David Apgar: If You’re Out after Three Strikes, What Happens after Three Lies?

By David Apgar, the founder of ApgarPartners LLC, a firm that helps companies and development organizations learn by treating goals as assumptions to be tested by performance results. He blogs at www.relevancegap.blogspot.com.

Speaker Boehner made three points in his surprisingly combative reply to President Obama on debt ceiling legislation Monday night. Readers of this blog can help determine whether, as I believe, all three were lies despite the seriousness of the impasse on federal authority to continue borrowing.

First, the Speaker declared that government spending was the reason for joblessness. Until this year no one believed that government spending decreases jobs. There has never been any public debate on this point because it flies in the face of common sense. Does anyone out there think government spending — on a net basis, if you like — reduces employment?

Second, Boehner described Republican conditions for an increase in the debt limit in terms of what Americans demanded — namely reduced spending and reforms. Several White House proposals have now offered deeper cuts than the Republicans dared propose, however. In his convoluted trope, Speaker Boehner thus managed to hide the fact that the key condition Republicans have imposed is no tax increases and, astonishingly, no reduction in tax loopholes. In other words, the Republican leader hid from view a key demand leading to an impasse that could cost American families thousands of dollars — and one, namely no reduction in tax loopholes, for which there is no public support.

Third, the Speaker declared that the vote for the House Republicans’ Cut, Cap and Balance bill was bipartisan — but hid the detail that only 5 of 234 votes for the bill were Democratic ones.

This appears to be a level of public duplicity on a par with what got the U.S. into the Iraq War.

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  1. F. Beard

    Does anyone out there think government spending — on a net basis, if you like — reduces employment? Yves Smith

    Sounds very Austrian to me. The Austrians believe the economy will sort itself out if the government just steps out of the way and allows deflation to “purge the malinvestments” and redistribute capital and labor. They are thus opposed to unemployment compensation, minimum wage laws and government stimulus spending.

    1. Linus Huber

      Right on, perfectly correct. The government should not be involved in the economy except by enforcing the rule of law. Unfortunately, in today’s world, it is the people in authority who violate repeately the spirit of the RULE OF LAW. Raping savings of their right rate of interest via manipulation, transferring losses of financial institutions to the tax payer are against any rule of capitalism but rather attempts to maintain a system that becomes more and more vulnerable.

      1. Lidia

        There is no “right rate of interest”.

        If anything, the “right” rate of interest today should be negative. Declining resources + increasing population = increasingly negative future per capita wealth.

      2. F. Beard

        I understand the Austrians but I don’t agree. Their solution is cruel and unjust because of the innocents who will suffer. They ignore Biblical concepts such as the prohibition on usury between fellow countrymen, debt-forgiveness and restitution for theft. They recognize that the banking system cheats savers but ignore that it cheats borrowers too. They are also hypocrites in that they claim to be libertarian but desire a government enforced gold standard.

        We need a bailout of the entire population and fundamental reform in money creation including genuine separation between government and private money supplies.

  2. attempter

    1. Does anyone out there think government spending — on a net basis, if you like — reduces employment?

    Yes, where 100% of government spending is for corporate welfare, which helps corporations temporarily keep up rent extractions while destroying as many good jobs as they can. Government-enforced extraction points and forced markets, which are everywhere by now (and Obama’s health racket Stamp Mandate will be the biggest and most vicious of all), are part of the way corporatism wants to temporarily overcome the fact that consumers can’t/don’t want to keep buying their increasingly worthless products/services.

    Then there’s the fact that government taxation on the non-rich has the intended effect of making it more difficult for us to build our own alternatives to the corporate command economy. Every cent stolen from us in taxes is a coerced opportunity cost, a cent lost to our democratic and relocalization efforts, which are the only constructive way we’ll be able to organize the productive economy going forward (“employment” isn’t the right word; we seek something far better than that).

    So there’s the ways in which government tax-and-spend reduces employment. (Of course, that’s not what Bohner meant.)

    2. The post itself contains several lies here. The American people have consistently said they consider jobs to be a more pressing issue than government spending, and they see through this Orwellian term “reforms”.

    I already dealt with the malevolent intent and effect of taxes on the non-rich. (At least the MMTers are honest about taxation not being necessary for revenue, but only for social control.)

    I’ll just add that the part about “loopholes” is nonsense. We know the criminal politicians won’t enact “progressive” taxation. They’ll only make taxation more regressive. So when you hear the word “revenue”, always think anti-citizen austerity, because that’s all it is.

    Under kleptocracy, all taxes on the non-rich and on productive activity are regressive. Every cent. Our demand should be clear and stark:

    No Taxes on the Non-Rich.

