Why Unemployment Stays High, Simply Explained

As you can see from the graph above, drawn from the invaluable FRED database of the St. Louis Reserve Bank, in 39 months of recovery the total number of jobs in the economy today remains below its pre-recession peak and, indeed, has barely returned to its level in 1999. Essentially, the net effect is that we’ve moved sideways for ten years. This has occurred even as the country’s population has increased by 10% over the period of the last decade.

A quick look at the Employment Situation Reports of the Bureau of Labor Statistics over the last dozen years reveals that of the increase that was seen over that period much was in just three sectors: construction, healthcare, and education. That construction jobs will likely never return to the heights seen at the peak of housing bubble and that healthcare and education spending are largely funded by unsustainable increases in public spending or, in the case of education, by unsustainable increases in public spending and unsustainable levels of private debt are discouraging.

Under the circumstances I thought it might be prudent to revisit what I believe is actually happening, explained as simply as I can.

Following the collapse of the housing bubble and the attending financial crisis, much of the attention of the authorities both in the government and the Federal Reserve has been devoted to what I believe to be mostly futile attempts at restoring health to the banking system. The fallacy in the strategy has been that although a healthy economy will revitalize an ailing banking sector, you can’t cure a struggling financial sector without a healthy underlying economy.

Let’s think about the role that the financial sector and all forms of consumption—personal consumption, government consumption, and business consumption—play in the economy and in job creation.

The various measures, especially QE1, QE2, and what’s now being referred to as QEx, do very little of themselves for the underlying economy. Any amount of money—billions, trillions, quadrillions—can be inserted into the banking sector and, as long as that money doesn’t leak out into the underlying economy in the form of private sector loans or spending, it will have little effect on the underlying economy and practically no effect on employment. That’s the point of the anecdote I’ve told several times here of the three shipwrecked merchants.

Even in the absence of a reluctance to lend (generally characterized as a “lack of credit-worthy applicants” which is circular) some money, of course, will leak out in the form of compensation for people working in the financial sector and executive compensation. That’s concentrated in relatively few hands, accounting for a lot of the increase in income inequality, and has had precisely the effects you would predict: prices for things that rich people buy have gone up a lot faster than the prices of things that the rest of buy. Consider the following graph:

Handily, Forbes Magazine keeps track of this stuff for us and has been tabulating a Cost of Living Exceptionally Well for some time. Here’s their latest report:

This year, 18 of the 40 good and services in our basket are more expensive. What went up? A Russian Sable fur coat (increase due to an international increase in demand for fine Russian sable skins), Turnbull & Asser shirts (due to an upgrade in their basic poplin quality), a Steinway & Sons concert grand piano (due to increased costs of the very best materials, especially woods), season tickets to the Metropolitan Opera, a Patek Phillipe watch and a pair of James Purdey & Sons’ Shotguns (12 gauge Side-by-Side) sold by Griffin & Howe in Bernardsville, NJ & Greenwich, CT.

A total of 13 CLEWI items remained stagnant in price. Caviar, chateaubriand, flowers, bedsheets, a face-lift, a swimming pool and a tennis court were the items that remained the same. Three items are cheaper this year. A Hatteras 80 MY motor yacht (with 1,550hp Caterpillar C-32 engines), priced at $5.1 million, is down 3% from a year ago. A dinner at La Tour d’Argent in Paris is down 6%, due to a stronger U.S. dollar. This restaurant, dating to 1582, has a nice view of Notre Dame, a leaning toward duck on its menu and an extensive wine list. The average price of a thoroughbred at the Fasig-Tipton Saratoga summer yearling sale is down 6% from last year. Dubai’s ruler Sheikh Mohammed has been the New York auction’s most powerful shopping force in recent years and a driving force on its performance. He curbed his spending this year by spending millions less than usual. As a result, prices dropped and most of the of money spent was American this time.

Price increases for luxury good are mostly due to scarcity. French wines have been at maximum production for a century or more. Caviar and sable production is declining, if anything, as wild stocks are hunted to extinction. The number of tickets available for a Metropolitan Opera season is, essentially, fixed. More money available to be spent on these things won’t result in more employment producing them. It just results in higher prices.

Additional consumption by people in the lower income quintiles doesn’t do much to create American jobs, either. The consumer goods that people buy are mostly food, automobiles, gasoline, apparel, and electronics.

