It’s the public sector that’s ‘doing fine’

White House/Lawrence Jackson

President Barack Obama delivers a statement on the economy in the James S. Brady Press Briefing Room of the White House, June 8, 2012.

Article Highlights

  • In the first quarter of this year, private-sector GDP grew by a meager 2.6 percent.

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  • A recent poll of swing-state voters found that 55 percent agreed the Bain attacks were “unfair.”

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  • The only way to help Americans find work is to reduce barriers for job creators in the private sector.

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“It’s very clear that private sector jobs are doing just fine.”

Sound familiar? These words are not President Obama’s. They were spoken six months ago by Senate Majority Leader Harry Reid. While pushing a Democratic proposal to spend another $35 billion we don’t have to help states hire more public workers, Reid declared: “It’s very clear that private-sector jobs have been doing just fine; it’s the public-sector jobs where we’ve lost huge numbers.” At last week’s news conference, Obama simply repeated the point Reid made last October.

Jared Bernstein, a former Obama economic adviser, said the president’s gaffe won’t do lasting damage “because that’s not the way he sees it.” But as Reid’s comment demonstrates, that is precisely how Obama and Democratic leaders on Capitol Hill see it. They’ve been saying for months that the private sector is doing fine and that the solution to our unemployment problems is to spend even more taxpayer money to hire more government workers.

Obama and Reid have it precisely backward: It’s the public sector that’s doing fine. According to the Bureau of Labor Statistics, the unemployment rate for government workers last month was just 4.2 percent (up slightly from 3.9 percent a year ago). Compare that to private-sector industries such as construction (14.2 percent unemployment), leisure and hospitality services (9.7 percent), agriculture (9.5 percent), professional and business services (8.5 percent) and wholesale and retail trade (8.1 percent). As Andrew Biggs of the American Enterprise Institute points out, the public-sector unemployment rate “is the lowest of any industry or class of worker, even including the growing energy industry.” If the rest of Americans enjoyed the same unemployment rate as government workers, Obama would be cruising to reelection.

Meanwhile, the private sector continues to struggle under the weight of Obamacare, the spiraling national debt, the $46 billion in annual costs of the new regulations imposed by Obama, and the looming threat of “taxmageddon” — when, come January 2013, the private economy will get hit with hundreds of billions in higher taxes.
"Meanwhile, the private sector continues to struggle under the weight of Obamacare, the spiraling national debt, the $46 billion in annual costs of the new regulations imposed by Obama, and the looming threat of 'taxmageddon'" -Marc A. Thiessen
The result? In the first quarter of this year, private-sector GDP grew by a meager 2.6 percent. That is certainly better than the pathetic 1.2 percent growth rate last year, but compared to previous recoveries, it is anemic. When Ronald Reagan ran for reelection in 1984, private-sector GDP grew by 6.5 percent — 2 1 / 2 times the current rate. That’s why Reagan was able to declare “It’s Morning in America again” while Obama can’t.

Obama and Reid may think 2.6 percent private-sector GDP growth is “just fine,” but the 23 million Americans who are unemployed, underemployed or have quit looking for work don’t share their complacency. Unless Obama wants to put them all in government jobs (which he might), the only way to help these Americans find work is to reduce barriers for job creators in the private sector. The election will likely hinge on who Americans better trust to do that.

That is why Obama’s gaffe is so damaging to his prospects for reelection. It feeds a growing public perception — which is being actively cultivated by the Romney campaign — that when it comes to the economy, Obama is out of his depth and hostile to private business.

That perception was fed by Obama’s attacks on Bain Capital and their subsequent public repudiation by leading Democrats from Bill Clinton to Deval Patrick. A recent poll of swing-state voters found that 55 percent agreed the Bain attacks were “unfair” and “a perfect example of the Obama administration’s anti-business mindset.” The perception was further hardened in the public consciousness by Romney’s response highlighting Solyndra and Obama’s other failed “green energy” investments, which left taxpayers on the hook for billions. That was soon followed by the Labor Department’s May jobs report showing rising unemployment — the sting of which had not yet subsided Friday when the president told Americans that the private sector is doing “fine.” All this helps Romney sell his narrative that Obama is “in over his head” and “is simply not up to the task of fixing our economy.”

How bad is all this for the president? Here’s how bad: Last week Mitt Romney accused President Obama of being “out of touch with the American people.” When a guy building a California vacation mansion with a car elevator for his wife’s two Cadillacs calls you “out of touch” — and no one laughs — you know you are in trouble.

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