McCain blames economic slowdown on government spending

January 19, 2008

John McCain recently acknowledged, “The issue of economics is not something I’ve understood as well as I should.” He added, however, “I’ve got Greenspan’s book.”

I’m quite certain The Maestro isn’t helping. In South Carolina, McCain told an audience a couple of days ago, “Every time in history we have raised taxes it has cut revenues.” As a matter of reality, McCain was talking gibberish.

A few days prior, at a Republican debate, McCain said, “I don’t believe we’re headed into a recession. I believe the fundamentals of this economy are strong and I believe they will remain strong.”

Now, McCain, who presumably would have learned something about economics after serving in Congress for the last quarter-century, blamed government spending for creating an economic decline that he didn’t believe existed less than a week ago.

John McCain blamed overspending by the federal government in part for the nation’s economic troubles as South Carolina voters Friday received the sobering news that the state unemployment rate had hit 6.6 percent, the largest one-month increase in nearly 20 years.

“As a Republican, I stand before you embarrassed. Embarrassed that we let that spending get out of control,” McCain told voters on the eve of the state’s GOP primary.

“The economy is not good. The stock market continues down. And the indicators are not good. I’m not too astonished…. We let spending get totally out of control, and it continues today, and I’m sorry to tell you this,” McCain said at a town-hall style meeting at the Carolina Hospital East Campus in Florence.

What on earth is this guy talking about?

First, how is it that McCain thinks the economy is “strong” on Monday and “not good” on Friday?

Second, how is it, exactly, that government spending had anything to do with today’s deteriorating economic climate?

Third, hasn’t government spending historically promoted economic growth?

Fourth, would a McCain administration try to improve the economy by reducing spending? If so, how much? And where would these cuts come from?

And finally, given that McCain fully admits that the “issue of economics is not something I’ve understood as well as I should,” maybe he should stop talking about it?

As hinted in the previous post.

The Repubs are a party of ideas, REALLY FUCKING STUPID IDEAS.

And relying on Greensap aka Mr Bubbles to help? Up there with taxcuts in a time of war.

  • The press will never probe these issues, so I guess we have to hope that the Huckaboom wipes McCain from contention.

  • Hey, why spend when you can simply borrow? We’re already only 9 trillion in debt, and just because the Chinese and Saudis hold the notes, I wouldn’t worry because they’re our friends. Besides, why should the taxpayers pay to fix bridges and armor our troops vehicles? It’s not like our bridges are falling down, or that the troops ever encounter IEDs or something. And besides, those Exxon-Mobil execs need a break too. With enough tax breaks they afford to hire more landscapers and pool attendants, and the more mansions they buy, the more attendants they’ll need! Don’t you liberals get it?

  • Pathetic. I’m surprised that McCain didn’t recommend more tax cuts while he was at it.
    Of course, he also neglected to mention that we’re hemorrhaging billions a month into the sands of Iraq. Bringing that one to a timely end would help but McCain’s view is:
    When an audience member asked him what he thought about President Bush’s plan to keep troops in Iraq for 50 years, McCain answered, ‘make it a hundred,’

    Does McCain even realize that even if discretionary spending was cut out of the budget completely we’d still have a deficit? Did he make mention of the fragility of an economy two-thirds of which is based on selling each stuff we import from somewhere else? The problems in the economy are deep seated and complex but, we can rely on our politicians to come up with shallow, simplistic fixes for them.

  • But McCain is “Mr. Straight Talk.” Even when he obviously has no idea what he is saying, he is saying it straight!

    Or so the story goes.

    Many Republican voters think that government spending is bad. A recession is bad. Therefore government spending causes a recession. What’s wrong with you Dumbocrats? Can’t you think logically?

  • Wow, and according to the MSM, McCain is the “mainstream” Repub in the race?

    Who is going to vote for these guys?

  • McCain meant to say that government spending causes global warming. Cow farts cause economic slowdowns.

  • McCain is an idiot. The current economic slowdown is founded on the madness of making credit all too easy for people to get. Years of throwing credit cards at kids in college, buy-here/pay-here auto loans, venture speculation, and the sub-prime market have all led to an investment strategy that offers superior profit-taking via speculatory risk.

    And that risk was promulgated by wholesale deregulation that promised lower, competitive costs, yet was designed solely as a profit engine for the culture of greed. The logical conclusion of that greed is the fiduciary disaster we see before us today; a disaster of such proportions that it is global in nature, and threatens now to exceed the definition of “recession.”

    Look at the banks and the investment firms. Each has a balance sheet, with assets on the one side, and liabilities on the other. Suddenly, the banks and investment companies are being allowed to use their “new toy”—the write-down pencil, to unilaterally reduce the value of certain assets so as to offset the massive liabilities that those assets have brought. If you or I were to do that, we’d be hauled off to jail for fraud

    “We screwed up big time,” the banks say. “Nothing to see here. Moving on”

    And then they turn right around and offer more high-risk, low-security packages.

    They’ve not learned their lesson, because they have “friends” in political places. Friends like John McCain who, at the slightest hint of trouble, can turn a phrase, twist a fact, and spin reality like a street-carnival magician.

    They won’t learn their lesson until those institutions who have founded this disaster have been brought to heel—and that must begin with re-regulation of the banks, the finance companies, the back-door lenders, and the financial con-men who have lined their pockets at the expense of the world’s financial stability.

    And if the penalty of the courts for their actions is to declare that every last loan in the country is hereby deemed “paid in full”—credit cards, appliances, electronics, furniture, cars and home mortgages combined—then so be it. The financial base of America has developed gangrene—and one does not apply the “band-aid” of a stimulus when amputation is the only recourse….

