President Obama has finally admitted that a core premise of his nearly trillion-dollar stimulus package was false. In an interview this week with The New York Times' Peter Baker, the president acknowledged that "there's no such thing as shovel-ready projects," despite the president's near-constant invocation of the term over a two-year period to explain how government spending was going to create jobs.
The president's admission is no minor matter; it goes to the heart of why his economic policies have been such a failure. Not since President Jimmy Carter's confession in 1980 that it took the Soviet Union's invasion of Afghanistan for him to fully understand "what the Soviets' ultimate goals are" has a sitting president so fully exposed his ignorance.
Obama's admission might be refreshing if it meant he would rethink his economic assumptions, but the Baker interview gives no such indication. Instead, the president seems to think his biggest problem has been his failure to communicate his policies effectively.
"There is probably a perverse pride in my administration -- and I take responsibility for this; this was blowing from the top -- that we were going to do the right thing, even if short-term it was unpopular," he said. "And I think anybody who's occupied this office has to remember that success is determined by an intersection in policy and politics and that you can't be neglecting of marketing and P.R. and public opinion."
The statements are both stunningly arrogant and misleading. The president of the United States is not a philosopher king. In a democracy, the president doesn't determine what "the right thing" is and let the people who put him in office be damned.
Nor did the president and his team neglect the "marketing and P.R." of his policies. The "shovel-ready" comments were all salesmanship and no substance. In his first year in office, the president gave 411 speeches, sat for 158 press interviews, conducted 42 news conferences, and visited 30 states, according to a compilation by CBS News. Failing to communicate was not the issue.
The president's problem is that he has neither experience in, nor understanding of, the private economy. He has worked exclusively in the nonprofit and government sector. He has an unlimited faith in government and limited trust in private industry. And the president surrounds himself with people who share his myopia.
When the president visited plants from Buffalo to San Francisco on his much-touted jobs tours during the spring and summer, he was there to tell workers that government saved or created their jobs.
But that is not how it's done. Job creation happens when individuals take personal risks: A man notices that all his friends and neighbors have garages stuffed with junk they don't want and starts a new business with $700 in startup capital and an old beat-up truck. A few years later, Brian Scudamore's 1-800-GOT-JUNK has 100 franchises across the country. A young woman decides her chocolate chip cookies deserve to be enjoyed beyond her family. Debbi Fields borrows money, opens a small storefront, and within seven years, her company, Mrs. Fields Cookies, had revenues of more than $45 million. A college student spends his time in his dorm room building personal computers for his friends and selling them for less than the name brands. He drops out of school, but by the time he's 27, Michael Dell is the youngest CEO on the Fortune 500 list of largest companies in America.
These individuals created great wealth for themselves, but they also created thousands of jobs for other people. The fallacy in Obama's thinking is the assumption we'd be better off taxing rich people more and having government spend the money directly.
But government can never be as efficient as the market. Scudamore, Fields, and Dell might just as well have failed as succeeded. When entrepreneurs fail, they've lost their own money and that of investors who have freely chosen to take the risk.
Government programs, however, play with other people's money -- since government has no money of its own. When government programs fail, the consequences aren't born by the people making the decisions but by the taxpayers.
So when Obama finally realizes there's no such thing as a shovel-ready project, he's admitting he's wasted our money -- billions of dollars -- not his own. But his only answer is to raise taxes so he can spend yet more. It's the kind of thinking that dooms his presidency and our economy.<
Linda Chavez is chairman of the Center for Equal Opportunity and author of Betrayal: How Union Bosses Shake Down Their Members and Corrupt American Politics .
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