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Out of Touch? Not So Much. Out of Gas? Definitely

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By Debra J. Saunders
"The private sector is doing fine," President Barack Obama declared Friday at a news conference that was supposed to show that the administration knows how to make the economy stronger.
It was a bad way to end a tough week. Wisconsin voters had rejected a recall of their Republican governor, and Bill Clinton had praised Mitt Romney's business record as "sterling" and called for a temporary extension of the Bush tax cuts. Then Obama made himself sound like GOP Sen. John McCain, who in September 2008 stink-bombed his election prospects by saying, "The fundamentals of our economy are strong."
Team Romney gleefully jumped on the "doing fine" quote as proof that Obama doesn't appreciate the plight of the unemployed. The campaign produced a video that asked, "Has there ever been a president so out of touch with the middle class?"
Obama was ill-served by 24-hour cable news shows that like to dwell on and distort what politicians say rather than what they do. He was not saying that the economy is hunky-dory.
But in saying that the private sector is doing just fine and citing the corporate sector's "record profits," the president was playing to a frequent far-left gripe -- that the private sector is sitting on cash instead of hiring more workers.
In essence, then, Obama's remarks served as an admission that he cannot do much of anything about the creation of private jobs but can only help government workers laid off as local and state tax revenues dry up.
Chad Stone, chief economist of the nonpartisan but left-leaning Center on Budget and Policy Priorities, agrees with the president that private-sector employment has grown while a huge drop in public-sector jobs -- some 502,000 -- is "unprecedented." As Stone put it, "the problem is not that the private sector doesn't have the money to expand, but it doesn't have the demand for goods and services. They don't have enough customers." Public-sector jobs mean customers.
Here's the problem. Even if you recognize that public-sector job losses cannot be good for the recovery -- if America indeed still is in a recovery -- you cannot help but notice that the president has given up on the private sector, which bankrolls the public sector.
He won't recognize that Obamacare, with its many mandates, serves as a tax on job creation. He doesn't understand how his calls for balancing the budget on the backs of the affluent might chill investment.
"You're not going to invest not knowing what the tax code is the next year," observed House Republican Whip Kevin McCarthy.
McCarthy sees a solution to the situation. Clinton and former Obama economic adviser Larry Summers have suggested that Washington extend the Bush tax cuts temporarily in order to prevent a slowdown. "You would have the biggest stimulus with no money being borrowed," McCarthy told me, and the president could promise tax reform next year -- if he's re-elected.
But it won't happen, because Obama puts all his energy not into fixing the economy but into raising campaign funds and blaming Republicans. "The president," McCarthy sighed, "he's done legislating."

Debra J. Saunders is a San Francisco Chronicle columnist. Her email address is

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