Responding to Mr. Carney

I’d like to thank White House Press Secretary Jay Carney for giving me so much material to work with in his press briefing today.

MR. CARNEY: Well, there’s a lot in your question, so let me go first to the broader fact, which is that we have seen consistent job growth over almost three years.

Nope. Job growth began in March 2010 and was strong for March, April, and May. We then lost net jobs for four months. We have had continuous job growth since October 2010. That is two and a quarter years, which is not “almost three.” (Source: BLS)

If you start measuring in March 2010, job growth has averaged +141K/month. If you start measuring in October 2010, job growth has averaged +153K/month. If we were at full employment those numbers would be fine because you need around +125-150K/month to keep up with population growth. Given continued high unemployment those numbers fall far short of the job growth rate we need to return rapidly to full employment. We’re generally doing a bit better than treading water, but not much.

MR. CARNEY: But there’s more work to do and our economy is facing a major headwind, which goes to your point, and that’s Republicans in Congress.

This is an aggressive and, I think, novel presentation—labeling Congressional Republicans as an economic headwind. Those same Republicans should respond aggressively to this particular language.

MR. CARNEY: Talk about letting the sequester kick in as though that were an acceptable thing belies where Republicans were on this issue not that long ago, and it makes clear again that this is sort of political brinksmanship of the kind that results in one primary victim, and that’s American taxpayers, the American middle class.

You’re correct that the GDP number we saw today was driven in part by — in large part by a sharp decrease in defense spending, the sharpest drop since I think 1972.  And at least some of that has to do with the uncertainty created by the prospect of sequester.

To the end of your question, I would say that the President has had and continues to have very detailed proposals, including spending cuts, that would completely do away with the sequester if enacted, that approaches deficit reduction — not just the $1.2 trillion called for by the sequester, but even beyond that  — in a balanced way.

His logic is:

  • The sharp decline in Q4 defense spending was in large part responsible for today’s bad (-0.1%) Q4 GDP growth number;
  • The President wants to replace the sequester cuts with a “balanced” package of tax increases and other spending cuts;
  • Republicans oppose the President’s reasonable “balanced” alternative;
  • A recent shift suggests that Congressional Republicans appear to favor leaving the upcoming sequester in place;
  • Therefore the bad Q4 GDP number is because Congressional Republicans refused the President’s reasonable alternative and may be willing now to leave the upcoming sequester in effect.

Problem #1 with this logic is that the President’s proposal would be deficit neutral, so any increase in discretionary spending that helped short-term economic growth would be mostly offset by cuts in other government spending and increases in taxes. If you buy the logic of yanking hard on the Keynesian short-term fiscal lever (big if) then your proposal needs to increase the deficit to get any first order GDP kick. So the tax-increasing solution Republicans are rejecting wouldn’t help GDP growth, it would just shift the components around so that government spending grew faster and private consumption and investment grew more slowly.

Problem #2 is that his sequence doesn’t work. Mr. Carney implies that last quarter’s GDP was harmed by Congressional Republicans’ movement in the past two weeks toward allowing the sequester to take effect. That puts the effect before the cause, which is hard to do.

MR. CARNEY: So it can’t be we’ll let sequester kick in because we insist that tax loopholes remain where they are for corporate jet owners, or subsidies provided to the oil and gas companies that have done so exceedingly well in recent years have to remain in place.  That’s just — that’s not I think a position that will earn a lot of support with the American people.

The words “DEMAGOGUE ALERT” should flash any time you hear the ol’ corporate jet tax break. Eliminating it would raise a few billion dollars of revenue compared to spending problems measured in trillions.

Still, Republicans should find a way to propose repealing this tax break and using the revenue to lower some other tax in a way that both parties like. Neutralize the stupid talking point by getting rid of this tax preference, but don’t use the revenue raised to increase government spending. Don’t wait for tax reform, get rid of this one quickly in the right way.

MR. CARNEY: Speaker of the House Boehner put forward, in theory, at least, a proposal late last year that said he could find $800 billion in revenues through tax reform alone — closing of loopholes and capping of deductions.  So surely what was a good idea then can’t suddenly be a bad idea now.

Did he forget about the $617 B of tax increases that were just enacted? No. This is another important rhetorical trick – suggesting that the previously offered +$800B and the recently enacted +$617B are additive rather than duplicative. I’m certain that’s not how Congressional Republicans think of it. Watch for this rhetorical trick to be repeated often.

MR. CARNEY: The President put forward a proposal to the super committee that reflected the balance that was inherent in every serious bipartisan proposal, including the Simpson-Bowles proposal.  A refusal at the time to allow revenue to be a part of that meant that the super committee did not produce.

Congressional Republicans told me at the time that the Administration was nowhere to be found during the Super Committee’s failed attempts in the fall of 2011.  “Completely disengaged – absent,” was how one insider described the Administration.

Republicans on the Super Committee offered to their Democratic colleagues to accept higher revenue in exchange for either significant entitlement reforms or pro-growth tax reform. Mr. Carney’s claim that Republicans “refus[ed] at the time to allow revenue to be part of that” is inaccurate.

