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Analysis on Treasury Secretary Tim Geithner’s View on the Economy

July 16th, 2011
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07.16.2011 original publish date
09.06.2012 minor updates including updated broken links. Deleted link on China’s economy (no archive avail.)
07.21.2014 repaired broken links as avail. Minor title edits, page format update.

President Obama's Economic Record to July 10, 2011. Graphic credit: Meet the Press, MS-NBC (Air date 07-10-2011)

Analysis on Treasury Secretary Tim Geithner’s View on the Economy

original article written by Net Advisor

WASHINGTON DC. Treasury Secretary Tim Geithner appeared on Meet the Press Sunday July 10, 2011. Mr. Geithner seems to be parroting the Obama Administration’s mantra including about how they “created 2 million jobs.” After the news host placed a graphic of the jobs data (pictured above), Geithner was quick to reject the facts.

“That’s a ridiculous table”

— U.S. Treasury Secretary Timothy Geithner, comments over President Obama’s economic record (graphic above). However as the interviewer Mr. David Gregory noted that Geithner did not dispute those economic jobs or debt numbers (MS-NBC Video @10:20).

MS-NBC VIDEO:

Visit msnbc.com for breaking news, world news, and news about the economy

[1] Jobs

We researched this two-million created jobs claims using the Bureau of Labor Statistics (BLS) own numbers. It is difficult to argue that government created any net job growth when the government’s own data shows more jobs lost than jobs gained (Source: NetAdvisor.org Fact Check).

Mr. Geithner argued why the economy had slowed in the last quarter. He did not cite that new burdensome government policies on business such as healthcare costs, higher taxes, or that artificial economic stimulus was slowing to an end. Mr. Geithner didn’t think any of these policy moves had anything to do with business or the economy. Here is his view of why the economy slowed in the first quarter and our analysis:

“…as you know, gas prices went up a lot because we had a huge supply disruption in the Mideast. You saw some really terrible weather across the country which slowed construction spending. State and local governments across the country are having to cut back, tighten their belts. You saw Japan suffer catastrophic damage. A lot of concern out of Europe still. And those factors together account for a large part of the slowdown. Not all of it, but a large part of it.”

— U.S. Treasury Secretary Timothy Geithner said on Meet the Press, MS-NBC 07-10-2011

[Quick edu on Spotting Persuasive Speech
The use of the phrase, “as you know” has a specific purpose in persuasive speech. The speaker is attempting to tell the audience that they already know and understand what the speaker is saying. The intent is to hedge against any rebuttal. Since we are supposed to already understand and agree with something, why would we question it? That is why we hear politicians, lawyers, and sometimes we use phrases such as “you know” (meaning you understand); or “as you know” (meaning you already know and understand, so there is no need to argue against with what I am saying).

The rebuttal to such a assumption is, “Why don’t you give me some specific examples of how YOU see this.” Now the speaker has to go back and justify their argument to you.

Other times we hear presumptive speech such as, ‘I think the American people will agree with me.’ There are no facts to support this statement. The speaker just presumes it is true. The speaker might as well say, ‘I think I’ll win the lottery tonight.’

The rebuttal to such an presumption is, “How do you know?” Here we are asking the speaker to provide evidence or their belief to support their claim. This puts the burden back on the speaker to prove their argument, and thus now we can more easily tear apart faults in their assumptions.]

[2] Let’s Examine Mr. Geithner’s View on Economic Slowing

Did gas prices slow the economy?
Gas prices did climb during the first quarter however our view is that prices were not significant enough to be the primary or a major cause for economic slowing. Also rising gas prices would have little correlation with increased federal deficit spending or increased jobs losses.

Supply disruption in the Middle-East caused the U.S. economy to slow?
Mr. Geithner was referring to the rebels and the Libyan government slowing down oil production. However Libya produces at best 2% of the world’s oil (Source: BBC). The U.S. imported about one-half of one-percent of Libyan oil in all of 2010 [Source: International Energy Agency 2010 IEA.org Libya Report (PDF)]. Thus the U.S. is not dependent on Libyan oil. For the rest of the world, Saudi Arabia increased oil production to make up for the slightly decreased oil production from Libya (Source: Telegraph.UK).

