Click on WORD or PDF for full content
James Pethokoukis posts on the drop in GDP.
US economic output fell at a 0.1% annualized rate in the fourth quarter, adjusted for inflation. Blame spending cuts, say the Democrats. Blame Republican “austerity.” And one more thing: Stop the sequester. As the Center for American Progress put it: “The economy most certainly would have grown at a faster rate were it not for the ongoing political brinksmanship over the debt ceiling and the risk of sharp fiscal contraction in the form of the pending automatic ‘sequestration’ budget cuts.”
If you break down the GDP report, you begin to see the problem with this line of argument. Private-sector GDP actually added 1.2 percentage points to overall GDP during the past three months. A decent rise in consumer spending was slightly offset by a drop in business investment and a rise in imports. Government spending, however, subtracted 1.3 percentage points, turning the overall GDP number slightly negative.
But so what? Liberals are confusing a metric used to measure the size of the US economy with the actual US economy. What if GDP internals were reversed? What if government spending contributed 1.2 percentage points, and the private sector subtracted 1.3 percentage points? The overall GDP report would have been superficially the same, but in reality much, much worse with the real economy contracting.
Or what if government spending added 6 percentage points, and the private sector subtracted 2 percentage points? The news headline would say GDP rose by 4%, but that growth would be illusory and unsustainable. Should we have more government spending just to prop up the GDP numbers? As economist Tyler Cowen notes in The Great Stagnation: “We are still valuing government expenditures at cost rather than being able to measure prices set in a competitive market. … The larger the role of government, the more the published figures for GDP growth are overstating the improvements in our standard of living.”
Instead of kvetching about how spending cuts are hurting growth, liberals should focus on the fourth-quarter drop in business investment — and the impact this year of the 60% rise in investment taxes. From 1994 through 1999, GDP growth averaged 4% a year. But government spending added, on average, just 0.3 percentage points to that total. The other 3.7 percentage points came from private sector growth, with business investment adding a healthy 1.3 percentage points to that total. (Also note that federal spending as a share of GDP fell from 21% of GDP in 1994 to 18.5% in 1999. Still the economy boomed.)
Of course, liberals might argue that the drop in government spending is hurting the private sector. But that’s just the reverse of the theory that held the $800 stimulus would ignite the private sector into a multi-year, mini-boom of 4%-plus growth. In August of 2009, the White House predicted GDP would rise 4.3% in 2011, followed by 4.3% growth in 2012 and 2013, too. In its 2010 forecast, the White House said it was looking for 3.5% GDP growth in 2012, followed by 4.4% in 2013. In its 2011 forecast, the White House predicted 3.1% growth in 2011, 4.0% in 2012 and 4.5% in 2013.
But the fiscal multiplier didn’t multiply as predicted. The problem isn’t too little government spending, but too much government regulation and taxation.
Jennifer Rubin too.
No wonder the president didn’t want to talk in his inaugural address about economic growth — we don’t have any. In fact, the economy is contracting, as Bloomberg reports: “Gross domestic product, the volume of all goods and services produced, dropped at a 0.1 percent annual rate, weaker than any economist forecast in a Bloomberg survey and the worst performance since the second quarter of 2009, when the world’s largest economy was still in the recession, Commerce Department figures showed today in Washington. A decline in government outlays and smaller gain in stockpiles subtracted a combined 2.6 percentage points from growth.”
In large part, the drop is driven by the looming defense sequestration: “Government outlays dropped at a 6.6 percent annual pace from October through December, subtracting 1.3 percentage points from GDP. The decrease was led by a 22.2 percent fall in defense that was the biggest since 1972, following the Vietnam War.”
I don’t know why they say the drop is unexpected. We are preparing to decimate national security, at a cost of perhaps 1.2 million jobs. The country was and still is poised to accept more tax hikes. The regulatory burden on employers and the prospect of Obamacare hang over our heads. No wonder we are in an economic slump. One more quarter of this, and, according to the technical definition, we will be in a recession.
House Speaker John Boehner (R-Ohio) via his communications director Kevin Smith tells Right Turn: “Today’s report is another warning sign that families and small businesses are still struggling, and our economy isn’t creating enough jobs under President Obama. That’s why Republicans are focusing on pro-growth policies such as reforming our burdensome tax code and stopping excessive regulations to create jobs and promote a healthier, more robust economy.”
This is why Republicans must talk growth, jobs and economic opportunity. The president isn’t because his policies stifle all three.
The immature One continues his fight against dissent. Bethany Mandel from Contentions has the story.
Recently in an interview with the liberal magazine the NewRepublic on “his enemies, the media and the future of football,” President Obama took aim not just at his antagonists on Capitol Hill but also those in the press, particularly Fox News. He told the NewRepublic:
“One of the biggest factors is going to be how the media shapes debates. If a Republican member of Congress is not punished on Fox News or by Rush Limbaugh for working with a Democrat on a bill of common interest, then you’ll see more of them doing it.”