There’s more, but that’s enough for today.

(photo credit: Talk Radio News Service)

29 thoughts on “Responding to Mr. Carney

  1. Pingback: Keith Hennessey: Jay Carney Rebuttal – DUVALL REPORT

  2. Dairenn Lombard (@Dairenn)

    Is the “corporate jet” tax credit one specifically legislated to benefit private jet manufacturers? If so, doesn’t it make it a lot easier for those companies to hire people? If the jets get more expensive–because their taxes are higher (and/or, the taxes on purchases or leases made by their customers, thereby reducing total inbound revenue), then the charter flight contracts will actually go to companies like Embraer, which is based in Brazil. That’ll kill jobs.

    1. Riquochet

      …and won’t the democrats just find another supposed rich man’s loop hole to beat over the heads of the Republicans? It’s just a game to them. One that they are very good at.

    2. Diego

      There IS NO corporate jet loophole. Dems are talking about the same basic deduction for business expense that applies to any other business expense, whether it’s payroll costs, raw materials, shipping, whatever. Basic economics: you sell stuff for money, you subtract your expenses from what you made, and the remainder (profit) is what you pay taxes on. Obama would like you to believe that deducting the cost of the plane and its upkeep as an expense is somehow a “loophole” used only by greedy fat cats. But it’s just another cost of running the corporation, just like any other. Typical liberal demagogic know-knothing BS.

  3. Ronald Grey

    A strong economy needs strong national security to protect it. Likewise, strong national security needs a strong economy.

    Barack Obama began putting the American economy and national security on a downward spiral in January 2009, when he decided to make health spending his top priority in the wake of the 2008 financial crisis in housing.

    See: “Housing: The Right (but Neglected) Issue for Economic Recovery”

  4. mark man

    This is really pretty shallow. Let’s start with facts. Until January 1, 2013, the DoD was facing a sequester that would have required a drastic reduction in its spending. That reduction would have begun on … January 1, 2013. We went over the cliff. The administration had to, by law, begin planning for the legal requirements of cutting spending. The DoD cut spending in the 4th quarter to begin to prepare for the sequester. The timing is NOT that Republicans in January caused the cuts in December, and you ignorant or dishonest to say it. The timing is that an inability to reach an agreement last year caused reductions in the 4th quarter. Not surprisingly, the Democrat Carney blames the Republicans. Not surprisingly, you disagree. And, not surprisingly, you ignore the facts in the case to make Carney’s position seem silly, effect before the cause. But Carney is right (about the cause/effect; i’ll leave blame you to, you’re so practiced at it!); you are wrong.

    1. RCY

      Easy…….just like his daily (or somewhat daily briefings) it’s like looking into one of those fun house mirrors….total distortion!

  5. Bob

    It ALL comes apart right here when Carney says: “To the end of your question, I would say that the President has had and continues to have very detailed proposals, including spending cuts, that would completely do away with the sequester if enacted, that approaches deficit reduction — not just the $1.2 trillion called for by the sequester, but even beyond that — in a balanced way.”

    The president has made NO such detailed proposals “including spending cuts”. NONE. NADA. He has focused entirely on revenue increases (aka tax increases) because he can’t cut spending. He throws around the broadest of generalities but nothing approaching “very detailed proposals”. His M.O. form day one has been to have the other said propose and he then attacks it. Look at the 2012 campiagn! Did we debate his performance? No, we debated Ryan’s budget proposals and Romney’s tax proposals. And debate in O-lingo means attack.

  6. paul rathbun

    Such little real thinking put into this dialogue. This is really quite twisted. But if the 53%ers want to believe this tripe so be it. But why is they actually have a big problem believing in the existence of God?

    1. Yashmak

      They do believe in god. Their god is simply big government. Their faith is blind, unswerving, and terrifying.

      That, or they’re the low information sort, more interested in the sort of appearance-without-substance stuff this administration churns out (like the now disbanded “Jobs Council), and in the next episode of Dancing With the Stars, than in paying attention to what their elected officials are doing.

  7. B.B>

    Two points. First, non-federal payrolls started to rise in March 2010 and have risen in every month since then, albeit at a mediocre pace. There were some stronger and weaker months in 2010 caused by temporary hiring and layoffs related to the 2010 Census. Second, all of the discusssions of the huge drop in military spending in Q4 misses the fact that there was a huge 13% saar rise in Q3 in military spending. Some of use might wonder if this Administration goosed spending right before the elections with a payrback in Q4.

  8. Richard

    Cut the payroll tax for the poor. End the myth that Social Security and Medicare are self-paid pensions, and clarify that they are a safety net for the poor.

  9. John Sorg

    Another amazing feature of Jay Carney and his minions in the press is that “good news” is always because of Obama and “bad news” is always because of Republicans in Congress though they’ve controlled that house, and only that house, for two of Mr. Obama’s four years. Reasoning is foreign to these solons.