The weather caused the U.S. economy to slow?
The weather? But there were storms, it was hot, it was cold, it rained, it snowed, there were tornadoes. So because of “weather,” people could not shop, including for food? This is probably one of the worst excuses government is using. It’s the same excuse the Obama administration used to explain a poor jobs report last year too. Each year in parts of the U.S., we have tornadoes, hurricanes, rain, fire, and sometimes earthquakes. Despite this “extreme weather” the government managed to hire 48,000 temporary workers for the 2010 Census during this same period. So, we would argue that weather, even “extreme” weather are annual occurrences in many parts of the country, and most people manage to live year-to-year in it.

Did cutbacks in state and local governments slow the economy? This whole manta assumes that without unlimited government money, jobs just can’t be created as needed. It is true that states and local government should be cutting back on their spending as tax revenues slow from people out of work. About 1 out of 3 states continued spending with temporary federal government stimulus money under Obama’s American Recovery and Reinvestment Act (AARA) (Source: Business Insider).

The AARA was really a welfare program where most of the money went to extend unemployment benefits, increase in food-stamps, increase in social security payments, government subsidies in free to low cost health care, money to shore up state’s balance sheets, money supposedly for “education” which really went to the teachers unions to maintain their jobs for a year or two, and which are being cut now as Obama stimulus money ends (Sources: EducationWeek.org and en.wikipedia.org).

Here is where the Obama Administration could say they “saved or created” jobs, but it was only temporary. The result however based on the MS-NBC chart above referring to the latest unemployment figures, as the temporary stimulus ends, unemployment is higher. Thus the stimulus was an artificial short-term boost to maintain some jobs and benefits but creating long-term employment just didn’t happen.

There was also government money to buy a home, and other tax credits, but less than 10% of AARA went for “shovel ready” programs to “build roads and bridges.” As it turned out, the government really didn’t have much in the way of “shovel ready” programs (Sources: en.wikipedia.org, President Obama – Video Below).

The Obama AARA stimulus program is expected to add a revised higher $814 Billion to the U.S. deficit from 2009 to 2019 [Source: Congressional Budget Office 2010 AARA Report P9 of 20, parr 5&6].

[3] Obama Admits: His Jobs “Not Shovel Ready”

VIDEO:

“Shovel-ready was not as … uh … shovel-ready as we expected.”

— Barack Obama, at President Obama’s Council on Jobs and Competitiveness, 06-13-2011

[4] If government doesn’t create the jobs then who does?

The Answer is Small Businesses are the biggest job creators in the USA.

“Small firms:

  • Represent 99.7 percent of all employer firms.
  • Employ just over half of all private sector employees.
  • Pay 44 percent of total U.S. private payroll.
  • Have generated 64 percent of net new jobs over the past 15 years.
  • Create more than half of the nonfarm private gross domestic product (GDP).
  • Hire 40 percent of high tech workers (such as scientists, engineers, and computer programmers).
  • Are 52 percent home-based and 2 percent franchises.
  • Made up 97.3 percent of all identified exporters and produced 30.2 percent of the known export value in FY 2007.
  • Produce 13 times more patents per employee than large patenting firms; these patents are twice as likely as large firm patents to be among the one percent most cited.”

— Source: SBA.gov PDF

Geithner blames Japan’s Earthquake & Tsunami for the slowing U.S. economy?
Since when was the United States dependent on the success of the Japanese economy? With a brief exception, Japan has been in recession for 20 years.

“Like the U.S., much of Japan’s debt resulted from efforts to stimulate its economy out of a 20-year deflationary period and recession.”

— Source: U.S. Economy. About.com/ Japan

The Earthquake in Japan and the aftermath impacted Japan’s economy, but that does not appear to have a material impact anywhere else in the world.

Geithner’s blanket blame on “Europe”. So Europe caused the U.S. economy to slow? It’s true that some European government fiscal mis-management is coming home to roost, and this could impact financial markets, then the U.S. economy, but so far this has not happened.