Most of the grain (bread) and meat we eat are domestic. Nearly 20% of the processed food that we eat is imported. Roughly 20% of produce is imported and, importantly, nearly all of the increase in produce consumption over the last twenty years has been imported. See also here. Almost 100% of food additives (coloring, texturizing agents, vitamins, etc.) are imported. The amount of domestically produced food with 100% domestic contents we consume is surprisingly small—mostly fresh meat. Read the package. If it’s been flavor enhanced, color enhanced, texture enhanced, or nutritionally enhanced, it is virtually certain to have imported components regardless of what the manufacturer might say (they may not even know). If you drink apple juice or 100% juice products containing apple juice, the odds are that the concentrate used was imported from China and that includes juice labeled organic.

Increasingly, automobiles are manufactured overseas and assembled in the United States. A very large percentage of tires are imported. We don’t produce internal combustion engines for small cars here. If you drive a small car and it’s gas or diesel powered, its engine was imported. Presumably, it goes without saying that a lot of the oil for the gas that we buy is imported. Oil imports have grown from about 40% thirty years ago to 60% today.

Apparel these days is almost entirely imported—98% or more. Just twenty years ago it was 50%. Buying more clothing will produce jobs but the jobs will be in China, Vietnam, and the Philippines.

Do I need to explain that electronic consumer products are almost entirely imported and those that aren’t are assembled in the U. S. from imported components? Twenty years ago we had a domestic electronic consumer products industry. That’s no longer the case. There are a few design jobs left here but those are increasingly moving overseas as well and the electronics production engineering jobs have been gone for years.

Much of government spending these days consists of transfer payments, e.g. Social Security, Medicare, Medicaid, for which the matching consumption has been discussed above. Most of the direct government consumption is defense-related. U. S. military spending comprises 41% of world military spending and ia larger than the military spending of the next dozen largest spenders combined. I don’t believe that increasing real U. S. military spending is either likely or desireable. That largely rules out government consumption as a creator of jobs.

There’s another component of GDP: business investment. Domestic business investment as a percent of GDP has been declining for decades and it is now at a post-World War II low. Uncertainty is one of the reasons for this but it primarily explains why business investment is so low now but it doesn’t explain why it’s been declining for the last thirty years. This is the area that I think must and will change.

In future posts I will consider direct and indirect production, the services economy, and suggest some of the things that we might change to improve our prospects.

In conclusion let’s review.

  • Money that remains within the financial sector doesn’t do much to produce new jobs.
  • We import too much of what the top decile of income earners consumes for expanding that consumption to produce many jobs and the production of much of what they consume doesn’t expand much with greater willingness to pay, anyway.
  • We import too much of what the lowest nine deciles of income earners consumes for expanding that consumption to produce many jobs.
  • Do we really want to buy more arms?
  • Businesses are in a sort of holding pattern for a variety of reasons. There’s room for expansion through exports and in select industries (e.g. energy production, mining, agriculture) but that’s blocked by trade barriers and regulations.
69 comments… add one
  • The GDP has been steadily declining for 70 years. Trickle down economics has turned out to be trickle up economics.

  • ?

  • Attila the American

    Do we really want to buy more arms?

    Absolutely! I have the economic plan that is guaranteed to work.

    We bomb the rest of the world’s industrial facilities flat. After that we will be the only nation capable of ramping up industrial production to necessary levels. The best way to do this would be to get the other greater and lesser powers to start lots of wars with each other. Wars taking up the greater parts of eastern and western Eurasian would be ideal. Best of all, we’ve already got the capacity to sell them the arms to do so. We’ll get ’em coming, going and standing still! They’ll have to borrow like Hell to buy the bombs, and when they use them it will just lead to more wreckage.

    In the end, we’ll be the last nation standing! Woohoo!

    Hey, it worked before, there’s not reason it can’t work again.

    I am Attila the Hun American, and I approve this message!

  • Icepick

    Typo alert!

    See also herre.

    in the paragraph about meat and grain production.

  • Thanks.

    In case my response to the first comment in this thread was too cryptic, by conventional measurements of GDP, contrary to the comment, over the last 70 years real GDP has risen seven-fold. Real GDP per capita has risen three-fold since 1960. So I don’t understand what Ron is talking about. If he means per capita real disposable income, that’s risen, too.

    If he means real per capita income of the lowest income quintiles, he should read the post more carefully. As long as we’re not producing more stuff here that we consume here, increasing income won’t produce more employment here.

  • Drew

    “So I don’t understand what Ron is talking about.”

    Neither does he.

  • PD Shaw

    I think Ron might mean the GDP growth rate has fallen over time.