  • is he saying that overspending on iraq has damamged the economy?
    if so, i would agree with him. after the tax cuts iraq has had the biggest adverse effect on the economy. all that debt held by foreign countries isn’t such a hot idea.

  • It’s those greedy, lazy poor people with 2 crusts of bread. You can only eat one at a time.

  • I assume McCain has better advisors than Huckabee and Paul, but he has learned from his colleagues that the media that caters to his constituents follow Reagan’s 11th Commandment enough to let anything slide.

  • Steve #9 makes an excellent argument. A further point is to note that one of the traditional remedies to economic slowdowns and recession is for the Fed to lower interest rates which increases the amount of money available to borrow, theoretically providing economic stimulus by boosting spending on credit. The current credit crisis, a negative personal savings rate, home values in decline and enormous consumer debt means that there aren’t the qualified consumer borrowers available to get further into debt to boost the consumer economy. Furthermore, if you look at who has been squirreling away money into savings, it’s been the corporations. Lower interest rates won’t spur them to borrow and buy if they have the cash make purchases. One of the biggest tools in the government’s toolbox will no longer work. Throw out the old economics text books. We’ll have to invent a new out of this mess.

  • McCain will only start to learn about economics when the press expects him to make sense when he speaks. Since the press is predisposed to think anything he says is refreshing “straight talk”, we can expect continued nonsense.

    Particularly since nonsense seems to be what GOP primary voters seem to want. The reality about Michigan’s jobs couldn’t hold a candle to Mitt’s dreams of sugarplums.

  • Throw out the old economics text books. We’ll have to invent a new out of this mess.

    Lets hope it works better than last time we tried to clean up after a Republican had trashed the old economic rules, petorado.

    From the rise of Keynesian economics to the oil shocks of the mid-70s, it was firmly believed that unemployment and inflation were at opposite ends of a see-saw: if unemployment went down, inflation went up and vice-versa. But Nixon’s poor handling of the rise of OPEC, and his odd mix of conservative economics with very unconservative price-controls, combined with his breaking of any sense of faith in government, left Carter and his advisors in a total “no man’s land” when the old rules broke down and inflation and unemployment both rose. And of course Carter got blamed for the newly created “stagflation” and not knowing what to do about it, even though no one would have known what do about it and even though Nixon caused it.

    I fear something similar will happen as we try to clean up after Dubya-nomics.

  • Wasn’t it government spending in order to fund WWll that got us out of The Great Depression?

  • Government spending prior to the entry into WWII also helped considerably by alleviating the crippling unemployment rate during the Great Depression.

    Thank you, Hoover, and your Republican ilk.

  • I am tired of hearing from Greenspan et al that there was nothing they could do about what we are now seeing as a financial disaster. Here are a few tidbits I have found out.

    Federal Reserve Governor Edward Gramlich warned Greenspan many years ago that lenders were getting out of hand…and that it was starting to feed on itself. He asked Greenspan to investigate. Nothing happened.

    In 2001, Treasury official Sheila Bair tried to get outside monitors to check on lenders’ compliance with loans. Nothing done!

    John Gamboa and Rober Gnaizda of the Greenlining Institute warned the Fed in 2004 about what was occurring. They met with Uncle Al. They have been quoted as saying that “he just wasn’t interested.”

    Greenspan was warned on many fronts…from many people. Nothing done. What did we get from Uncle Al? This quote that gives you a clear understanding of the buffoonery.

    “Innovation has brought about a multitude of new products, such as sub-prime loans and niche credit programs for immigrants. . . . With these advances in technology, lenders have taken advantage of credit-scoring models and other techniques for efficiently extending credit to a broader spectrum of consumers. . . Where once more-marginal applicants would simply have been denied credit, lenders are now able to quite efficiently judge the risk posed by individual applicants and to price that risk appropriately. These improvements have led to rapid growth in sub-prime mortgage lending . . . fostering constructive innovation that is both responsive to market demand and beneficial to consumers.”

    I can go on and on about the missteps that were made. I am in hopes that previous mistakes are not compounded by the Fed and the regulators that missed the boat in the first place. Having a President who continues down this road would make the current catastrophe one of truly historic proportions.

  • Medicare Part D and the Iraqi occupation.
    McCain is right, government spending without paying for it with taxes produces massive debt that requires cuts in services or raised taxes to pay the interest on that debt.

    Or you just borrow more.

    Greenspan had recommended a tax cut to eliminate the Clinton surplus.
    He never said to go through with it if the surplus disappeared.

    Alas, he didn’t say NOT to do it either.
    It’s so odd when people think a surplus is excess money when there’s a national debt 100 times as big left to be paid.

    Greenspan was concerned Congress would just spend it.
    They cut taxes AND spent more. Mr. Greenspan might have offered them water, but just see if they would have drunk.

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  • McCain is right when he says that government spending has attributed to the deteriorating economy. Don’t get me wrong I don’t believe McCain knows jack about the economy, but his advisors are right. Government spending replaces the judgement of all of the buyers and sellers in a market society with the judgement of a few old men. Just look at Hong Kong. Hong Kong’s G.D.P. per capita has increased significantly more than any other country over the past decade. This has been done, because the Hong Kong government has allowed Hong Kong to come close to achieving a pure market society with minimal government intervierance.
    Also the New Deal policies that andy phx was reffering to was not the cause of the end of the Great Depression. WWII itself caused the end of the Great Depression. New Deal policies began in 1933. All throughout the 1930’s we were in the Great Depression. There was even a decline in the economy in 1939, two years after the New Deal was not over. It took many people leaving our country to fight in the war to end the Great Depression. Since many men left, the unemployment rate sky-rocketed, and the economy stabilized.

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