The swipe at Fox wasn’t the president’s first, though it appears to have struck a nerve at the network. Two Fox personalities, Megyn Kelly and Kirsten Powers, responded to the president’s remarks. In a blog post on the Fox website, Kelly’s remarks were partially transcribed by the network, indicating the following was the main thrust of Fox’s argument against the statement:
“For me this isn’t about what he said about Fox News [...] it’s about once again the president saying that if somebody disagrees with him, if Republicans disagree with him, it’s because someone has ‘gotten’ to them,” she told Fox News Digital political editor Chris Stirewalt. “It sounds dismissive of heartfelt beliefs that Republicans may hold or their constituents may hold that just don’t line up with his.”
One of Fox’s most vocal liberals, Kirsten Powers, took to the Fox opinion page to discuss Obama’s “war on Fox News.”
“Whether you are liberal or conservative, libertarian, moderate or politically agnostic, everyone should be concerned when leaders of our government believe they can intentionally try to delegitimize a news organization they don’t like.” …
Roger Simon was asked to cheer up some Republicans. He talks about his conversion from leftist and the founding of PJ Media.
Thanks for having me here. When my friend Todd Hermann emailed me to invite me to speak to this group, he directed me to Steve Buri, whom I suspect many of you must know. Anyway, by way of advice, Steve told me this audience was depressed by the election. (No surprise there.) They need cheering up. So I thought — oh, great… a group of Republicans in the northwest during the dead of winter need cheering up from a disastrous election, Obama’s inaugural speech announcing the installation of socialism in America followed by Hillary testa-lying about Benghazi. That’s going to be a real walk in the park…
All right, here are five words that should make you smile: You don’t live in California…. I would imagine that saves many of you ten thousand dollars a year or more right there. There’s something to be happy about. Speaking of which, since I live in L.A. but spend a lot of time in this state, I’ve always been perplexed why everything seems to work better up here… the roads are better, the services are better… but we pay the ridiculous amount of state income tax. I don’t have to tell this crowd — don’t ever go there.
So I will try to cheer up you up, but I’m not going to make any false promises. Years ago I wrote a movie for Richard Pryor who was then supposed to be the funniest man in America and I never met anyone gloomier — unless it was Woody Allen with whom I worked several years later.
But Pryor did tell me something interesting when I asked him why he never cracked a joke in person during our meetings. (BTW, I was always trying to make Pryor and Allen laugh… probably to prove myself in some way, kind of a guy thing… I never did get even a smile out of Richard, but finally did get one out of Woody. You won’t be surprised to know it was a dirty joke.) Anyway, Pryor said the secret to his standup is he just got up and told the truth and that, by itself, made everybody laugh. …
… This was all at the beginning of blogging and I had been reading the work of this Tennessee law professor, Glenn Reynolds, whose pioneering blog Instapundit went live just a few weeks before September 11. I decided, in imitation of Glenn who eventually became my business partner, that I would blog to promote my new novel.
It didn’t work. The novel sunk like the proverbial stone. But something else happened. The blog itself became immensely popular with tens of thousands of readers online every day because I was writing about… political change…. something a lot of people were undergoing in those days, as I mentioned.
Glenn, I, and others started talking to each other about this new form and, being pro-capitalist, decided to do something with all this Internet traffic we were getting,. That led to the debut of PJ Media in the fall of 2005 and of PJTV at the Republican Convention of 2008.
Our company got its name from a slur by CNN executive vice-president Jonathan Klein. When some of us alleged that a document being flogged by Dan Rather on 60 Minutes as proof that George W. Bush had not completed his National Guard service was a forgery — Klein called us “amateurs in our pajamas.” We thought that would be a nice name — hence, PJ Media. Of course, we were right about those National Guard papers. The exec, like Rather, lost his job. PJ Media is a thriving online media company with page views roughly equivalent to National Review and Weekly Standard, with many of the same writers like Victor Davis Hanson and Andrew McCarthy. We have recently added former Congressman Allen West for a new television initiative.
And I have been an accidental CEO for over seven rather amazing, incredibly fast-moving, years. My only regret is in that time I have not done as much screen and novel writing. That’s about to change. The last election… not that I want to bring up that ugly subject again (my mission being to make you laugh)… has convinced me, if I even needed convincing, that my friend the late Andrew Breitbart was right when he said “politics was downstream of culture.”
Many on the right love to attack Hollywood and make fun of the likes of Sean Penn and Oliver Stone and they deserve it. But this abjuring of the entertainment industry happens at our peril. The rest of the world is watching that entertainment no matter what you say or do, most especially your children. Rather than boycott Hollywood, take it over – at least part of it. But do it well and professionally. Otherwise there’s no point. No one’s interested. …
Andrew Malcolm with late night humor.
Conan: Video game maker Atari has filed for bankruptcy. Atari fans are so upset, they’re organizing a massive letter-writing campaign to President Reagan.
Fallon: Today is the 200th birthday of Jane Austen’s classic novel “Pride and Prejudice.” Fans celebrated the historic anniversary as always, reading half-way through and then giving up.
Fallon: Iran has successfully launched a monkey into space. And it actually returned to Earth alive. Which was great news for their space program, but terrible news for the monkey. He thought he’d finally escaped Iran.