  • Icepick

    Drew, I’ve got questions for you. I’m not trying to start anything, I am looking for your considered professional opinion. (I’m happy to get feedback from anyone else as well, especially Schuler.)

    How important do you consider follow through to be for an executive?

    Just to be clear, let me give a couple of examples. Let’s say the exec speaks to someone about some issue and says “I’ll keep you in the loop.” If they keep that person in the loop on a consistent basis (even if it is to just let the other person know that nothing has happened yet) I consider that good follow through. If they say they will see that something happens, making certain that something happens is follow through.

    So, how important is that in an executive? Obviously some matters are more important that others, and some people (or situations) are more important than others.

    So again, how important do you consider that in an executive? How important do you consider that to be in a manager or just a line employee?

    Like I said, I’m just looking for your judgement on this matter. At what point is the executive considered to be just plain bad and needs to be replaced?

  • Icepick

    I think Ron might mean the GDP growth rate has fallen over time.

    I think Attila addressed that issue directly!

  • I think Ron might mean the GDP growth rate has fallen over time.

    That hasn’t happened, either. Besides, who cares about second derivatives as long as real per capita GDP is growing?

    I think an argument could be made (and I’ve made it from time to time) that sans the dot-com and housing bubbles real GDP growth has slowed but not for the last seventy years.

  • I have been putting in the fall garden for the past nine hours.

    If you’ll find me someone who can develop a kinkless water hose, I’ll pay a dollar a foot.

    I’ll use my connections at the local banks to see that you have development funds, and I have a few.

  • Try the Sears Craftsman garden hose. The one I’m talking about is black and hexagonal in cross-section. Costs less than $1/foot IIRC.

    I doubt that there’s such a thing as a truly kinkless garden hose but it’s pretty close. There’s a tradeoff involved. You may get more upper body workout than you’re accustomed to.

  • jan

    How important do you consider follow through to be for an executive?

    Icepick, from a lay person’s POV, I believe follow-through is important in almost any relationship, including an executive one with their cohorts or employees.

    Follow-through is remembered feedback, which makes a person feel valued, if nothing else. In our small business, follow-through is is an important component holding it together, on the same page and with shared practices. It generates respect, trust, and cohesiveness in a business, a family, a friendship, and a marriage.

  • jan

    Janis

    Pure rubber hoses kink less frequently and last longer, in my experience.

  • PD Shaw

    Perhaps I should have written “real per capita GDP growth rate.” My general sense is that it has slowed. Here is an article (I don’t agree witht the primese) that’s been the subject of recent discussions on the growth rate:

    http://www.voxeu.org/article/us-economic-growth-over?goback=.gde_2942155_member_172669431

    Why is it important? Its important if we are borrowing based upon outdated growth expectations.

  • Icepick

    Icepick, from a lay person’s POV, I believe follow-through is important in almost any relationship, including an executive one with their cohorts or employees.

    That’s been my experience. Hell, follow through was important when I was a bag boy. But I’m wondering if somehow things are different at the top. I’ve got to imagine that it really REALLY isn’t, but I’m not sure. And Drew and Schuler are the two most likely to be able to answer my questions on that front.

  • Drew

    Icepick

    Jan nailed it on the head. What many new executives do not recognize is that everything they do is watched like a laser by subordinates. Aside from just being common courtesy, if feed back is offered it is required to engender trust, sense of team and self worth.

    If an issue is off limits then the executive simply firmly and clearly states so. Everyone does not have a right to any and all information about the business, start ups where people wear sandals and eat pizza until midnight notwithstanding. Total Transparancy generally exists only with the core executive group, a span that may vary from business to business.

    I could tell you stories……

  • Drew

    I forgot the line person vis a vis another line person. I think this falls more under the heading of common courtesy and commaraderie than executive type responsibility. .

  • Since you’re online, Drew, why don’t high-fangled establishments answer their damned phones?

  • Drew

    Janis

    Do you mean executives or customer service types?

  • I mean up and down. Receptionists are even hard to come by these days.

  • Drew

    Janis

    Well, I can only imagine you are really talking about large corporate. And you know how I feel about large corporate. I’m not here to defend slothful, customer insensitive companies like GM.

    My experience is different with our companies. Customer service is paramount, and we never really have a problem reaching the executives in our businesses.

    Just one example. One of our companies supplied components for one phase in the construction cycle of certain facilities. We introduced computer linkages with customers such that they knew exactly where their order stood, could make change orders real time, and if they so desired could request a call from us. We would get back to them immediately. Customers loved it.

    I suppose a variant of the old Woody Allen line that half of life is just showing up has a business analog……..half of success is just paying attention to your customer.

