Barack Obama Still Doesn't Understand the Economy

President Obama doesn’t understand what needs to be done to fix the economy.

President Barack Obama
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At the end of possibly the worst week he's had so far, the president called a press conference in the White House briefing room. After his opening statement, he took questions from only three reporters over the course of half an hour. He was in full law professor mode, and it was during an explanation of whether he was blaming Europe for the failures of his own economic policies that the president said, "The private sector is doing fine."

Oops. Within hours, the president was back out in front of the press corps: "It is absolutely clear that the economy is not doing fine. That's the reason I had the press conference. That's why I spent yesterday, the day before yesterday, this past week, this past month, and this past year talking about how we can make the economy stronger. The economy is not doing fine."

Note that the president never took back what he said about the private sector—he just clarified that the economy was not doing fine. And he said nothing about the rest of the press conference, in which he said all kinds of things about the economy and very little about how he'd fix it. "The private sector is doing fine" was just one of several surprising statements.

[Check out our editorial cartoons on President Obama.]

For example, despite the fact that the unemployment rate has been above 8 percent for 40 months, the president said this: "Keep in mind that the private sector has been hiring at a solid pace over the last 27 months. But one of the biggest weaknesses has been state and local governments, which have laid off 450,000 Americans. These are teachers and cops and firefighters. Congress should pass a bill putting them back to work right now, giving help to the states so that those layoffs are not occurring."

The dismal jobs report that was released the same day as the president's press conference contradicts any notion that private sector hiring is at a "solid pace." And while no one wants to see teachers, police, or firefighters laid off, what the president doesn't mention is that even in an era of cash-strapped municipalities, the Labor Department reports that there are more state and local government employees than there are manufacturing and construction workers combined.

Immediately after his "private sector is doing fine" observation, the president said this: "Where we're seeing weaknesses in our economy have to do with state and local government—oftentimes, cuts initiated by governors or mayors who are not getting the kind of help that they have in the past from the federal government and who don't have the same kind of flexibility as the federal government in dealing with fewer revenues coming in." So the problem is that state and local governments aren't getting enough "help," meaning money, from the federal government, and many are constrained by being constitutionally mandated to balance their budgets. If only states could spend more without having to worry about deficits, like the Obama administration is doing, this would all go away.

[See a collection of political cartoons on the economy.]

And there's this: "The most important thing I think we can do is make sure that we continue to have a strong, robust recovery. So the steps that I've outlined are the ones that are needed. We've got a couple of sectors in our economy that are still weak. Overall, the private sector has been doing a good job creating jobs. We've seen record profits in the corporate sector."

Really? Let's not forget the president said in hindsight that "it is absolutely clear that the economy is not doing fine." Yet most Americans would probably disagree that we "continue" to have a "strong, robust recovery" or that the private sector job growth is where it should be, with only 69,000 jobs created last month. As to "record profits in the corporate sector," companies are keeping over $1 trillion on their balance sheets rather than investing and hiring due to all the uncertainty in the markets. At one point, the president urged Congress to reconsider his previous pieces of legislation that it had voted down; he did not put forth any new economic proposals. Some of us wondered why he called the press conference in the first place.