Libertarian Party blog: Caterpillar CEO contradicts Obama on ‘stimulus’

If I were wearing a hat, I’d tip it to Don Irvine at Accuracy In Media for pointing me to this interesting development from ABC News.  For weeks President Obama has claimed his "stimulus" plan allows manufacturers like Caterpillar to stop layoffs and immediately re-hire laid off workers.  Obama even traveled to the company’s factory in Peoria, Ill. today to pitch his $1.1 trillion welfare-and-spending plan.

One problem for the White House, however.  Cat CEO Jim Owens never said such a thing.  While Owens supports the plan because it includes hundreds of billions of borrowed dollars for highway construction and more government buildings, he never claimed he could re-hire recently laid off workers, despite what Obama claimed.  Owens even warned Cat will have to lay off even more workers to stay afloat, despite the incoming tidal wave of expensive deficit spending.

Jake Tapper reports:

"Yesterday, Jim, the head of Caterpillar, said that if Congress passes our plan, this company will be able to rehire some of the folks who were just laid off," Obama said today in Peoria.

But when asked today if the stimulus could do that, Owens said, "I think, realistically, no. The honest reality is we’re probably going to have more layoffs before we start hiring again."…

…Owens also cautioned that even if a stimulus is passed within the next month, the effects will not be immediate and are more likely to impact construction activity at the end of 2009 or spring 2010.

The Congressional Budget Office reported last week the recession will end by mid-2009, long before both Obama and Owens agree the "stimulus" will begin working in 2010. 

The CBO also reports Obama’s $1.1 trillion spending plan, part of a larger $9.7 trillion package of spending and bailouts, will actually damage the economy by destroying private investment and saddling the nation with crippling debt.


Posted by Donny Ferguson at LP blog. Reposted to IPR by Paulie.

26 thoughts on “Libertarian Party blog: Caterpillar CEO contradicts Obama on ‘stimulus’

  1. Robert Dupuy

    Any source can occasionally stumble on the truth.

    I hear people talking about how the 1982 recession lasted 16 months, and we are on 13th month of this one.

    But correct my memory if I’m wrong, did they spend 3 trillion dollars to get out of the 1982 recession, about the 13th month in?

    answer, no they didn’t.

    If that one solved itself 16 months in, and this one requires trillions, 13 months in, well, do the math.

    It’s bad. Its worse than that.

    And politicians have made themselves borrowers of last resort, with no effective plan to invest this money.

  2. Mik Robertson

    There have been a lot of claims for the stimulus plan. If three trillion dollars is spent to “create” four million jobs, what does that work out to per job?

    If congress believes this much money absolutely has to be spent, why don’t they just order the mint to print it and spend it into circulation? That would cost less in the long run than having the federal government borrow the money from the Federal Reserve and having to pay it back with interest. The inflationary pressure will still be there, but so what?

  3. Bob Thompson

    I don’t see anything right wing or left wing George…what I see is the President getting caught in a lie.

  4. Elliott Kay

    More proof that the agenda behind this spendulus package is something other than the economy recovery being touted by Obama and the Democrats.

    This is a push towards Socialism, consolidated power, and pocket-lining under the guise of an economic stimulus.

    We’re spending $3,000,000,000,000 to hopefully end the recession a couple months earlier than it otherwise would end? That just doesn’t pass the smell test.

  5. citizen1

    Two items that Democrats pushed in elections could actually stimulate the economy but have not even been mentioned since the end of those elections.
    1. John Kerry wanted end tax breaks for companies that move work out of the US in 2004. Has he brought it up yet? Dems control everything even more than they did in the early 90s when he did nothing about them. Most of these tax breaks have been around since the 50s.
    2. Barrack Obama said that he would renegotiate NAFTA. Since NAFTA is not a treaty and therefore can be change unilaterially by ordinary legislative means. Why not do it?

  6. pdsa

    Robert Dupuy – AIM doesn’t want to “stumble” upon the truth; they are inveterate liars.

    Bob Thompson – maybe you ought to read the FULL coverage by REAL journalists, before you bite on a right-wing propagandizer’s hook, then accuse Obama of being the liar.

    (Caterpillar Inc’s CEO, Jim) Owens seemed to back away from Obama’s assertion that the Caterpillar CEO had promised him he would rehire some of the laid-off workers if Congress approves a sweeping stimulus bill. The company has struggled with lower demand amid the global economic downturn.

    The severity and swiftness of the recession, Owens said, makes adding jobs back quickly unrealistic.

