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President Obama’s instantly infamous “You didn’t build that” speech is a major turning point of the 2012 election not because it was a gaffe but because it was an accurate and concise summary of core progressive fiscal dogma. It was also a political blunder of epic proportions because in his speech Obama unintentionally proved the conservatives’ case for limited government.

This essay will show you how.

When Obama implied at the Roanoke, Virginia rally that some businessmen refuse to pay for public works from which they benefit, he presented a thesis which, like a three-legged stool, relies on three assumptions that must all be true for the argument to remain standing:

1. That the public programs he mentioned in his speech constitute a significant portion of the federal budget;
2. That business owners don’t already pay far more than their fair share of these expenses; and
3. That these specific public benefits are a federal issue, rather than a local issue.

If any of these legs fails, then the whole argument collapses.

For good measure, we won’t just kick out one, we’ll kick out all three.

“Small Government” Is Not the Same as “No Government”

Progressives critique the fiscal conservative/Tea Party/libertarian position by purposely misrepresenting it as anarchy. When fiscal conservatives say “We want smaller government,” progressives reply, “Oh, so you want no government?”

“Government” in this particular discussion is shorthand for “communal pooling of resources for mutual benefit.”

Fiscal conservatives have never called for no government — that’s the anarchist position, and contemporary anarchism is actually dominated by extreme leftists, not extreme conservatives. Instead, fiscal conservatives clearly and consistently call for limited government, or for smaller government — but not for the absence of government altogether.

So when President Obama and his mentor Elizabeth Warren justify their call for tax hikes by pointing out that all entrepreneurs benefit from communal infrastructure, they’re committing the classic Straw Man Fallacy by arguing against anarchy — a position that their opponents do not hold.

Here’s the shocking truth: President Obama and Elizabeth Warren are correct — we all benefit from certain taxpayer-funded collectivist government infrastructure projects and programs. And here’s the other shocking truth: Therefore, we should limit government expenditures to just those programs. Why? Because most of the other government programs either

• hinder, constrict or penalize entrepreneurial activity; or
• benefit some people to the detriment of others; or
• waste money on bureaucracy, overhead or ill-considered expenditures that end up indebting the nation and by extension all Americans.

Below are videos and transcripts of Obama’s speech as well as the Elizabeth Warren speech that inspired it. First watch or read both speeches, and then we’ll list all of the programs that they both mention, and see what percentage of our taxes goes toward those programs.

Obama’s Speech

Here is Obama’s game-changing speech from Friday, July 13 in Roanoke, Virginia:

And here’s the transcript:

There are a lot of wealthy, successful Americans who agree with me — because they want to give something back. They know they didn’t — look, if you’ve been successful, you didn’t get there on your own. You didn’t get there on your own. I’m always struck by people who think, well, it must be because I was just so smart. There are a lot of smart people out there. It must be because I worked harder than everybody else. Let me tell you something — there are a whole bunch of hardworking people out there. (Applause.)

If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business — you didn’t build that. Somebody else made that happen. The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet.

The point is, is that when we succeed, we succeed because of our individual initiative, but also because we do things together. There are some things, just like fighting fires, we don’t do on our own. I mean, imagine if everybody had their own fire service. That would be a hard way to organize fighting fires.

Warren’s Speech

And here’s Elizabeth Warren’s original 2011 speech, upon which Obama’s was based:

And the transcript:

There is nobody in this country who got rich on his own. Nobody. You built a factory out there — good for you!

But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did. Now look, you built a factory and it turned into something terrific, or a great idea — God bless. Keep a big hunk of it.

But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.

OK, now that we have both speeches in front of us, let us list the exact government programs and projects that Obama and Warren use to justify their position:

Education (Obama: “There was a great teacher somewhere in your life.” Warren: “You hired workers the rest of us paid to educate.”)
Transportation (Obama: “Somebody invested in roads and bridges.” Warren: “You moved your goods to market on the roads the rest of us paid for.”)
Public Safety (Warren: “You were safe in your factory because of police forces and fire forces that the rest of us paid for.” Obama: “There are some things, just like fighting fires, we don’t do on our own.”)
The Internet (Obama: “Government research created the Internet so that all the companies could make money off the Internet.”)

…and that’s it.

OK. Fine. Let’s absolutely concede this point to Obama and Warren: There are some government activities that benefit us all, including business owners.

And for the sake of argument let’s just allow for a moment that the federal government is the best, most efficient and only supplier of these benefits. You win, Elizabeth and Barack.

But having conceded this central point, let us now ask the key follow-up question, which is the first leg of their three-point hypothesis: What percentage of the federal budget is devoted to these universally beneficial public works?

And if you’re a progressive reading this, you’d better get off the stool because it’s about to fall down.

The Numbers

Here is the federal government’s budgetary breakdown for a recent fiscal year:

What percentage of this is devoted to education, transportation, public safety, and creating the Internet (i.e. basic research)?

I’m going to be as generous as possible to the progressive position and include ALL of defense spending in their column, since defense aids both basic research and public safety. Highways and roads are covered by the Department of Transportation. The Department of Education covers, well, education. And various other smaller departments — Department of Justice, National Science Foundation, etc. — contribute in varying degrees to public safety, research, and so forth.

Ready? Here we go:

Below is a list of all government expenditures, with Obama’s and Warren’s “public benefit” programs highlighted:

Social Security 19.63%
Department of Defense 18.74%
Unemployment/welfare/other mandatory spending 16.13%
Medicare 12.79%
Medicaid and SCHIP 8.19%
Interest on the national debt 4.63%
Health and Human Services 2.22%
Department of Transportation 2.05%
Department of Veteran’s Affairs 1.48%
Department of State 1.46%
Department of Housing and Urban Development 1.34%
Department of Education 1.32%
Other on-budget discretionary spending (1.8%): $149.67
Other off-budget discretionary spending (1.3%): $108.10
Department of Homeland Security 1.21%
Department of Energy 0.74%
Department of Agriculture 0.73%
Department of Justice 0.67%
NASA 0.53%
Department of Commerce 0.39%
Department of Labor 0.38%
Department of Treasury 0.38%
Department of the Interior 0.34%
EPA 0.30%
Social Security Administration 0.27%
National Science Foundation 0.20%
Corps of Engineers 0.14%
National Infrastructure Bank 0.14%
Corporation for National and Community Service 0.03%
Small Business Administration 0.02%
General Services Administration 0.02%
Other agencies 0.56%
Other off-budget discretionary spending 2.97%

So, let’s clear away the irrelevant government expenditures and list just the ones noted by Obama and Warren:

Department of Defense 18.74%
Department of Transportation 2.05%
Department of Education 1.32%
Department of Homeland Security 1.21%
Department of Justice 0.67%
National Science Foundation 0.20%

TOTAL: 23.4%

And that, of course, is being absurdly generous to the Obama position, since in reality huge portions of the defense budget, the Department of Education budget, and so on, have basically nothing to do with promoting public safety or educating workers. And let’s be even more generous and round that 23.4% up to 25%, or one-fourth of the budget.

So what Obama and Warren are really stating is this:

Only one-fourth of your federal tax dollars go to projects and programs that benefit the general public and entrepreneurs; the other three-fourths are essentially a complete waste, or are at best optional.

Which of course is exactly what fiscal conservatives have been arguing all along.

So yeah, I agree with Obama: Let’s slash the federal budget by 75%, and only fund services and programs that directly serve the public good.

The first leg of their argument has snapped, and the stool has toppled over. Since the essential programs aiding “the commons” are only a small percentage of an overall bloated budget, we don’t need to raise taxes to fund them.

And now for the second leg.

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