President Obama’s “gaffe” about the private sector doing just fine has whipped Republicans up into a lather.

Last week while addressing the media in the White House briefing room, President Obama made a “gaffe,” saying that the “private sector in this country was doing fine.”  Ever since, that “gaffe” has been the favorite punchline of every Republican talking head to appear on cable TV to deliver their official Roger Ailes approved talking points.

The media across the nation has jumped all over the “gaffe.”  They’ve all piled on saying what a huge mistake Obama made in saying that “the private sector is doing fine.”

Even the Mittster himself–Republican Presidential nominee Mitt Romney–has gotten into the act.  “I think he’s defining what it means to be out of touch with the American people,” Romney said.

The clear message that Republicans want people to take away from this is that “Barack Obama thinks that the economy is just fine.”  Except that’s a lie.  That’s completely the opposite of what Obama said.

And that’s why what Obama said wasn’t a “gaffe” at all.  It’s only been twisted to sound like a gaffe by Republicans who are all giddy like little schoolgirls that the economy is bad in a presidential election year and they get to use it against a sitting president, and the media types are all too happy to help them do it if it stirs up the proper amount of controversy.

Here’s what Obama said:

Keep in mind that the private sector has been hiring at a solid pace over the last 27 months.  One of the biggest weaknesses has been state and local governments which have laid off 450,000 Americans; teachers, cops, firefighters.  Congress should pass a bill putting them back to work right now, giving help to the states so that those layoffs are not occurring.

In response to a reporter’s question, he later reiterated:

The private sector is doing fine.  Where we’re seeing weaknesses in our economy have to do with state and local government.  Oftentimes cuts initiated by governors or mayors who are not getting the kind of help that they have in the past from the federal government, and who don’t have the same kind of flexibility as the federal government in dealing with fewer revenues coming in.

And so if Republicans want to be helpful, if they really want to move forward and put people back to work, what they should be thinking about is how do we help state and local governments and how do we help the construction industry.  Because the recipes that they’re promoting are basically the kinds of policies that would add weakness to the economy; would result in further layoffs; would not provide relief to the housing market, and would result, most economists estimate, in lower growth and fewer jobs.

Context is everything.  The truth is that the statement “the private sector is doing fine” wasn’t a gaffe at all.  It’s just being spun that way for political purposes by Republicans who are not so quietly cheering for the economy to remain not-so-good.

Rather, the statement “the private sector is doing fine” is something we like to call a “fact.”  As in, it’s a fact that the private sector is doing okay.

Here’s how Obama can say that and be absolutely correct:  According to the Bureau of Labor Statistics (I actually looked it up myself, I didn’t just take Obama’s word for it) since February 2010, the deepest depth of the recession in terms of employment figures, the economy has added 4.27 million private sector jobs, including 1.9 million between April 2011 and March 2012 (April and May of 2012 are still only projections, but the two months combined are expected to add an additional 169,000 jobs).

Investigating further how well the private sector has done, on March 3, 2009, the Dow Jones Industrial Average hit its lowest point of the recession at 6,626.94.  Since then it has steadily climbed, and now sits at an index level of just over 13,000, more than double the lowest point of the Great Recession.

Need more proof?  According to the Federal Reserve Bank of San Francisco, corporate profits have hit a near all-time high.  From the “FedViews” economic research report:

Business profit margins are a link in the chain running from labor costs to prices. These margins look extraordinarily strong now. According to the national-accounts data used to compute GDP, the pretax corporate profit rate is the highest in decades and the after-tax corporate profit rate is the highest on record. We do not forecast that the profit rate will rise further. (Emphasis mine.)

Let’s repeat that one more time just so it sinks in:  The after-tax corporate profit rate is the highest on record!  The private sector is indeed doing just fine.  Mitt Romney can spin it any way he wants, but his buddies on Wall St. are simply rolling in dough right now.