    “We literally (went from) a three-year order backlog coming into November to now having order cancellations to the point where we cannot run at capacity,” he said.

    When asked to explain the difference between Obama’s and Owens’ statements, Caterpillar spokesman Jim Dugan said, “perhaps there’s some nuance.”
    [. . .]
    Owens told reporters that the president’s plan is too light on infrastructure spending. Only about 20 percent of it would be devoted to the kind of infrastructure work that would benefit Caterpillar, he said.

    The country will need more government spending on the economy, Owens said.

    A roughly $600 billion economic package being worked on in China might be of more immediate help to Caterpillar.

    “Theirs is even richer in terms of major infrastructure projects that will drive demand for our types of products,” he said, noting that about 90 percent of the Chinese money would be used on such work.

    David Mercer-Associated Press, “Caterpillar CEO sees more company layoffs“, Forbes, February 12, 2009

    Did you catch that? He didn’t say that Obama lied; he said that the giveaway wasn’t big enough for him to swallow, whereas Mainland China’s giveaway is just dandy. Looks like this crony capitalist is going to be fellating Gang of Beijing Party Members, before he gives a quick hand job to American workers. This isn’t free-market hardball, it’s socialistic corporapists, playing f**k the people.

    Once again, The LP National proves they are slatternly respewing toadies for the RNC.

  7. pdsa

    Donny Ferguson wrote: “The Congressional Budget Office reported last week the recession will end by mid-2009, long before both Obama and Owens agree the “stimulus” will begin working in 2010.”

    This blog post was published Feb. 12. I’ was unable to locate the report referenced on the CBO’s website, looking back January 27, 2009. What is Ferguson definition of “last week”, and why didn’t he post a link to the study?

    Donny Ferguson wrote: “The CBO also reports Obama’s $1.1 trillion spending plan, part of a larger $9.7 trillion package of spending and bailouts, will actually damage the economy by destroying private investment and saddling the nation with crippling debt.”

    I was able to locate these CBO Reports, and there are two separate reports, not one. Ferguson really should provide links to governmental reports, if he’s going to base assertions upon them. The two CBO Reports are:

    February 11, 2009, “Estimated Macroeconomic Impacts of H.R. 1 as Passed by the House and by the Senate
    February 13, 2009, “H.R. 1, American Recovery and Reinvestment Act of 2009“, Cost estimate for the conference agreement for H.R. 1

    A very probable reason for Ferguson’s unwillingness to post links to these Reports is the tremendous variation in confidence in the datasets between the two reports.

    The February 13, 2009 Report on the estimated cost of H.R. 1 uses straight-forward calculations, that will only change with funding changes enacted by the legislature. The data has a very high level of confidence.

    The CBO readily admits its February 11, 2009 Report on the Estimated Macroeconomic Impacts of H.R. 1, is filled with many unpredictable variables, and that there is a great disparity between different economists’ predictions. Simply, it is fuzzy bunny guesstimates pulled straight out of a top hat:

    The macroeconomic impacts of any economic stimulus program are very uncertain.
    Economic theories differ in their predictions about the effectiveness of stimulus.
    Furthermore, large fiscal stimulus is rarely attempted, so it is difficult to distinguish
    among alternative estimates of how large the macroeconomic effects would be. For
    those reasons, some economists remain skeptical that there would be any significant
    effects, while others expect very large ones.
    [. . .]
    In contrast to its positive near-term macroeconomic effects, the legislation would reduce
    output slightly in the long run, CBO estimates, as would other similar proposals. The
    principal channel for this effect is that the legislation would result in an increase in
    government debt. To the extent that people hold their wealth as government bonds
    rather than in a form that can be used to finance private investment, the increased debt
    would tend to reduce the stock of productive private capital. In economic parlance, the
    debt would “crowd out” private investment. (Crowding out is unlikely to occur in the
    short run under current conditions, because most firms are lowering investment in
    response to reduced demand, which stimulus can offset in part.) CBO’s basic
    assumption is that, in the long run, each dollar of additional debt crowds out about a
    third of a dollar’s worth of private domestic capital (with the remainder of the rise in
    debt offset by increases in private saving and inflows of foreign capital). Because of
    uncertainty about the degree of crowding out, however, CBO has incorporated both
    more and less crowding out into its range of estimates of the long-run effects of the
    stimulus legislation.
    The crowding-out effect would 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 would create incentives for increased private investment. According to
    CBO’s estimates, provisions that could add to long-term output account for between
    one-fifth and one-quarter of the legislation’s budgetary cost.
    The effect of individual provisions could vary greatly. For example, increased spending
    for basic research and education might affect output only after a number of years, but
    once those investments began to boost GDP, they might pay off over more years than
    would the average investment in physical capital (in economic terms, they have a low
    rate of depreciation). Therefore, in any one year, their contribution to output might be
    less than that of the average private investment, even if their overall contribution to
    productivity over their lifetime was just as high. Moreover, although some carefully
    chosen government investments might be as productive as private investment, other
    government projects would probably fall well short of that benchmark, particularly in
    an environment in which rapid spending is a significant goal. The response of state and
    local governments that received federal stimulus grants would also affect their long-run
    impact; those governments might apply some of that money to investments they would
    have carried out anyway, thus lowering the long-run economic return on those grants. In
    order to encompass a wide range of potential effects, CBO used two assumptions in
    developing its estimates: first, that all of the relevant investments together would, on
    average, add as much to output as would a comparable amount of private investment,
    and second, that they would, on average, not add to output at all.

