If you listened to Speaker John Boehner’s speech before the D.C. Economic Club today, you heard a very specific story explaining why unemployment is stuck at 9 percent: “it’s not because the American people have lost their way,” he said. “It’s because their government has let them down.” But Boehner never mentioned Wall Street, or foreclosures. There was no talk of consumer debt or weak demand. Nothing about underwater homeowners or European crises. If liberals sometimes go too far in thinking the government can solve every problem, conservatives sometimes go too far in thinking the government causes every problem. And that’s where Boehner went today.
To read Boehner’s speech, the economy can’t grow because government won’t let it. On the margins, there’s something to that analysis. There’s no doubt that government policy could be more growth-oriented than it is today. But consumer spending is being held back by housing and credit-card debt much more than it is by abstract fears of future actions to reduce the deficit. Major corporations that export products and worry about the cost of credit are primarily concerned with Greece defaulting and emerging economies slowing down, not with coal regulations.
The Economic Club of Washington, D.C., was, in a sense, the perfect venue for a speech such as Boehner’s. “Organized in 1986,” the venue’s Web site reads, “the Economic Club of Washington was established in recognition of the unique and critical role that Washington plays in the national and world economies.” But Boehner overstated that role today. Washington plays a unique and critical role in national and world economies, but what happens in Washington is not the single factor deciding what happens in national and world economies. This is not a criticism you can typically make of Boehner, but today, he gave the government too much credit.