  • Oh, I am talking large corporate.

    That’s why I want these boots (8, medium).”

  • Anyway, sounds like you run lively companies, Drew.

  • I think that Drew used the key word in his answer: trust. If top management doesn’t engender trust, that’s a problem.

    Re: receptionists

    IMO the reason that voice response systems are used is that nobody wants to answer their damned phone calls. I see it as a general decline in salesmanship.

  • In the case of Lineberger, they hadn’t done the damned work.

  • They hadn’t even opened the damned file in two months.

  • Icepick

    Drew and others, thanks for the responses. It confirmed what I already believed, but like I said I wanted some other perspectives, especially from those dealing with executives.

  • I found that out by taking my brother-in-law’s advice and talking to the helpful women at the Wood County courthouse.

  • Raising hell can get you somewhere if you have a big enough vocabulary.

    My husband used to say, “We can rise and descend to any occasion.”

  • ” Now, Y’all need to stop being intransigent heah. I’m just a poor, destitute widow-woman…”

  • jan

    Icepick

    To take it a bit further….employees are the foundation of any business. If you develop a team effort, where everyone gains from work effort and prosperity of the business, you have a better model for success. If you have a pushy, one-sided boss at the helm, people below him will put more effort into sabotage than into trying to support the business.

    I learned this from my father-in-law who was a beloved man and boss, simply because he was fair-minded, worked with his employees, and made it an equal opportunity company for all.

  • jan

    Janis

    You appear to be a very independent, plain speaking authority on any topic at hand. I like you.

  • Well, I like you, too.

  • What would I do without nurses?

  • Icepick

    jan, I’m as much interested in follow through to people outside of the organization as inside it. My questions all ultimately relate to the Benghazi fiasco. As I mentioned the other night, various aspects of that are making me think I might just have to vote for Romney. The thought of doing so is making me queasy, but good Lord, I don’t remember ever seeing an Administration ever handle anything as badly as I am seeing this handled.

    The potential breaking point comes from the mother of the IT person who was killed. She did an interview on CNN the other night. She basically stated that the President, the Vice President, the Secretary of State and the Secretary of Defense all told her, all looked her in the eye and told her personally, that they would make certain she found out what happened to her son. Since then … nothing. That is an absolute failure of follow through by arguably the four highest ranking members of the Executive Branch. Absolute, total failure. Do I expect the President to personally call her every day? No. But if he made the promise he needs to put someone responsible in charge of making sure she’s in the loop. And goddamn it, he can call her when the final verdict is in. He bent over backwards to accommodate the death of Heavy D. Now I liked Heavy, I’ve got found memories of him and the Boys. But he didn’t die serving his country. He didn’t die because the Executive Branch completely fucked up its responsibilities. And Obama didn’t make a photo op out of standing over Heavy’s coffin and telling the mother how concerned he was.

    Add to that their overall response. Add to that Biden during the debate the other night. His statements about who knew and didn’t know various aspects were troubling in the extreme. By implication he was either accusing various Administration officials of perjuring themselves before Congress that very day or he was stating that the White House is kept in the dark by their subordinates. What the Hell are they good for, then? Who’s making the decisions? Is ANYONE in charge?

    You know I have no faith in Romney to do what needs to be done, and increasingly I question his foreign policy beliefs. But what we have now is complete and utter failure in every conceivable sense: managerially, execution-ally, politically, conceptually, morally. Who the fuck is in charge up there? Who’s responsible? Does the buck stop anywhere?

  • Icepick

    Also? B+ my ass.

  • Icepick

    Also note the narrative that the only reason Obama’s Admin got involved in Libya was because of pressure from European allies – I believe France and Italy are usually cited as the primary agents. Once again, the Administration flailing around at the behest of others, completely incapable of making its own way in the world.

  • steve

    Dave- Can you heal a bad economy w/o healthy banks? If both are unhealthy, which do you fix first? If the problem with both is too much bad debt, what fixes it other than time?

    Steve

  • jan

    Icepick

    I am finding this Benghazi incident as troubling as anything that has gone on in the Obama administration thus far. It is one thing to have differences between various ideological pathways, as to what is best economically for this country. But, when it comes down to foreign affairs, and people outright lying about circumstances surrounding an ambassador being murdered, then it becomes something venturing beyond just differences of ideology — more in the realm of overall concerns about the safety of this country, and whose hands that safety would best be held in..

  • steve

    @jan-I have yet to see a lie, can you cite one?