  8. paulie cannoli Post author

    citizen1,

    1. John Kerry wanted end tax breaks for companies that move work out of the US in 2004. Has he brought it up yet? Dems control everything even more than they did in the early 90s when he did nothing about them. Most of these tax breaks have been around since the 50s.

    Good point. Thanks for bringing it up.


    2. Barrack Obama said that he would renegotiate NAFTA. Since NAFTA is not a treaty and therefore can be change unilaterially by ordinary legislative means. Why not do it?

    I wouldn’t trust them to do anything but make it worse if they did.

  9. paulie cannoli Post author

    pdsa @ 7

    I saw no contradiction between the two reports, and Obama did in fact lie if he’s been claiming that his porkulus will get Caterpillar to get laid off workers back to work immediately.

    I saw nothing from Ferguson which charatecterized Owens as either a free marketeer or crony capitalist. In fact, I would venture that this part of Ferguson’s post as well as the report you bring up in comment 8, and your explanation of it (“he said that the giveaway wasn’t big enough for him to swallow, whereas Mainland China’s giveaway is just dandy. Looks like this crony capitalist is going to be fellating Gang of Beijing Party Members, before he gives a quick hand job to American workers. This isn’t free-market hardball, it’s socialistic corporapists, playing f**k the people“), are both correct.

    However, Ferguson does go off base in treating the CBO’s fairy tale projections of a recovery in mid-2009 as gospel.

    To the extent that you have a point in saying that the LP’s rhetorical/ideological focus is too Republican-like, and I think in many ways that is correct, you take away from it in phrasing it the way you do. I think a more polite explanation is more likely to get people to listen to us.

    Nasty sniping, on the other hand, will generally be taken to be just that, and most people will never get beyond it to the meat of the argument.

  10. Eric Dondero

    On a related note, the newly elected Republican Congressman from Peoria – Caterpillar’s HQ – is turning out to be quite libertarian.

    His name is Aaron Schock, and he’s only 23 years old. That’s right. You heard it right. He’s the youngest member of the US Congress.

    Well, Obama tried to pull a fast one on him. It’s a amazing story. But Shock got the last laugh.

    Not trying to shamelessly plug LR blog, but we’ve got the story, as does National Review ad Weekly Standard.

    Be curious as to what Illinois Libertarian Party members think of Schock?

  11. pdsa

    Paulie; in re: Comment 10 – thank-you for the link, but I direct your attention back to Ferguson’s blog post:

    The Congressional Budget Office reported last week the recession will end by mid-2009, long before both Obama and Owens agree the “stimulus” will begin working in 2010.

    From Page 1 of that Testimony:

    The Congressional Budget Office
    anticipates that the recession—which began about a year ago—will last well into 2009.

    First: how is a report delivered in Congressional testimony, and released by the CBO, January 9, 2009, “one week ago” from a February 12 blog post?

    Two: how does the CBO’s “anticipates that the recession…will last well into 2009”, get mangled uinto the CBO reproting, “the recession will end by mid-2009”?

    It’s time to add Orwellian newspeak onto the list of evils committed by the LP National.

    In re: Comment 14 –

    When asked to explain the difference between Obama’s and Owens’ statements, Caterpillar spokesman Jim Dugan said, “perhaps there’s some nuance.”

    This does not indicate a lie, as much as it does a bit of misunderstanding about what the stimulus package would contain.

