman described how, instead of defaulting, if the debt ceiling were not raised, the government would actually have to prioritize its expenses and keep its spending under the revenue the government collects.  “In simple terms, the government would have to spend an amount less than or equal to what it earns,” he explained, “just like ordinary Americans have to do in their everyday lives.”

The New York Times discovered “a surprisingly broad section of the Republican Party believed ‘there is no deadline at all — that daily tax receipts would be more than enough to pay off Treasury bonds as they come due.’”  That included Rep. Justin Amash, R-Mich., who said: “There’s no way to default on Oct. 17. We will have enough money to make interest payments. The issue is, how do we restructure our government so we don’t have to keep hitting the debt ceiling?”

Who threatened default?

“We know that just the threat of default – of America not paying all the bills that we owe on time – increased our borrowing costs, which adds to our deficit,” warned the president.  But the Republicans never used a default as a threat. In fact, Republicans maintained the debt limit did not need to be raised at all to pay the nation’s bills.

It was the president who said the debt ceiling needed to be raised to avoid default and repeatedly insisted raising it “does not add a dime to our debt.” But economist Dorfman said Obama’s statement is not true.

“An increase in the debt ceiling allows the government to continue to run a budget deficit, which by simple accounting means that the national debt will increase,” he said. “Not raising the debt ceiling does not mean defaulting on the current debt, but rather that no new debt can be incurred.

War of words

Obama made an appeal for civility Thursday, lecturing, “[D]isagreement cannot mean dysfunction. It can’t degenerate into hatred.” “And when we disagree, we don’t have to suggest that the other side doesn’t love this country or believe in free enterprise, or all the other rhetoric that seems to get worse every single year.”

But it was the president and his allies who made a series of unusually heated remarks, calling GOP opponents anarchists, suicide-bombers, hostage-takers, arsonists, political terrorists, fanatics, blackmailers and ideological crusaders.  Obama said failure to raise the debt ceiling would cause “insane, catastrophic, chaos.” He declared, “We are not going to pay a ransom for America paying its bills,” and, “We can’t make extortion routine as part of our democracy.”

One famous economist even went so far as to portray the president’s dire warnings as outright dangerous and irresponsible. CNBC’s Lawrence Kudlow accused the president of threatening “to pull the whole system down for (his) own gain.”

Sen. Ted Cruz, R-Texas, the administration’s main antagonist, said the discussion should be kept to the issues.

“Look, what the Democrats are trying to do is make this a battle of personalities,” Cruz said. “They have engaged in relentless, nasty personal attacks. … I don’t intend to defend myself. I don’t intend to reciprocate. Why? Because what matters is responding to the American people. Millions of Americans are losing their jobs, are being forced into part-time work, are seeing skyrocketing health insurance premiums and are losing their health insurance.”

Trust in government

The president declared, “But to all my friends in Congress, understand that how business is done in this town has to change. Because we’ve all got a lot of work to do on behalf of the American people – and that includes the hard work of regaining their trust. Our system of self-government doesn’t function without it.”

Nonetheless, it would be exceedingly difficult to make a strong argument that the Founding Fathers regarded trust in government as necessary for self-government. In fact, they created a system of checks and balances to keep ambitions in check. “All men having power ought to be mistrusted,” wrote James Madison to Thomas Jefferson. “The way to have safe government is not to trust it all to the one, but to divide it among the many, distributing to everyone exactly the functions in which he is competent,” Jefferson wrote.