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The Private Sector Is Not Fine, the Public Sector Is Still Fat

Per the employment numbers, Obama isn't just out of touch. He's out of reach.

by
Tom Blumer

Bio

June 11, 2012 - 6:45 am

You can tell that President Obama’s press conference statement Friday morning — “The private sector is doing fine” — is a big problem for Democrats, the left, and much of the media simply because they’re spending so much time and energy denying that it is.

Their biggest problem: Obama’s supposed back-off from his original remarks was instead an attempt to fool people into thinking it was a back-off. A full-context look at his morning statement and later response shows that:

  1. He never retracted his contention that “the private sector is doing fine,” only saying that “the economy is not doing fine.”
  2. He insisted in his response that the private sector “has not been the biggest drag on the economy,” when for all practical purposes the economy is the private sector, and it has been the biggest drag.
  3. He still believes, after well over three years of proof to the contrary, that the road to recovery is historically ineffective Keynesian demand-side stimulus.
  4. He still believes that it is a proper role of the federal government to prop up state and local governments which refuse to reform themselves.

Luckily, CNN’s Candy Crowley, of all people, understood Point 1 She tried three separate times on Sunday to get Obama chief campaign adviser David Axelrod to say “yes” or “no” as to whether he agreed with the president that the private sector is doing fine. Crowley knows that Obama didn’t backtrack at all. Of course, Axelrod dodged the question all three times.

As to the location of the biggest drag on the economy, let’s take a look at the relative seriousness of the private-sector employment problem compared to the public sector in the following chart, which maps seasonally adjusted percentage job loss or growth since the economy’s employment peaked in January 2008:

PercentageChangeEmployment0108to0512

At the federal level, after taking away reductions in postal service employment (appropriate, since those jobs are never coming back, and the Post Office is an independent agency which is supposed to live or die on its own, a concept which will be severely tested in the coming months and years), employment is up by over 11%. Imagine that.

Meanwhile, state and local government employment actually continued to increase as the economy began to worsen and — partially sustained by stimulus funding which didn’t stimulate anything — stayed above its January 2008 level until near the end of 2009. Even now, at 5.073 million, state government employment has only gone back to where it was in mid-2006. That’s not good enough, because that six-years-ago number resulted from an employment spurt of about 10% during the previous eight years. Local government has been hit harder as a percentage of its January 2008 workforce, but the growth in headcount of almost 17% during the previous decade was even more out of control.

Even on a percentage basis, it’s clear that the private sector, where employment is almost 4% lower than it was at peak employment, is still the biggest problem — or “drag,” if you will — of the bunch. Wait until you see what that means in terms of actual headcount:

ChangeInEmployment0108to0512

President Obama can brag all he wants about how “we’ve created 4.3 million jobs over the last 27 months” — that’s what he said, as if he had anything at all to do with it except to keep the number from being larger (the reporter’s question which led to his answer concerned “your own policies,” so there’s no alternative interpretation as to the identification of “we”). The fact remains that we’re still 4.6 million jobs below getting back to where we were at peak employment — even before considering population growth during the past four-plus years. At the average monthly job growth of roughly 160,000 during that time, we’ll get back to where we were in late 2014. That’s bad enough, but at the average private-sector job growth of 85,000 seen during the past two months, we won’t get there until early 2017, shortly after the end of the next presidential term, which hopefully won’t be Obama’s. Sadly, given the “Taxmageddon” scheduled to visit us on January 1 and the president’s and his party’s refusal to do anything about it before the election, at least several more miserable months are a virtual lock.

Really now, how can anyone say that the area which is responsible for well over 90% of the 5,000,000-job shortfall and where part-timers are rapidly supplanting full-time employees is “doing fine”? I’ll tell you how: We have a president who has never managed anything bigger than a Senate office budget in his entire life, has no clue as to what’s going on outside of his Beltway/”Chicago way” bubble, and has only fever swamp-driven higher education, community organizing, legal system, and political backgrounds as points of reference. He isn’t merely out of touch; he’s out of reach.

If he wants state and local governments to preserve their jobs or at least to minimize layoffs, Obama should be giving them six words of advice: Do what Scott Walker has done. But he won’t do that. As the Wall Street Journal said in its marvelous editorial following Obama’s expressed ignorance which is miles beyond the level of a mere gaffe, “Governments are having to lay off workers to pay for their rising pension and health bills.” States which have faced up to those twin problems, like  Governor Walker’s Wisconsin, have averted thousands of layoffs while preserving services. States like Ohio — which tried something similar but saw their efforts subverted by the left/organized labor axis — have seen thousands of layoffs. Union bosses would rather see younger members thrown out on the streets than give up even the smallest portion of their oversized, outdated, and unsustainable wages and benefits.

There is potential good news in all of this. Obama, in continuing his tired push for more stimulus to state and local governments which won’t reform themselves while making life miserable for a private sector which he still insists is “doing fine,” appears to be sowing the seeds of his own November defeat to a degree where the non-stop establishment press excuse-making and cover-ups still might not be able to prevent it.

Also read:

4 Reasons Why Obama’s ‘The Private Sector is Doing Fine’ Gaffe Matters

Along with having a decades-long career in accounting, finance, training and development, Tom Blumer has written for several national online publications primarily on business, economics, politics and media bias. He has had his own blog, BizzyBlog.com, since 2005, and has been a PJM contributor since 2008.
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