    Paulie, I am having a difficult time supporting the LP presently. The LP National has go0ne completely off message to promote/recruit contemporary conservatives. This is wrong. The GOP Gone Wild in D.C. 2002-2006 made it transparently clear that contemporary conservatives do not believe in fiscal responsibility, smaller government, individual liberty, or accepting personal responsibility for the effects of their past actions. In short: there is nothing conservative about contemporary conservatives. Why the hell is the LP National recruiting fainéant Republicans who sat idly by while their party of choice became corrupt? If they want to become libertarians, they should come on bended knee, apologising for what their party did to America.

    Another place the LP National has gone off message is their portrayal of the stimulus package as being worthless. This is hogwash. Federal budgetary largesse, especially if targeted for infrastructure, research, and specialised scientific education, will result in innovation and higher overall productivity for the economy. It is not a question of Constitutionality either. What should be attacked is whether is is the most effective use of the public treasury, and the propriety of outspending revenues constantly increasing deficits.

    Another place the LP National is missing the boat is their unwillingness to stand-up defend the free-market properly. Far too many Americans believe that market deregulation was a primary cause of the present-day problems. This is a fallacy. A major cause was the legislated lawfulness of transactional non-transparency, pitched under the guise of deregulation. Free markets must also be transparent markets.

    I presently am not in an evangelical mood about the LP. I consider it a perversion of libertarianism, controlled by equivocating poseurs. If I wanted to be a member of a compromised party, I be a member of one of the two dominant parties. The time has come for the LP to clean up its act, or become a valid target of opportunity for real libertarians.

  12. paulie cannoli Post author

    pdsa,

    Paulie; in re: Comment 10 – thank-you for the link, but I direct your attention back to Ferguson’s blog post:

    The Congressional Budget Office reported last week the recession will end by mid-2009, long before both Obama and Owens agree the “stimulus” will begin working in 2010.

    From Page 1 of that Testimony:

    The Congressional Budget Office
    anticipates that the recession—which began about a year ago—will last well into 2009.

    First: how is a report delivered in Congressional testimony, and released by the CBO, January 9, 2009, “one week ago” from a February 12 blog post?

    Perhaps CBO has issued something new since then? I don’t know. I don’t think the most important thing here is whether they said it last week or last month.

    Lasting well into 2009, and recovering in mid-2009 can be two ways of saying the same thing. In the introduction to “Economic Outlook” , CBO says

    CBO anticipates that the current recession, which started in December 2007, will last until the second half of 2009, making it the longest recession since World War II. (The longest such recessions otherwise, the 1973–1974 and 1981–1982 recessions, both lasted 16 months. If the current recession were to continue beyond midyear, it would last at least 19 months.)

    I haven’t read the whole report. From what I’ve read, it seems that they are predicting that the recession will end sometime in 2009 – possibly mid-2009. I find this to be extremely optimistic on their part.

  13. paulie cannoli Post author

    pdsa,

    When asked to explain the difference between Obama’s and Owens’ statements, Caterpillar spokesman Jim Dugan said, “perhaps there’s some nuance.”

    This does not indicate a lie, as much as it does a bit of misunderstanding about what the stimulus package would contain.

    I think it indicates a lie, and Dugan being very diplomatic about it. Unless Ferguson has misrepresented what Obama has been saying, Obama and his people have been going around claiming that Caterpillar will immediately bring back laid off workers if the porkulus passes. Yet that is clearly not what Dugan is saying. He can be nice and characterize it as a “nuance he may have missed” all he wants.

  14. paulie cannoli Post author

    pdsa,

    The LP National has go0ne completely off message to promote/recruit contemporary conservatives.

    I’m afraid there is a great deal of truth to this. As well, I think that the LP has been far too into recruiting from the contemporary conservative side – to the extent that it recruits at all, which is not nearly enough – all along, going back to the party’s beginnings. In fact, I don’t think it has ever attempted to recruit from the left/libertarian border in any concerted fashion, much to the party’s detriment.


    This is wrong. The GOP Gone Wild in D.C. 2002-2006 made it transparently clear that contemporary conservatives do not believe in fiscal responsibility, smaller government, individual liberty, or accepting personal responsibility for the effects of their past actions.

    I wholeheartedly agree. I think what The LP is hoping for is that some of the conservatives’ rank and file supporters, who bought into conservative rhetoric of “fiscal responsibility, smaller government, individual liberty” in the past, have finally had enough due to this, and will come over to the LP.

    The mistake the LP is making here, IMO, is that conservatives also tend to be temperamentally conservative – that is, the last people to change anything, including their party, no matter how much some of them may line up with the LP ideologically, and no matter how much the LP reorients itself to appeal to them.