    3. The assault on the people is as bipartisan as it gets. Just because most Democrats voted against a nominally Republican bill doesn’t change the fact that their own prescription is identical. Such votes are mere partisan squabbles. It’s the post’s lie that there’s any substantive difference.

    This appears to be a level of public duplicity on a par with what got the U.S. into the Iraq War.

    The Iraq War – a bipartisan effort to this day, just like the Permanent War in general.

  3. NYT

    If losing AAA causes bond yields for the US to rise by even 1% (say) then that will cost the US taxpayer 140B per year or 1.4T over ten years.
    These arguments over a couple of hundred billion are literally insane if you assume the players acting in good faith.

    1. Yves Smith Post author

      No, it depends on what the real interest rate is, not the nominal interest rate. The “cost” is illusory if the value of the principal is falling in real terms thanks to inflation (which also increases nominal GDP and tax receipts).

      1. nanute

        That’s true theoretically. The question is will default be expansionary in nature or contractionary? I guessing that a downgrade in credit ratings will increase the cost of borrowing in real terms. Continuing to reduce spending, with no increase in revenue will not stimulate the economy. I suspect that a default or downgrade will only exacerbate the excess demand for money.

  4. daniel de paris

    Does anyone out there think government spending — on a net basis, if you like — reduces employment?

    Yes, most certainly so when government spending reaches a certain level and:
    1- makes it impossible for “real stuff” makers – ie your rust belt -to output anything on a competitive basis,

    2- is funded via external cash providers from Asia – and on a much reduced scaled, North Europe – that can only sustain their low exchange rates to the USD via massive and persistent purchase of treasury bonds.

    Once the US stops funding itself into oblivion, people will have a job again – the one needed to clothe, tool and feed themselves.

    By the way, they will get fitter and more work-effective.

    Time spent building real stuff is serotonin-producing. As much as the one spent in academia, buying or trading on the Net…

    On top of it, the US may rediscover the values of their grandparents and a more effective democracy.

    The show on display in Washington is absolutely disastrous. None of the two parties is caring about America itself.

  5. Expat

    I am shocked, shocked to learn there is gambling at Rick’s!

    Seriously, Boner lies to us and you get all pissy? These people in Washington are so full of shit and so out of touch that they don’t really even know what is a lie any more. Boner probably believes some of what he says, but more likely has no sense of right, wrong, truth, or justice left in him after years of selling his soul to fellow congressmen, lobbyists, and corporations.

    I think in many other countries there would rioting and lynching of politicians, something the United States actively encouraged in communist countries and left-leaning third world shit-holes. But Americans gleefully accept the same corruption and perverted kleptocracy that sends Africans, Asians, and Europeans in a revolutionary frenzy.

    I think Boehner should be arrested and waterboarded until we get something honest out of him (it’s gonna be a looong waterboarding session). Instead, he is hailed as a saviour and political hero by half the nation.

    That says an awful lot about the sad state of American and Americans.

  6. Cedric Regula

    Honestly, I think it would be hard for the Rs to be honest about their hidden agenda to “Starve The Beast By Devouring It From The Inside Out”.

    1. john dordan

      OK Boner is a liar, but so is Obama. Rs want to starve the beast but so do Ds. No one has noted that Obama never mentioned the elephant in the room– Social Security cuts– in his sermonette. He only mentioned Medicare adjustments.

  7. jim

    Socio-paths make up 1% of the general population and 4% of government officials.

    There are a few socio-path politicians who apprently have a great deal of influence on the GOP and can some how manipulate the rest of their base.

    The mainstream media, and socio-paths in government are allowing special interests to have their way with the country at this point and I fear how close they are to their end-game.

    President Bush set the USA up for a big fall with his phony wars in Iraq, tax cuts, and unfunded prescription drug benefits. How this mess is handled will greatly affect the future of the western world.

    The story I’m most interested in (and has somehow disappeared from the news) is the funding of the Taliban with US tax payer money.

  8. Charlotte W

    I want to see people calling this level of duplicity EQUAL TO or surpassing those surrounding 9/11.

    The Iraq War? — no different than other wars – all smoke and mirrors.

    But 9/11 was an act of war by our own government – against the people of this country.

    Stop pretending it isn’t so.

    1. Peter T

      “But 9/11 was an act of war by our own government – against the people of this country. Stop pretending it isn’t so.”

      Stop excusing al Quaeda. People like you give the Republicans cover for their dirty work. They point at you and say that all on the left are nutcases. Please go away.

      1. Burt Frobe

        We will all go away hopefully, from the leadership of nutcases. Look at Afghanistan, they’ve left. “They” are people with educations and the means to get the hell out. The US wants permanent bases there, the Afghans do not.