    @Ice- Col. Lang is suggesting people read this from Stein.

    http://spytalkblog.blogspot.ca/2012/10/the-benghazi-debacle-fubar.html

    Steve

  • My point, steve, is that banks are not an end to themselves. They’re just a means to an end and recapitalizing banks does nothing to correct the fundamental problems with the economy.

    As an aside I do want to mention that we have thousands of healthy banks. We also have big banks. The greatest problem with the financial system seems to be that we don’t have big, healthy banks. The pity of it all is that the sickest (Citi and BoA) could have been taken over for a pittance at their full capitalized value.

  • jan

    Steve,

    Where have you been?

    Within 24 hours of the Benzhazi attack there were people on the ground citing it was a terrorist attack, emails have been retrieved along with undamaged, on-site videos visually depicting the attack. In the meantime, waivers, dealing with the structure of the building being safe for buildings in unsafe areas, were given by higher ups. Red Cross facilities were attacked prior to this fatal one, along with facebook threats recorded that this attack was going to happen. And, thoughout all this mounting evidence and angst, there was no supposedly no operational evidence to give any more security to this outpost in Libya from the WH? And, weeks after this attack the President, his minions/operatives were still glued to the story that this was an attack related to an on-line movie trailer?

    Supposedly the NSC, National Security Council, receives all the problems accruing out there in the world, including probably the pleading for more security forces in Benghazi. These reports find their way to the Intelligence Briefing Book that the president gets, on a daily basis. So, there was no reason that the top people were not aware of the problems mounting in the Benghazi area, and either failed to deal with them, or are now hiding their failures. That’s what I call a lie.

    Are you that committed to Obama that all sensibility fails you?

  • steve
  • jan

    Steve,

    That link does not answer the question as to why Rice came out, five days after the attack, representing the WH POV, saying quite adamantly that the attack was precipitated by a little know film, does it? Why did Obama go to the UN, 2 weeks later, and basically say the same thing?

    The fact that Obama wanted the public to think that terrorism was no longer a present, existing danger, presumably because of OBL being taken out, is what is the hanging chad question, at the moment, and the reason for not trusting Obama and his command of foreign policy.

    Also, who issued the waivers for not making the consulate safer? Why is the FBI in change, as this is a terrorist act, rather than the CIA?

  • steve

    @jan- There was no precedent for this kind of attack in Libya. The ambassador had been given extra security, as noted in the link above. They had no classified documents on station, so they would not merit Marines. No one has yet produced any intel, that I am aware of, indicating that an attack of this scope was in the works. Please cite if you have it. We did not have reports from credible people for several days.

    “Are you that committed to Obama that all sensibility fails you?”

    Are you so committed to Romney that you have no common sense? Or maybe you just havent gone overseas. Attacks on embassies have decreased over the last 30 years. We had no hint that an attack of this scale was coming. Because it was 9/11. they did take extra precautions. Because Stevens asked, they did give him two extra guards. Yes, they failed to see an attack this size coming. If there is anything you want to fault, it should be the intelligence. Well, that and it took a while longer than it should have for the White House to figure out everything that happened.

    What I think you forget, Col. Lang addresses this well if you want to hear it from an experienced special forces guy. There is no way to eliminate risk. You make your best judgment about risk and allocate (limited) resources as best you can. So, until I hear that we knew there was going to be an attack by 100 people but ignored it, I am not going to pay much attention to your right wing talking points. I actually give a shit about the people who deploy and put themselves in harm’s way. We can’t all live in the US or stay in heavily armed compounds with 100s of troops.

    OTOH, if you think that is too risky, then you should advocate that we remove all of our diplomats from almost everywhere. Then you can have your risk free world, for a little while.

    Steve

  • steve

    @jan- Did you actually read what Rice said? She heavily qualified everything.

    “The fact that Obama wanted the public to think that terrorism was no longer a present, existing danger, ”

    Where and when has the administration ever said this. I will vote for Romney, honest, if you can find such a quote. Note that the ambassador held all meetings on the compound on 9/11. He went to meetings off the compound on the 10th. It is clear that they knew there was risk. They did not know that a group of 100 was preparing to attack.

    Also, FTR, it never would have occurred to me to stoop to so low a level as to blame Bush for servicemen getting killed in Iraq because they were attacked by a larger group of insurgents. If Bush had known that a group of our guys was sitting unprotected with a large group preparing to attack them, I would have gone after him. As far as I know, no such thing ever happened. Yes, sometimes our guys got overrun. That happens when you dont have perfect intelligence and infinite resources.