    The low-hanging fruit from the right side of the fence has been picked. And, when they do join, they tend to go back home to their major party of choice when they don’t see the LP growing as fast as they may have expected when they joined, or move on to something else.

    I think the opportunities on the left-libertarian border are greater, and would have a greater payout in the quality of the members that could be recruited and what they would bring to the party in the long run, if a concerted effort was made there. However, it would not have as much short term result as easily, due to what the LP has done in the past – especially the recent past.


    In short: there is nothing conservative about contemporary conservatives. Why the hell is the LP National recruiting fainéant Republicans who sat idly by while their party of choice became corrupt? If they want to become libertarians, they should come on bended knee, apologising for what their party did to America.

    I don’t think anyone wants to be put in a position of having to apologize for what the party that, from their perspective, sold them out has done. But I can certainly see where you are coming from on that.

  15. paulie cannoli Post author

    Another place the LP National has gone off message is their portrayal of the stimulus package as being worthless. This is hogwash. Federal budgetary largesse, especially if targeted for infrastructure, research, and specialised scientific education, will result in innovation and higher overall productivity for the economy.

    There, I disagree with you. I don’t believe that central planners can manage the economy better than it can manage itself.


    It is not a question of Constitutionality either. What should be attacked is whether is is the most effective use of the public treasury, and the propriety of outspending revenues constantly increasing deficits.

    I think it needs to be attacked from a variety of angles, ranging from the inherent immorality of coercive taxation, to the inherent inefficiency of centrally planned economies.

  16. paulie cannoli Post author

    pdsa,

    Another place the LP National is missing the boat is their unwillingness to stand-up defend the free-market properly. Far too many Americans believe that market deregulation was a primary cause of the present-day problems.

    I think they are trying to address that. We can certainly quibble about the details, and suggest better ones, but doing so in a negative tone decreases the chances that they will take anything we say seriously.

  17. paulie cannoli Post author

    pdsa,

    I presently am not in an evangelical mood about the LP. I consider it a perversion of libertarianism, controlled by equivocating poseurs. If I wanted to be a member of a compromised party, I be a member of one of the two dominant parties. The time has come for the LP to clean up its act, or become a valid target of opportunity for real libertarians.

    I’m doing what I can to suggest what I believe is a better direction for the LP. However, that does not mean that I believe the LP is the only possible tool for fighting for liberty – in fact, far from it.

  18. Catholic Trotskyist

    Eric, it should be noted that according to his Wikipedia article, Aaron Schock is 27, not 23. Although he did win his state legislative seat at the age of 23, he could not run for Congress then because that would have been unconstitutional. It is required that congressmen in the US House be over the age of 25. Furthermore, Schock is not a libertarian, as true libertarians are not as pro-war as Schock is, no matter what you have to say about it.

  19. paulie cannoli Post author

    Comments on this article at Delaware Libertarian

    http://delawarelibertarian.blogspot.com/2009/02/making-it-up-caterpillar-contradicts.html

    Blogger Bowly said…

    [..] How can you just skim over “I think realistically no. The truth is we’re going to have more layoffs before we start hiring again”?

    And even if you’re correct (which you aren’t), cherry-picking one company that stands to benefit directly from road building doesn’t prove the case for the stimulus. A bill that planted apple trees and corn would result in increased agricultural employment, but that doesn’t say anything about the overall economy.

    It also doesn’t explain how Obama either lied, or at the very least omitted pertinent information. He didn’t say, “Caterpillar will hire again, but only after they have more layoffs.” Let’s see him go sell that plan to the public.

    Weak, weak stuff.

    February 13, 2009 8:22 AM
    Blogger Bowly said…

    By the way, it’s the broken window fallacy, again. Even if Caterpillar benefits from the stimulus and hires people back, it doesn’t mean it’s the most efficient use of the money. It’s great for the downsized Cat employees. It’s not so great for future generations that are being born into debt.

    February 13, 2009 8:28 AM
    Blogger Tyler Nixon said…

    Let’s face it, this is Clinton administration II underway in full force.

    Hype, bullshit, half-truths, lies, finger-wagging, PR blitzing, partisan chicanery, fatass government, and of course Hillary, Rahm, Leon, and Holder.

    Blech.

    February 13, 2009 9:00 AM
    Blogger Bowly said…

    Tyler, I think you left out an administration. Bush was Clinton II. “Hype, bullshit, half-truths, lies, finger-wagging, PR blitzing, partisan chicanery, fatass government” certainly seems applicable.

    February 13, 2009 10:34 AM

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