        “War profiteers, and occupation profiteers, and “reconstruction” profiteers seem to know their way out. But imperial rulers, whether British or Soviet or U.S., seem utterly incapable of withdrawing other people’s kids from Afghan wars until no other option remains. ” – David Swanson ‘Even the Birds Have Left Afghanistan’

  9. Joe Firestone (LetsGetitDone)

    Hi David,

    Good on ya, for identifying John Boehner’s lies. Now, don’t we need a parallel treatment of the whoppers the President told?

    To be a politician in Washington today is to tell lies, and Mr. Obama is a master at using frames that he must know are lies, and then spinning out a whole raft of lies large and small based on the frames. For example, Mr. Obama knows that deficits are not necessarily bad, nor surpluses necessarily good. yet he always talks in simplistic terms.

    Worse, he knows that right now any cuts in the deficit will cost jobs. He also knows that none of the sacrifices he is outlining in his or Democratic austerity plans involve any real measure of shared sacrifice. The “sacrifice” he is asking of rich people is purely symbolic, while the sacrifice he is asking from the vulnerable goes to the bone.

    Perhaps the biggest lie is that if he doesn’t compromise w/ the Republicans, there will be a default. But he must know very well by now that he can do at least three things, which Yves outlines in her interview with Paul Jay here: http://www.nakedcapitalism.com/2011/07/we-discuss-the-manufactured-us-debt-crisis-at-the-real-news-network.html

    The alternative I favor is proof platinum coin seigniorage. See:


    but whichever is the best alternatve, it’s clear to me that there are alternatives and that the President is telling a big lie by omission when he doesn’t tell the American people about these alternatives and about the fact that none of them requires giving in to deficit reduction craziness at this point in our national game.

    I could go on and on about Mr. Obama’s lies, and may do so, again later today. None of this is to excuse Mr. Boehner who is a much stupider liar than Mr. Obama; but surely to content oneself with pointing out Mr. Boehner’s lies alone is seriously one-sided.

  10. Mickey Marzick in Akron, Ohio

    Boehner has told so many lies that it’s difficult to single out one as more egregious than another. However, government spending causes joblessness is certainly one for the ages. Kind of like “Deficits don’t matter” … until now.

    The real intent of Boehner’s remark though is to blame the government again, thereby obfuscating the fact that the private sector is responsible for job creation – not the government – in a capitalist economy. Is anyone asking themselves why the private sector refuses to invest in this country? Because the government is in the way. Eliminate unemployment insurance, environmental regulations, reduce taxes even more, and the economy will heal itself. Just get the government out of the way…

    The whole campaign is intended to shift the present economic condition of this country away from corporate America onto the government. The government caused the housing bubble with low interest rates that induced the private sector to create liar/ninja loans that then “forced” them into creating the various credit instruments in a deregulatory environment that resulted in the current financial crisis. The message is the same: BLAME THE GOVERNMENT.

    This government is EVIL campaign has only one purpose: to remove any and/or all restraints on the private sector by dismantling Social Security and Medicare once and for all, reducing the need for taxation [OASDI and FICA] even further, and eliminate any and/or fetters [regulations] on production. It also precludes any discussion of a second stimulus because government spending causes unemployment, right? Debt, deficits, and the government are evil. Keep the “noble lie” simple stupid. Boehner has… and it appears to be working.

    But it is incomplete because the government is evil campaign is just the hammer. The anvil is unemployment/underemployment languishing at 20% with no economic recovery in sight. The private sector is sitting the economic recovery out, starving the other beast – the American people – of employment with an eye to 2012. It has no reason to rescue Obama or the Democrats. Quite the contrary! If unemployment/underemployment remains at 20% it can kill off the Democratic Party once and for all. It has been dying for 40 years, but this electoral defeat should bury it. What comes in its wake is anyone’s guess. But I’m pretty sure that so long as government spending causes joblessness, it won’t be another New Deal.

  11. Namazu

    Didn’t see the speech, but from your account:

    1. Depends on time frame. Short-term, you’re correct; longer-term, higher government spending retards the recovery of private sector employment.

    2. Is there a concrete White House proposal I can see somewhere other than the Land of Leaks?

    3. An exaggeration, of course, which was probably reported in all the major media.

    Now, what you didn’t ask, but I’ll tell you anyway, is that elevating normal Washington economic ignorance and obfuscation (which I have no doubt are equally present in the President’s speech) in a budget fight to the level of the Iraq War–in which many people were killed and maimed–seems a bit intemperate.

  12. Marty Heyman

    “This appears to be a level of public duplicity on a par with what got the U.S. into the Iraq War.” … so far the Iraq war only cost us a couple of trillion dollars. The loopholes are worth WAY more than that over the 10-year budget period they’re talking about!

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