Geithner closes with a catch-all phrase, saying, the above was, “not all of it.” Thus the reasons he just explained as the causes for the economic slowdown really were not all the causes. We would argue the Obama stimulus, and having government in-charge to be the job creator just has not worked. All one has to do is look at the higher deficit and higher unemployment numbers to see the actual results of such government policy.

The Secretary follows the same Obama mantra that government is the job creator, government solves economic problems, and government tells us how to shape our views and expectations.

Let’s review the Secretary’s exact words:

On growing the economy:

“…you know, our job (government’s job) is to make sure”

— U.S. Treasury Secretary Timothy Geithner said on Meet the Press, MS-NBC 07-10-2011

To make sure people have jobs? The government’s own (SBA.gov) data (above) suggest this not the government’s forte. The government’s job is to place the ground rules for business to thrive. We would argue that higher taxes, more regulation, and bureaucratic red-tape are not what business had in mind for job creation.

On Job Creation:
“…the most important thing we can do is to make sure we’re taking steps to get people back to work as quickly as we can.”

— U.S. Treasury Secretary Timothy Geithner said on Meet the Press, MS-NBC 07-10-2011

This assumes one believes that government is the source for jobs. We already pointed out using the government’s own data from the SBA.gov shows that small business creates 99.7% of all jobs in the USA. As this being the case, government might want to make regulations and tax burden far less on small business so they have more money to develop their business. If they are successful, that will create jobs based on demand for products and services.

[5] Half-Truths

“This was a crisis caused in part because Americans borrowed too much, banks took on too much risk. They — we built too many homes, more than we could afford.”

— U.S. Treasury Secretary Timothy Geithner said on Meet the Press, MS-NBC 07-10-2011

Note the Secretary nearly slipped as if they (meaning the public) built too many homes. He corrected himself in the Socialist way of thinking that government created too many homes. We just need someone to tell us that we should have stopped building homes, and no housing crisis would have ever come?

Apparently only government, specifically the Obama Administration seems to know the magic tricks on how to build homes, yet government built too many homes? Did the government build your home?

Actually the housing crisis was not about “too many homes being built.” It had a lot more to do with government policy and regulations to lower lending standards so people who have little to no money could buy a home they could never afford (Source: NetAdvisor.org article).

[6] Geithner Blames Consumers for Not Spending Their Money As Government Wants

“…part of what makes the recovery slower is because people are going back to living within their means. They’re spending less of their share of income, they’re saving more.”

— U.S. Treasury Secretary Timothy Geithner said on Meet the Press, MS-NBC 07-10-2011

So the economy is slowing because people – you’re just not racking up debt like you used to. If government was just there in your residence telling you how to spend your money, or better yet, just took all your money so it can redistribute it as they see fit, the economy would be booming again?

Also note the phrase, “their share of income.” Geithner suggests that income is not yours. Any money you earn from working is not your money. It is really the government’s money, and you have your share of it. Those who have too much of it from working their tail off will just have to give up more of “their share.”

Those who have too little money, don’t worry, no need to work, Obama will take money away from everyone else and be sure others get their “fair share.” No matter how you slice it, this is called Socialism – a redistribution of wealth according to a government’s master plan. It didn’t work for the Soviet Union; it’s not working in Europe, so it will then somehow work in the USA?

Sorry, that model doesn’t create jobs, it creates dependency – and that is what Socialists want. People to be dependent on government.

[7] Tax the “rich,” and that will solve our deficit and create jobs?

If we just tax the so called “rich” beyond the already top bracket and take more of their money away for redistribution, they have less incentive to work and earn more. The “rich” could also leave the U.S. and live 6 months out of the year in a country where there are lower or no taxes and then come visit the U.S. for 6 months and pay no taxes in the USA. All they have to do is surrender their U.S. passport and become a permanent citizen in that foreign country, then get a visa to visit the U.S.A.

