Wallace allowed McCain to falsely claim CBO says spending will "cause us to have a negative ... GDP growth"
SUMMARY: Chris Wallace allowed Sen. John McCain to falsely claim that, according to the Congressional Budget Office (CBO), "[a]ll of this spending, all of this debt, all of the policies" will, "in the long term, cause us to have a negative ... GDP growth." In fact, CBO has predicted a slight reduction in long-term GDP growth when compared to current projections -- though not enough to result in negative GDP growth -- due to the "crowding-out" effect of the increase in government debt resulting from the economic recovery act.
During the March 8 edition of Fox Broadcasting Co.'s Fox News Sunday, host Chris Wallace allowed Sen. John McCain to falsely claim that, according to the Congressional Budget Office (CBO), "[a]ll of this spending, all of this debt, all of the policies" will, "in the long term, cause us to have a negative ... GDP growth." In fact, CBO has not forecast "a negative" growth in gross domestic product (GDP), as McCain claimed; CBO has instead predicted a slight reduction in long-term GDP growth when compared to current projections -- though not enough to result in negative GDP growth -- due to the "crowding-out" effect of the increase in government debt resulting from the American Recovery and Reinvestment Act.
McCain appeared to be referring to CBO director Douglas Elmendorf's March 2 letter to Sen. Charles Grassley (R-IA) on the economic effects of the economic recovery act that discussed "CBO estimates ... relative to the agency's baseline forecast" and stated, "Beyond 2015, the legislation is estimated to reduce GDP by between zero and 0.2 percent," not cause negative GDP growth as McCain claimed [emphasis added]. A table of projected real GDP, also provided in the CBO letter, lists the same future range of 0 to -0.2 percent as a "[p]ercentage change from baseline." Despite the estimated long-term reduction in GDP growth caused by the recovery act, the CBO still projects positive GDP growth over that period; according to its January report, "The Budget and Economic Outlook: Fiscal Years 2009 to 2019," CBO estimates as its baseline forecast that real GDP will contract by 1.9 percent in fiscal year 2009, grow by 0.4 percent in fiscal 2010, and grow by at least 2 percent every year from fiscal 2011 to 2019. The January report was cited by CBO as its baseline forecast in its letter to Grassley.
While Elmendorf wrote that the recovery legislation "will reduce output slightly in the long run" primarily by " 'crowd[ing] out' private investment," he also wrote:
The crowding-out effect will be offset somewhat by other factors. Some of the legislation's provisions, such as funding for improvements to roads and highways, might add to the economy's potential output in much the same way that private capital investment does. Other provisions, such as funding for grants to increase access to college education, could raise long-term productivity by enhancing people's skills. And some provisions will create incentives for increased private investment. According to CBO's estimates, provisions that could add to long-term output account for between one-quarter and one-third of the legislation's budgetary cost.
From the March 8 edition of Fox Broadcasting Co.'s Fox News Sunday:
McCAIN: What we're doing is phenomenal, not only as far as the debt is concerned, but the transfer of what the free enterprise system does over the government. It's the biggest since Franklin Delano Roosevelt.
WALLACE: And do you think that is contributing to the decline in the market, this -- messages that the Obama administration is sending about its agenda?
McCAIN: I think so, but I'm always a little nervous about allowing short-term market activity to drive our conclusions, but I don't think there's any doubt talking to friends of mine on Wall Street and people that I know, that this is not a positive signal. All of this spending, all of this debt, all of the policies that will now, in the long term, cause us to have a negative GTB -- GB --
WALLACE: GDP.
McCAIN: -- GDP growth, according to the Congressional Budget Office over time.
McCain could talk to his "friends" on Wall Street and tell them to suck it up and take some responsibility for their contribution to this "negative" GDP growth.
All those jobs shipped overseas has a lot to do with Wall Street and their insistence on "the bottom line". With them, it's race to the bottom to screw the American worker, pollute the planet and get rich off of paper wealth.
All I hear from republicans is constant whining. What is the republican plan to get the unemployed working again?
I see this as a typo. He meant "negative GOP growth", not GDP growth.
Good catch. He's a big gypo, and the GOP has been very negative for his growth as a human being.
You've got this wrong. McShame did not say anything about GDP, he said something about "GPD," until, red-faced (and with voice-over correction by Chrissy Pooh), he switched the letters around. Remember, the Fox crowd had criticized Obama for misstating the price/earnings ratio, but far be it for Chrissy Pooh to even chuckle at McShame's mistake. Remember, too, that McShame himself admitted in interviews during the campaign that economics was his "weak point." (Actually, he is woefully ignorant about it, since wife Cindy makes all the financial decisions, including those on the eight houses they own -- which ought to be given away to some of the thousands of people who are homeless thanks to George W. Bush.)
And, while we are on Bush, did you notice that only Mara Liason bothered to correct Snit Fume's inane comment that the stock market reacted negatively to Obama's turn-around plans. Snit pointed to a double digit drop in the market since the inauguration, totally ignoring the fact that the market was in free fall long before Obama took office. Nor was anything said about Obama urging the Bush Administration to cut a stimulus package along about mid-December, which they stubbornly refused to do. These far right ideologuess are astonishingly confabulatory and self-serving. I only watch Fox Noise Sunday so that I can monitor the lies and subterfuge and report it here or on other political sites. Believe me, it is sheer masochism to do so. I guess I should be spread-eagled and tortured, but someone's got to do it.
Gross Domestic Product includes government spending. In other words, increasing govt spending increases GDP, by definition.
This is how you avoid a (technical) resession, which is when GDP declines for 2 quarters in a row.
I'll throw the truth express a bone and admit that he throws in a "in the long term" but even if he's right, he'll be dead by then.