  10. Bill Dan

    Keith, before attacking this White House, perhaps you can explain how you were unable to tell
    It amazes me that an advisor who missed the rise of the Housing Bubble is so confident now, when he failed miserably in advising President Bush about the dangers of the House Bubble.

    There is not a shred of evidence in this article that write here has learned anything – certainly not humility.

    And he was partly responsible for failing to warn the President about the dangers to the entire financial system when it was his job to advise the President.

    Most Americans would hang their heads in shame given such a record.

    But DC types screw up and never change their opinion about anything.

    From the New York Times:
    “As early as 2006, top advisers to Bush dismissed warnings from people inside and outside the White House that housing prices were inflated and that a foreclosure crisis was looming. And when the economy deteriorated, Bush and his team misdiagnosed the reasons and scope of the downturn. As recently as February, for example, Bush was still calling it a “rough patch.”

    The result was a series of piecemeal policy prescriptions that lagged behind the escalating crisis.

    “There is no question we did not recognize the severity of the problems,” said Al Hubbard, Bush’s former chief economic adviser, who left the White House in December 2007. “Had we, we would have attacked them.”

    Looking back, Keith Hennessey, Bush’s current chief economic adviser, said he and his colleagues had done the best they could “with the information we had at the time.” But Hennessey did say he regretted that the administration had not paid more heed to the dangers of easy lending practices.”

    1. Vivian Darkbloom

      I would suggest that you read the comments policy. Although I don’t always agree with Hennessey, one thing that impresses me with his comments here is that when he disagrees with someone (like Carney) he sticks to the facts and proceeds from there with logical argument. This post was no exception.

      There is a good discussion of the logical fallacy known as “ad hominem” argument which I could also recommend to you to read. Wikipedia might be a good place to start, but there are others.

      This type of argument is self-defeating. You are wasting your time.

  11. mdbrock2118

    I used to think we should fight the progressives on all fronts to preserve the country. But now I am thinking the electorate will only come to its senses when we have reached absolute bottom. So I say, sure, let’s enact the President’s program in full and see what other excuses they can generate.

  12. David OHara

    Basically, all the Dems can say now is that “The Obama Magic Economy” isnt working because those evil Rethuglicans don’t believe in it. Pathetic.
    Even my dog could get this economy going again but the Dems cannot. Face it, if you voted for Obama you simply are not smart enough to vote.
    Romney would have had this economy recovering by now simply because he was elected. Within 6 months we’d be over 1% better unemployment and within a year nearly back to normal. Instead, the Obama voters have given us more of a depression. Their 2% tax increase will kill 10% of small business within 18 months because most of those businesses rely on your small amount of discretionary income which the Obama voters have thoughtful reduced by about $2000 per family. Due to the 2% increase, I have already seen small businesses suffer and we are less than one month into it.
    If you voted for Obama you should either be making less than minimum wage or be unemployed as you are clearly too stupid to be working.

  13. cleo48

    I can only say that Carney conjures up a picture of a child-like sock-puppet reading a script. And the content of that script is in total contradiction of the world around it. I sure hope someone isn’t foolish enough to hire this “credibility car-wreck for a PR job some day.

  14. oparoberts

    The intellectual dishonesty of this administration – translate: Lies – has no equal in American politics in the past 60 years. Clinton nuanced everything, there’s a difference. He did lie about Monika and while I in on way give him a pass on that, it was not about policy and governing. Nixon lied about Watergate, again no pass but again not about policy, even though heinous.

    President Obama basically lies about everything, if not directly then with his false choices and straw men. I cannot tolerate deception from a person in a power position and his is the ultimate one, thus I have the ultimate intolerance for him

    I think he believes in what Malcolm X said: “…….and means necessary…..”. He has the media in his hip pocket; he can lie with impunity; he gets a pass.

    I am in a state of unbelief that we have re-elected him.

  15. rtcdmc

    If I remember correctly, two weeks ago the media were exclaiming that Obama had taken the Republicans to the woodshed on the tax rates for zillionaires. He claimed a mandate from the election. Total victory! But this week, the economic numbers are down, so round up the usual suspects … the Republicans. Those crafty Republicans are sabotaging the economy. [Picture Wiley Coyote and a falling Acme safe.] Is there a person in the media who still has a functional memory? Or at least realizes that there are a few citizens who do?

    1. Yashmak

      “Is there a person in the media who still has a functional memory?”

      Nope. They’re too busy writing fawning articles celebrating Hillary’s stint at State, or commenting how they should ‘pinch themselves’ during Obama’s inauguration.

      Worse, they know it doesn’t matter if they don’t use what memories they have. Low information voters buy into the shtick this administration is selling. If they hadn’t, he wouldn’t have been re-elected, for he certainly didn’t win on the basis of his first-term accomplishments.

  16. Blunt

    Reblogged this on Abruptly Put and commented:
    Came Across this and found it refreshing to see someone who follows and dissects the issues to put them in an easy to follow format. There are several great points listed here refuting Jay Carney, the White House bobble head.

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