Vice President Joe Biden’s speech last night at the Democratic National Convention consisted of admissions, statements, and claims which amused and baffled. Biden opened the body of his remarks by stating “our journey isn’t finished; we still have more to do.” He summarized the mission of the Obama Administration as one “to move this nation forward from doubt and downturn, to promise and prosperity.” Biden’s promise that “we will complete” this mission served as a tacit admission that the Administration has not accomplished its stated goals, the most prominent being the promise of a late 2012 unemployment rate below 6.0 percent.
Biden boasted that nearly 4.5 million private sector jobs have been created over the past 29 months. The Vice President completely ignored the fact that since taking office, fewer than 100,000 net jobs have been added. Even if one focuses only on the past 29 months, the 155,000 monthly job creation rate is dismal. This level of job creation fails to even equal the average national monthly population increase. In fact, the present economic “recovery” in terms of job creation is one of the most tepid in American history.
Much of Biden’s speech centered on the auto industry bailouts. Biden claimed the government saved more than one million American jobs. In so doing, he failed to show an understanding of how allowing a corporate bankruptcy actually proceeds. Corporate bankruptcies often allow an organization to reorganize. Often, this involves negotiating debt owed and jettisoning certain union contracts. The one million jobs allegedly “saved” by the bailout would not have necessarily disappeared in the absence of such government action. Some would remain in the reorganized corporation while others would migrate to solvent competitors of GM, such as Ford. Of course, in such a scenario, politicians could no longer claim credit for creating jobs. What is certain is that a standard bankruptcy would not leave the Treasury Department with a $25 billion GM bailout loss.
In his boasts regarding the bailouts, Biden neglected to disclose the primary beneficiaries of the GM bailouts and did not mention which parties were directly harmed. Senior debt holders, other than the United Autos Workers, received a 10 percent stake in the reorganized GM, while the UAW received a 17.5 percent stake. This outcome stands in stark contrast to how bondholders are to be treated in a corporate bankruptcy. Those who invested hard-earned money in GM bonds suffered at the hands of Obama Administration cronyism. In addition, our economic system now must operate under the threat of government arbitrarily altering the rules.
Joe Biden is right— the bailout “wasn’t just about cars”… Rather, the bailout was about rewarding the administration’s big labor boss cronies at the expense of the average taxpayer. The administration exhibited a disregard for the rule of law. Biden last night claimed the administration “fought to save all those jobs,” yet he didn’t pause to reflect on the auto dealerships the administration fought to close. Nor did he mention the jobs which could have been created within the private sector had the Treasury Department not squandered $25 billion of capital. Biden chooses only to highlight the jobs “saved” with bailout funds rather than the opportunity cost of jobs “lost” by this egregious government action.
Importantly, this irrational bailout euphoria ignores the lost confidence within the nation’s bond markets attributed to the government’s violation of legal precedent. This diminished confidence directly affects the flow of capital within the economy – the capital flow which fuels job creation.
Biden claimed the bailout was “about restoring America’s pride” and sending the right “message” to the world. Can a government bailout really restore this pride? Usurping the rule of law and rewarding political allies is not the right message. It’s a national disgrace. Indeed, the bailout is about “far more than cars.”
The Vice President proceeded to excoriate the Republican ticket for not “telling the calls they would make.” This accusation conveniently ignores the extensive information available from Mitt Romney and Paul Ryan’s “Roadmap to America’s Future.” Biden derisively referred to Ryan’s Medicare reform proposals as “Vouchercare,” ignoring the lower costs and higher quality that a voucher program potentially offers. He offered fear and hysteria rather than alternative proposals.
Biden also made several odd claims against Romney. Biden accused Romney of believing children of undocumented immigrants are “a drag on America.” He also stated that “Governor Romney looks at the notion of equal pay for equal work in terms of a company’s bottom line.” Biden’s failure to elaborate leaves the phrase lacking in context or meaning. According to Biden, the Republican definition of a “culture of dependency” refers to student loans and job training, with no evidence presented to back up this claim. Of course, most familiar with the term understand it to reference the colossal welfare state.
Biden boldly stated that “America is NOT in decline” and warned Romney and Ryan not to “bet against the American people.” Biden seemingly fails to grasp the facts. Sadly, statistics show students ranking 27th in math and 21st in science out of 30 industrialized countries, deteriorating economic freedom, an exploding national debt, diminished national wealth, and shrinking median middle class income. Unfortunately, government policies are largely responsible for this decline. Telling millions of Americans an untruth in an effort to boost spirits or win reelection does nothing to solve the problem. Suggesting that speaking the truth is tantamount to “betting against the American people” is sheer demagoguery.
Although delivered with bombast, the Vice President’s speech primarily consisted of factual distortions, wild accusations, and baffling statements. Chances are that Biden failed to persuade a skeptical public.