Why John Boehner's Nose is Getting Longer

Why John Boehner's Nose is Getting Longer

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House Speaker John Boehner praised New Jersey Gov. Chris Christie this week as a potential Republican presidential candidate on the grounds Christie “speaks English.” Well, Boehner himself speaks perfectly good English, except as he proved once again this week, he has a lot of trouble with the truth.

In a speech to the New York Economic Club, Boehner was like the guy in the country music song caught lying about where was the night before, “That’s My Story and I’m Sticking to It.” Boehner blamed the federal government for much of what ails the American economy. His “story” included the following:

• “The recent spending binge hurt our economy and hampered private sector job creation in America.” Never mind that the Congressional Budget Office has said that the stimulus package passed two years ago did lead to the creation of several million additional jobs.   

• “The massive borrowing and spending by the Treasury Department crowded out private investment by American businesses of all sizes.” This is patently not true. If the government and private borrowers are competing with each other for funds, that competition causes interest rates to rise. Yet rates have been and remain extremely low. For example, on Wednesday Treasury will sell $24 billion worth of 10-year notes at an interest rate expected to be less than 3.25 percent. Similarly, business spending on equipment and software rose 15 percent last year and was responsible for nearly a third of the economy’s 2.9 percent growth

• “It’s well known that when you print tons of money, the dollar sinks, and the price of food and energy rises—significantly.” No, that’s not “well known.” There are many different factors that affect the value of the dollar. In recent months, the very low level of interest rates has been an important one, and over this period money supply growth has been very modest.

• “I ran for Congress in 1990, the year our nation’s leaders struck a so-called bargain that raised taxes as part of a bipartisan plan to balance the budget. The result…was the recession of the early 1990s.” That’s nonsense. That recession was a direct result of Saddam Hussein’s invasion of Kuwait, which caused oil prices to soar. In response, consumers, recalling the hard times, high inflation and gasoline shortages of 10 years earlier, spontaneously curtailed their spending and pushed the economy into a slump.

• “We will never have real economic growth if we raise taxes on those in America who create jobs.” That’s not what history demonstrates. The 1990 tax increases Boehner rails against were followed in 1994 by still higher tax rates under President Bill Clinton. Nevertheless, over the next seven year there was a powerful economic expansion and the number of U.S. jobs rose by more than 14 million. On the Today Show the morning after the speech, Boehner bragged about how many jobs President George W. Bush’s tax cuts created. Over the seven years of the Bush administration before the recession began in late 2007, the numbers of jobs rose by about 9.5 million. So over comparable periods, tax cuts didn’t do as well and tax increases on the jobs front. Of course, lots of other factors affected job creation, which is another reason Boehner is wrong to argue that raising taxes would prevent job gains.

• “I would note that my colleagues and I are not calling for tax cuts in our budget. Rather, we’re calling for an end to the threat of tax hikes—and a fundamental reform of the tax code—to provide certainty to those in our country who create jobs.” They certainly are calling for personal income tax cuts for those in the highest brackets. The budget resolution crafted by Budget Committee Paul Ryan of Wisconsin and passed recently by the Republican majority in the House calls for reducing the top tax rate, even for millionaires, from 35 percent to 25 percent. Even if some deductions were limited or ended, the tax rate reduction would be far more important for those with very high incomes.

• With adoption of the changes called for by the budget resolution and a reduction in government regulation, “the federal budget can be balanced.” Well, according to the budget resolution itself, there would still be a deficit, albeit a small one, in 2040.

Instead of realistically discussing the issues with which the president and Congress have to deal as they try to find solutions to the government’s long-term fiscal problems, Boehner offered only demagoguery and outrageous demands. Two trillion dollars in spending cuts have to be agreed before the August deadline, or Republicans won’t vote for an urgently needed increase in the federal debt limit, he threatened.

“With the exception of tax hikes—which will destroy jobs—everything is on the table,” he said.
That statement only underscores what Boehner, his counterpart in the Senate, Minority Leader Mitch McConnell of Kentucky, and a large majority of Republicans in Congress see as their overriding goal. Not securing the fiscal future of the country, not protecting the members of society who need help the most, not ensuring investors don’t lose confidence in the country’s willingness to pay its bills, not even doing what is necessary to defend our national security by keeping the economy strong. No, nothing is as important to them as keeping taxes low—or reducing them further—for the voters with the highest incomes in the land.

“In closing, let me say I’m humbled by the opportunity to serve our country,” the Speaker intoned.

Would that he were doing that instead of serving the interests of only a narrow, well-off slice of it.

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covered the Federal Reserve and the economy for 25 years at the Washington Post before joining Bloomberg News in 2004. In 2009 he began writing freelance pieces for, among others, Thomson Reuters, and is widely recognized for his ability to interpret the Fed.