In fact, one could live in Canada for 6 months out of the year, pay a maximum 29% top tax bracket, get low cost to free healthcare, free to cheaper education, produce products cheaper in Canada or Mexico at $1.69/ hr, then ship the products back to the U.S. with no import tax under President Clinton’s NAFTA.

Since NAFTA, the unfriendly business environment in the USA has exported jobs to foreign counties including Mexico where labor is cheap and regulations a minimum.

“The U.S. trade deficit with Mexico (since NAFTA) displaced a total of 682,900 U.S. jobs as of 2010, affecting every state.”

— Source: Economic Policy Institute, 05-03-2011 Map & Report

So if the “rich” stay in the USA, this is what they face: For 2010-2011 if one earns over $180,000 their tax is $54,550 (30.31%) PLUS 45% of every dollar above $180,000. This does not include any state income tax.

Unless one is a high level executive, most of the country’s wealth comes from entrepreneurs. And if this is the case, couldn’t they just move the business and export jobs to a country where labor is cheaper and taxes are lower? We’ll this has been going on especially since NAFTA, and the Obama Administration is helping to get rid of these “rich” people who spend their money in the U.S. economy, which subsequently creates demand for products and services, which in turn creates the jobs.

[8] Geithner: Government Can Solve our Problems?

“…the president of the United States is going to keep at it to make sure that every day we’re looking for more opportunities to get the economy moving again faster.”

— U.S. Treasury Secretary Timothy Geithner said on Meet the Press, MS-NBC 07-10-2011

And what will amount to about $5.9 Trillion in “stimulus” and deficit spending under Obama’s plan, unemployment is climbing higher (Source: BLS.gov PDF – highlight added).

[9] Geithner: More Regulation Will Somehow Transform Our Economy?

“…It does require Congress, under our Constitution, to be willing to legislate things that would help.”

— U.S. Treasury Secretary Timothy Geithner said on Meet the Press, MS-NBC 07-10-2011

If it were just that easy that all Congress has to do is pass new laws and suddenly jobs are magically created, then Utopia would arrive and there would be a pony in every garage?

[10] Media Confronts Geithner About Obama’s Policies

MS-NBC’s Mr. Gregory:

“…You had stimulus, right? We were told that was going to keep unemployment to 8 percent. You had health care. You said it was critical to our economic security. The Fed did its thing before it backed out. You went after housing policy. None of them have really stemmed the tide, the decline in the housing market.”

— Host Mr. Gregory on Meet the Press, MS-NBC 07-10-2011

Geithner’s response was just a rehash of the same straw man argument without the explicit, “did I tell you we inherited this mess,” or “it’s Bush’s fault.” Here is Geithner’s response:

“I, I told you yesterday…let me stop you there again…The American economy was falling off the cliff in the fall of ’08 and the first months of his (Obama’s) administration.”

— U.S. Treasury Secretary Timothy Geithner said on Meet the Press, MS-NBC 07-10-2011

Geithner then rehashed the created 2 million jobs argument. Again, the data shows more job losses than job gains.

Finally Mr. Geithner was asked whether he would stay for the remainder of Obama’s first term as Treasury Secretary.

[11] Bailing Out From the Obama Administration?

Tim Geithner is the last member of Obama’s original cabinet. He reportedly is considering leaving the Obama Administration (Source: ABC News). Everyone else has left the Obama Administration’s Cabinet where many have gone back to teach school at their respective University (Source: CNN and NetAdvisor.org). It seems that school is a safer place to discuss ideological theory. When applying ideological theory in the real world, facts and results seem to display a different reality.

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Graphic credit courtesy: Meet the Press, copyright 2011 MS-NBC.
Videos copyright 2011 courtesy MS-NBC, and Fox News respectively.

Copyright © 2011 NetAdvisor™
Revised Copyright © 2014 NetAdvisor.org® All Rights Reserved.

NetAdvisor.org® is a non-profit organization providing public education and analysis primarily on the U.S. financial markets, personal finance and analysis with a transparent look into U.S. public policy. We also perform and report on financial investigations to help protect the public interest. Read More.

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