    Steve

  • jan

    Steve,

    My responses have been to your original question: “@jan-I have yet to see a lie, can you cite one? “

    What happened at Benghazi,

    So Hillary Clinton and the State Department unequivocally reject the account that Barack Obama and Joe Biden have given. It is hard to imagine what “intelligence” reports Obama could have received that blamed the YouTube video. He is lying, evidently.

  • jan

    Steve,

    This has less to do with the politics of the election that how Obama is handling this unexpected assault in Benghazi. I’m not even talking about Romney, only you are. I am simply dismayed as to the crap coming out of the Obama administration regarding this incident. It seems utterly misdirected and dishonest.

  • steve

    Even your own pundit qualifies this with an “evidently”. Notice that we never actually have the “lie” printed, just allusions to the lie? So, what we think we know from the account to which you link (the same one I did), is that they upgraded the compound and provided extra security. We think we know that the attackers could not get into the safe room. That if they had respirators, the Americans would have lived. This is a far cry from the claims of the right. (I would also note that the security team did not see anything on their cameras until the attackers were inside. They were not wearing armor or carrying their M-4s. I think this suggests they did not expect an attack.)

    So, I guess you are left claiming that the White House intended to keep this all secret somehow because it would make it hurt their (nonexistent) claims that there were no more terrorists. This would be the same admin. you raked over the coals two weeks ago for using too many drone attacks, trying to kill terrorists.

    Steve

  • Does anyone know anything about the Flexilla garden hose?

  • Icepick

    steve, you simply forgive anything and everything the Administration does. Nothing they can do will give you the least pause in condemning their enemies, the only enemies that count, which is any American that isn’t a Democrat.

    A US Ambassador, a “good friend” of the Vice President, was ass-raped by a gang of terrorists for a few hours before being murdered. This does not happen all the time, as you want to imply. A murder of a US Ambassador hasn’t happened in 33 years. I doubt the other part has ever happened before. The Administration has claimed as recently as last week that the Ambassador had an adequate amount of security. IT CLEARLY WASN’T ADEQUATE.

    Additionally, the Administration has shown a complete disregard for finding out what happened and reporting that information to the American people. Your fall-back defense is that they have used a bunch of weasel words to qualify their fictional narrative. Bullshit. The intent has been to obfuscate and deceive.

    It was known very quickly within the intel community and the State Department that this was not an attack by a mob protesting some random YouTube clip. One of the first things that should have been done once the death of Ambassador was confirmed would be to FIND OUT WHAT HAPPENED. This should be done before telling everyone what happened, yes?

    The Admin should then see to it that the narrative as they understood it was disseminated by the Admin and its spokespeople. Standing orders would be that everyone else speaking on record should SHUT THE FUCK UP.

    Instead the Administration pushed forward with a narrative that their staffers (at the very least) knew was untrue. Five days after the attack the Administration sent forth the US Ambassador to the UN Susan Rice to speak on FIVE Sunday morning political talk shows to spread the Administration’s preferred message. You claim she might have been misled or misinformed by staffers in the intel and State communities. This is irrelevant – she was acting as the Administration’s appointed mouth-piece that morning, and would have been briefed by the White House on what they wanted said. So either the White House completely failed to determine what the actual story was, failed executing basic duties of message control, failed to pass along the correct story to Susan Rice, or Susan Rice ignored what she had been told by the White House to pass along her own version of events.

    How is that not a failure of executive and management abilities?

    But let’s check the Admin’s response. Obama went to bed early. His flacks (both on staff and in the media) claimed that Romney was the problem. Obama called this a bump in the road while yucking it up with Letterman. His Administration repeatedly claimed for almost two weeks that this had be a video protest that got out of hand. The Administration claimed that the only reason anyone cared about a US Ambassador getting ass-raped to death was because of Republicans. Joe Biden laughed about the torture and murder of his “good friend”. Joe Biden implied that either Admin officials were perjuring themselves before Congress or that the White House was being kept in the dark by staffers, or both. Currently the Administration doesn’t seem to have a story as people at the White House and State have dueling carefully-worded accusations of “BULLSHIT” flying back and forth at each other. So far Patreus’s CIA seems to be sitting on the sidelines, unwilling to take sides. That alone speaks volumes about the weakness of the White House. The Administration and its supporters primary defense against all this is that the Admin has frequently couched everything in weasel words. Sorry, the intent has been to deceive all along, and pre-emptively lawyering up (by going to Ivy League law schools, no less) doesn’t change that.

