Mon, 16 Mar 2009 15:45:18 +0000 – By John R. Lott, Jr.Author, Freedomnomics/Senior Research Scientist, University of Maryland
Last Friday, Lawrence Summers, the White House Economics adviser, blamed a fearful publicfor dragging the economy down and said that there was an "excess of fear." Summers is right that an "excess of fear" has really harmed the economy and that that the downturn has been much sharper than it had to be.
Fear has scared consumers into changing their spending decisions. Businesses that would have gotten money from those consumers have had to change their plans and cut back on employment. The increase in unemployment is temporary as the money hasn't disappeared, but simply gone to other places and it takes time to move jobs around.
As this fear has spread, the economy has shrunk even faster.
But who has been responsible for instilling this fear?
-- During Obama's Feb. 18 address on the mortgage crisis, he said that we were in a crisis 24 times, Frequently describing in apocalyptic terms that the crisis would drag down the entire economy.
--During Obama's first and only national press conference he talked about us being in a crisis 12 timesand noted that it was an "unprecedented crisis" -- something sure to instill confidence.
-- In his first radio address to the nation on Jan. 24, Obama claimed, "We begin this year and this Administration in the midst of an unprecedented crisis that calls for unprecedented action."
-- It is even harder to make sense of Lawrence Summers' recent statement, because of these grossly exaggerated claims he made on stage with Obama in November -- saying again"we've had an unprecedented crisis."
-- On Nov. 16, Obama said: "We've got an unprecedented crisis, or at least something that we have not seen since the Great Depression."
It isn't just recent statements. In each of the three presidential debateslast September and October, Obama claimed that we were in the "worst financial crisis since the Great Depression." It was a constant theme of his campaign and he has made it again and again since the election.
In fact, since the election, we have gone from claiming that it is the worst crisis since the Great Depression to very frequently claiming that it is the worst crisis ever. Before the election he claimed that it was the "worst financial crisis" and now he usually says that it is simply an "unprecedented crisis" -- implying that there has been no worst crisis of any type.
Last fall when McCain said that the economy was fundamentally strong, Obama pounced on the statement. Obama argued that McCain's statement was irresponsible and showed that McCain was out of touch with the traumas facing Americans.
And why has Obama irresponsibly tried to scare people? During the election the reason was obvious -- Obama wanted to win.
As Rahm Emanuel, Obama's Chief of staff, famously announcedafter the election last fall: "Rule one: Never allow a crisis to go to waste. They are opportunities to do big things." Others in Obama's administration have made similar statements.
For example, to push his stimulus bill, Obama claimed: "We are experiencing an unprecedented economic crisis that has to be dealt with and dealt with rapidly."
Summer's recent statement implies that Obama has been willing to scare people and create unemployment for political ends -- to get the political programs that he and Democrats have pushed for years.
Of course, the stimulus billand other Democratic programsare increasing unemployment simply because it is moving around spending and the jobs associated with that spending. The government can't create new spending, but it can merely move it from what people wanted to spend their money on to what the government wants to spend it on.
Only Obama can judge whether he feels these political wins justify this fear mongering. But Americans who are unemployed because of these irresponsible statements and Americans generally who are faced with what appears to be blatant political actions will feel differently.