The Real Controversy of the Obama/Stewart “Dude” Exchange
I was in a cocoon when this originally happened, but apparently there was a big brouhaha when the Daily Show’s Jon Stewart called President Obama “dude” during their interview. I heard the clip on NPR, as one of the memorable events of 2010.
The thing is, it’s the earlier part of their exchange that caught my attention. (Sorry I can’t find it on YouTube.) Stewart was busting Obama for hiring Larry Summers when Obama the Candidate had promised to bring in new blood etc.
In his defense, Obama said something like this: “If you had told me two years ago, that we would be able to stabilize the stock market, stabilize the economy, while spending less than 1 percent of GDP…when the S&L crisis cost about 2.5 percent of the economy–and it was a much smaller crisis–then I would say I’ll take that deal.”
Then the crowd swooned and started cheering. Obama went on to say, “And Larry Summers did a heckuva job,” to which Stewart said, “You don’t want to use that phrase, dude.”
Sooo, let’s put aside the shocking notion that someone referred to the president as “dude.” Let’s focus on Obama’s claim that they stabilized the economy by spending less than 1% of GDP. What the heck is he talking about? Even if we put aside TARP and the Fed stuff, the Obama stimulus package was at least $700 billion. So even if we break if up per year, that’s $350 billion per year. Divided by a GDP figure of $14 trillion, that works out to exactly 2.5 percent.
So what the heck is Obama talking about?!
Won’t TARP turn a modest profit: in that case there would be no need to put that aside. Same goes for the “Fed stuff”, I have a hard time seeing how that would figure into the spending at all. Turning to the stimulus: I am not sure, but I have seen figures ranging from a much lower number to 700 billion; this depends on which baseline is chosen for “spending”. 1 % then would be a defensible number as long as you define your baseline properly and use it consistently.
A large percentage of the stimulus package was composed of tax cuts, and you also have to factor in whatever drop there was in state spending. All in all, there was actually very little fiscal stimulus, and just changes in spending patters and wealth distribution.
Washington math is different, dude.
This strikes me as a rather desperate attempt to strike at Obama, and puzzling considering that there are so many genuinely awful mistakes he’s made.
Bob,
Part of the answer on the 1% is that much of the “stimulus” was tax cuts, not the kind you and I would like to see, because they were lump-sum tax cuts rather than cuts in marginal tax rates, but they were tax cuts just the same.