    But you expect me to believe that Mitt Romney shouldn’t be allowed to say anything until he knows every fact about every detail in this story, but the Administration gets a pass for making up stories without bothering to even speak to its own staffers about the basic details?

    Unbelievable.

  • Icepick gets to a point, expressed more graphically than I have, that I’ve made over at OTB: why did the administration elaborate on the disaster in Benghazi? That they knew that the attack on the embassy had nothing to do with the film that was being protested in various places seems clear at this point. At the very least the administration’s official reaction was misleading. Why?

    IMO this is the ongoing legacy of All the President’s Men. While the American people are predisposed to forgive their presidents (we do believe in second chances), not so the press. They smell Pulitzer at every weakness, every chink in the armor.

  • Barbara O'Brien

    Please contact me back via email when you can–just have a quick question!

    B

  • jan

    Wow Icepick

    What a synopsis! Very explicit, but with more accuracy than the WH is willing to give.

    IMO, if Rice had come out and simply said, “We don’t know what happened.” Whether or not if this was true, at least such a statement would not be construed as ‘knowingly’ giving a false reason for this attack to have happened.

    Saying, in almost absolute terms, that it was a irrelevant on-line video, that it was not an act of terrorism, sending in the FBI rather than the CIA, shows every attempt was made to detour people’s minds away from the truth.

    It flabbergasts me that even the most diehard partisan would not take a moment, turn off their R or D ideology, simply study the timeline without bias, as well as the conflicted and convoluted verbiage the WH has spun out to the public for over a month, and not be disgusted by it!!!!!

  • TastyBits

    @Icepick

    Watch Bill Clinton and the Clinton supporters. They are not going to let Hillary get “thrown under the bus” whether she deserves it or not. If she is going to be able to run in 2016, she cannot be involved in this, but she cannot be seen to cause President Obama to lose. If anybody can do it, Bill Clinton can.

  • TastyBits

    @steve

    The Administration could have said it was an ongoing investigation, and they could not comment. Why they clung to the video protester story is bizarre.

    I would like to believe there is some reason they did it. The likely focus of the raid was the CIA, and Ambassador Stevens got caught in it. If they were trying to cover for the CIA, it would make sense.

    Otherwise, they thought that the American people were too dumb to figure out it was not a protest that got out of hand.

  • jan

    Steve

    Just read the ending of your last comment:

    “So, I guess you are left claiming that the White House intended to keep this all secret somehow because it would make it hurt their (nonexistent) claims that there were no more terrorists. This would be the same admin. you raked over the coals two weeks ago for using too many drone attacks, trying to kill terrorists. “

    If this is aimed at me, it is incorrect. I never claimed they wanted to keep anything secret, as much as they wanted to mute and/or alter the circumstances surrounding this attack.

    Ever since OBL was killed, his elimination has been trotted out by Obama as a sign that Al Qaeda was on it’s heels, seemingly vanquished. He’s endlessly talked about OBL on his stump speeches, at the Democratic Convention, anywhere ears are present. Obviously, this 911 Benghazi attack back pedals such a claim, tainting Obama’s foreign policy record in these very political times of electioneering.

    As for those drone attacks, I don’t recall such a comment, other than maybe wondering why Obama emphasized his roll in a ‘kill list,’ which I think wasn’t prudent.

  • Icepick

    TB, all they have to do to save Hillary from being seen as the cause of Obama’s defeat (should that happen) is control the story line of why Obama lost. They’ve already got the catch-phrase to do it: It’s the economy, stupid! It will have the novel (for the Clintons) feature of being substantially true. I will have lived to see everything at that point!

    Distancing her from this colossal FUBAR will be another thing entirely.

    Meanwhile the President continues to take the hard interviews and address the pressing issues of the day.

  • TastyBits
  • TastyBits
  • Thank you, TB. I’ll be passing a Lowe’s in December. My watering will be basically automatic ’til then.

  • The Administration could have said it was an ongoing investigation, and they could not comment.

    Or they could just have expressed condolences to the families of the slain and said they’d say more when they had a more complete picture. That’s not what happened. They went out of their way to tell a very different story. And they didn’t deflect criticism away from them by doing it. That doesn’t sound like a winning strategy to me.

  • PD Shaw

    My assumptions are:

    (1) The Administration got reports on Benghazi and Cairo at the same time and conflated the two. Negligence, not malice.

    (2) The Administration was and is operating under goals of zero-tolerance for terrorist attacks. See NYTimes piece on drone warfare. That is, it is operating under unreasonable expectations.