President Obama is also correct when he says that it is public sector job losses that continue to be a drag on the national economy.  According to an analysis by the Washington Post’s Ezra Klein, since Obama was elected, the public sector has lost 600,000 jobs.  That includes jobs at the state and local level across the country.  If those jobs had been maintained, Klein estimates, that would translate to a reduction in the national unemployment rate to 7.8 percent.

To take that analysis a step further, Klein says that by this point in the George W. Bush presidency, “public sector employment had grown by 3.7 percent.  That would be equal to about 800,000 jobs today.”  Add in those hypothetical jobs, he says, and the unemployment rate drops to 7.3 percent.

Republicans love that age old refrain about “small govmint.”  But government is shrinking.  So much so that it’s holding the economic recovery back.  According to the Center on Budget Policy and Priorities, state and local government employment has declined in 37 of the last 40 months.  While the private sector is thriving, the public sector is getting absolutely crushed.  Of course that’s likely the point, since the goal is to abolish government.

These are those inconvenient little facts that prove that Romney and his Republican cohorts are completely full of it.

Whereas Barack Obama insists that Congress needs to act yesterday to get aid to state and local governments so that they can avoid laying off teachers, police, and firefighters, among other public employees, Mitt Romney says we don’t need those cops and teachers and firefighters.  “He wants another stimulus,” Romney said of Obama.  “He says we need more firemen, more policemen, more teachers.  Did he not get the message of Wisconsin?  The American people did.  It’s time to cut back on government and help the American people.”

Last I checked, police, firemen, and teachers are American people.  So by “cutting back on government” and eliminating those jobs, you’re eliminating jobs!  Talk about a “job killing” agenda!  Further, what Mitt Romney is saying is that cities like, say, San Diego, doesn’t need more resources.  This is a city that in the very recent past was operating its police and fire departments on shoestring budgets, cutting back on officers on the streets, and having to implement a system of “rolling brownouts” so that the city could save money by closing a number of fire stations every day, leading to increased response times on emergency calls.  The SDPD had to effectively shutter its police academy for a time because they couldn’t afford to hire any new officers.

What Romney is also saying is that education is not a priority.  We don’t need teachers in the classrooms, so the 1,600 teachers that were tendered their pink slips by the San Diego Unified School District can get bent.  Their services are not necessary or wanted.

The Republican Party apparently doesn’t think that a crumbling infrastructure deserves any attention, and that construction workers and contractors aren’t “American” enough to warrant jobs repairing roads, bridges, libraries, schools, and water and sewage systems.

Or they do understand the importance of infrastructure investment and they simply refuse to allow it in order to reap a perverse political gain.

“It’s time to cut back on government……”  Government is shrinking; to dangerously thin levels in many cases.  Public agencies are being cut so deeply to the bone that they struggle to do their jobs.  Public employees are losing their jobs, and when public employees lose their jobs, they have less money to put back into the economy.  What the supply siders forget is that there is another side to that equation:  The demand side.  It’s all about demand, and when public employees don’t have jobs, they can’t create any demand, which means they can’t buy stuff, which in turn means that businesses can’t sell as much stuff.

With no demand, there’s no reason to supply.

The lesson to be learned is that government and government services are a vital part of the overall economy.  The private sector cannot carry the load alone, and it was never meant to.  Austerity in a fragile recovery doesn’t work, it only makes things worse.

Obama didn’t make a “gaffe” when he said that government employment levels.  He was doing something that some of us like to call “telling the truth.”

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Andy Cohen

Andy spent 15 years working in the highest levels of the San Diego professional sports world, including both the Padres and the Chargers. He began his foray into writing while a volunteer for Francine Busby's 2010 Congressional campaign, eventually becoming a contributor to the now defunct SDNN. He has reported on local and national politics for both the OB Rag and the San Diego Free Press. When not reporting news and events, he offers political and policy commentary from a liberal perspective, occasionally turning back to his sports roots.

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