RUSH: Barack Obama today out at the Eisenhower Executive Office Building and he’s talking to small business owners about health insurance reform and the economy. I actually think every sentence that he said to these guys began with F-you. They don’t know it, but it did. He’s out there promising the millionaires, these small business owners, these millionaires, that it won’t cost them a dime and all this is going to save them money. He is insulting their intelligence. We have a couple sound bites. Here is number one.
OBAMA: I am gratified that our economy grew in the third quarter of this year. The 3.5% growth in the third quarter is the largest three-month gain we have seen in two years. This is obviously welcome news and an affirmation that this recession is abating and the steps we’ve taken have made a difference.
RUSH: That’s a crock.
OBAMA: While this report today represents real progress —
RUSH: No, it doesn’t.
OBAMA: — the benchmark I use to measure the strength of our economy —
RUSH: Right, yeah.
OBAMA: — is not just whether our GDP is growing —
RUSH: It’s not.
OBAMA: — but whether we’re creating jobs —
RUSH: We’re not.
OBAMA: — whether families are having an easier time paying their bills.
RUSH: They’re not. Look, you can try to cover up 10% unemployment all you want with a phony GDP number of 3.5%, you can go out there and say you saved the economy, but there are no jobs. Obama is gratified, but by his own benchmark his economy is still failing. Now, let me see if I can put this GDP number into context for you, ’cause it’s phony. It is a fake number. Gross domestic product needs to be understood as the sum of three things: consumption by consumers, investment by business, and spending by government, CIG. Consumption, investment, spending by government. So they say the total GDP went up 3.5%. But was there any new consumption by consumers? No. Was there any new investment by business? No. Was there spending by government? Yes. That’s the G. The increase is in G, spending by government.
There was no investment in business. There was no consumption by consumers. You’ve seen all the numbers. Home sales down; consumer spending down. There was no economic growth. What happened here, you had the Clash for Clunkers fiasco and now the Edmunds.com bunch estimates that that program cost taxpayers $24,000 for every car sold, and then there was that first time home buyers fraud, all kinds of government spending which was government borrowing. So the government spending sector goes up, and they, oh, the economy grew by 3.5%. It did not. Government grew. All that’s happened here is that money has been shifted from taxpayers today and tomorrow into Obama approval ratings today.
RUSH: I want to take another stab at this GDP thing, because checking e-mail during the break, ‘What do you mean, Rush, you have never said that gross domestic product increases in the past were fake. You’re just anti-Obama.’ No, no, no, no. I am anti-Obama, but don’t you find this suspicious right before some elections hit next week? You know that this number is going to be revised downward later this month and nobody is going to pay any attention to it. But folks, there is no economic growth, at least in the private sector, and that’s what everybody cares about. The private sector is where you and I operate. The private sector is where you and I test the waters. It’s where we pursue the American dream. Gross domestic product equals the sum of consumption by consumers, investment by business, and spending by government, so the total goes up by three-and-a-half percent, it seems like growth, but all the increase is in G, spending by government, financed by an increasing deficit. It’s fake.
Look at it this way. It’s called the Keynesian fallacy. If I buy a refrigerator, that’s a real transaction. It counts toward C, consumption. If I own a business and I buy a new machine tool or a forklift or whatever, that’s real also. It counts toward I, investment. Real recoveries are led by consumption and investment, and there ain’t any of that going on, I’m sorry. I wish there were. Now, the Keynesian fallacy is based on the multiplier theory — I’ve done my economic homework on this — and it is that government spending causes growth. That’s what Obama believes, that’s what all these liberals believe, the government spending, that’s the engine. They think government creates jobs. They think government does all these wonderful things. The private sector is where all the fraud takes place. The private sector is where all the cheating goes on, the private sector is where the real people get cheated by the big shots on Wall Street and ExxonMobil and Big Oil, Big Pharma, big whatever. They think government is the engine. And so when it grows, ooh, baby, we’re smoking, cool. That’s the Keynesian fallacy.
Now, government spending could cause growth if the money is spent on certain things like infrastructure and keeping us safe. But then the growth that it causes comes from the consequences later that increase in consumption and investment. Now, this growth that they’re talking about here today, this GDP number, is just an accounting trick. Suppose I borrow $10,000 on my credit card, and then I tell my wife, ‘Look, honey, here’s the $10,000, I just got a raise.’ And then I go out and I spend that income on a new car or boat or whatever. You know, my wife, my girlfriend, whatever, would hit me with a chair. Borrowing money and spending it is not increased income. It’s sort of like baseline budgeting, if I can remind you of that lecture. Let’s say you go and buy a car, you’re looking at buying a car, and you want to spend, oh, $70,000 on a car.
So you go to some dealerships, start kicking the tires, look around. You go to Mercedes, you go to Ford, go to Chrysler, go to GM. And the car you end up liking costs $50,000, not 70. And you tell your family, we just saved 20 grand, when you didn’t. You just spent 50. It’s the same thing here. You borrow $10,000, you go spend it on something, and you tell yourself you got a raise, your income went up. That’s what’s happened here with this GDP number. This 3.5% growth is all in government, and as we know government doesn’t have any money. Government’s printing money. We’re running a deficit of $1.4 trillion this year. We don’t have any money. So this growth is fake, it is fraudulent, it is phony, it doesn’t exist, there is no growth, and Obama himself even admitted it out there.
RUSH: Here’s Tony, Wichita Falls, Texas. Hello, sir.
CALLER: Hello, Rush. Dittos.
CALLER: I’d like to speak to you a little bit about the first hour when you were talking about the gross domestic product equation. There’s actually another element in that equation and that is net exports, and since Bernanke, Geithner, and Obama got in office they’ve been exploding the amount of currency being printed, and that has massively devalued our dollar. When you devalue our dollar you basically make our products overseas cheap to the Europeans, the Japanese and whoever will buy them. And so the way I see it, the only two people that are really benefiting from all this stimulus stuff is our government, who’s on a spending spree, and the foreigners are getting all of our quality products at a very, very cheaper price, because we have a devalued dollar.
RUSH: You know, exports, there’s no question exports are a function, but I’d rather focus on exports when talking about the trade deficit. My formula for explaining this fraudulent, fake growth number, 3.5% today, I’m not going to tamper with it ’cause it was brilliant. It’s the most sensible, easy to understand explanation of what GDP is. GDP equals CIG: consumption, investment, government. Government spending is also part of GDP. Now, the growth that we’ve had, that they announced 3.5%, it’s all from government spending, it’s all from government borrowing. There is no consumption increase; there is no investment, businesses investing. There aren’t any inventories. Try to go out and buy something, they’ll have to order it for you.