    (3) Neither the administration, nor the Romney team, appreciate American unity in the face of attacks on U.S. citizens. Romney moved quickly to politicize the events, also initially conflating events in Egypt and Libya, and the Administration responded by treating the Middle East as an event to be handled politically.

    (4) The delays in retracting the prior statements are entirely political, not informational. Or to the extent they are informational, the Administation waited several days after learning its initial statements were erroneous in the hopes that information would be forthcoming that would make any retraction less painful.

  • Ben Wolf

    @Dave Schuler

    As I can think of nothing significant gained by lying, I can only conclude the President and his people exist in a self-contained information bubble, where biases regularly replace objective thought.
    His debate performance would seem to indicate that as well.

  • TastyBits

    @PD Shaw

    From what I understand, there was no protest before, during, or after the attack. After the initial attack, the US personnel fell back to a “safe-house”, and a follow on attack took place there. The “safe-house” was supposed to be secret, but the attackers knew where it was located.

    At some point State Department personnel were in contact with the Embassy staff, and there knew in real-time what was happening. A drone was also sent to the area, and it was on station for some part of the attack. When the Embassy personnel got to the safe-house, they thought they were safe, and they were waiting to be rescued. They did not expect a second attack.

    If I have understood correctly, the original consulate was a front for the CIA. Also, I have not heard any good reason for the two SEALs being in the area, but they were not part of the Embassy security team. They saw that the Embassy staff was under attack, and they went to help. I am fairly sure they were not in Benghazi for the tourist attractions.

    The US government knew within hours it was not a protest that got out of control, and when the White House sent Ambassador Rice to the Sunday talk shows, they knew most of what had happened. Why they would stick to an obviously wrong account is bizarre. This is well beyond incompetence.

    I am trying to give President Obama a plausible reason, but other than covering for the CIA or others, it is really hard to come up with something.

    The President should have been on this immediately. If a drone could be sent to the area, the President should have dropped everything, and this should have been his primary focus. To my knowledge, he could not be bothered, and this is the reason. A protest would not cause the President to drop everything, and therefore, this was the reason the Administration stuck to its story.

    I am open to any other suggestions, and I am willing to stretch reason.

  • Andy

    Dave,

    I don’t believe that increasing real U. S. military spending is either likely or desireable. That largely rules out government consumption as a creator of jobs.

    and

    Do we really want to buy more arms?

    In general, I agree. As I’ve said before, my bread is buttered by the DoD, but I realize that defense spending has got to shrink by quite a bit. That said, I’d just point out that defense employment isn’t trivial. The DoD directly employs about 800,000 civilians, 1.5 million active duty military and another 800,000 in the reserve components (some are full-timers, most are part timers). Then there are all the secondary jobs, mainly defense contractors big and small, which employ an estimated 3 million. It’s kind of sad, but weaponry is one of the few manufacturing sectors that’s still largely and actually “American made.” Then there are “defense related” programs that belong to other executive departments (the DOE’s nuclear weapons responsibility is the most obvious). I don’t have estimates for that.

    So let’s just say the total defense budget gets cut by 25%. All else being equal, that would result in the loss of about 1.5 million jobs. Over the long term, we’ll probably need to cut more than that. While necessary for the long-term health of the nation, such cuts will be painful in terms of employment.

  • Andy

    Not sure how we got on the embassy attack, but I might as well throw in my two cents.

    I think people sometimes forget that the enemy gets a vote and it is impossible for the intelligence community to catch everything, especially in a chaotic place like Libya. The fallout from the killings in Libya sort of quashed what could have been a bigger story – the Taliban attack on Camp Bastion a week later.

    Anyway, I thought Ambassador Rice’s Sunday talk-show circuit after the Libya attack was a bit strange. Although she did caveat her statements, I think it’s hard to argue that she wasn’t pushing the video angle to the story. I don’t really get why the administration chose to do that. PD’s explanation is probably right.

    It also reminds me of the aftermath of the UBL raid into Pakistan. The administration couldn’t really get its story straight for quite a while about many non-trivial details of the raid, despite the fact they had plenty of time to plan the media engagement. One should always expect bad information in the early phases of any event, but it exceeded the norm for these two events IMO. I won’t speculate about the reasons or potential motivations, but overall the impression I get from Libya and the UBL raid and other events (The fall of Mubarak, for example) is a White House staff that’s undisciplined when it comes to crisis communication.

  • Drew

    Icepick

    You poor, demented soul. Steve has become the Chris Mathews of Glittering Eye.

    Your words will fall to earth unconsidered.

Leave a Comment