Timothy Noah

Boehner's Jobs Speech, Part One

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From House Speaker John Boehner's jobs speech today at the Economic Club of Washington:

"[If] you talk to anybody outside of Washington who has to meet a payroll, they’ll tell you that out-of-control spending in Washington is one of the things that concerns them the most about our future.

"In New York City back in May, I warned that if we don’t take action soon, the markets will do it for us.

"Last month, the markets took action, in the form of a downgrade and the possibility of future downgrades that caused the markets to tumble."

It's a neat construct, but the stock market tumbled on Aug. 4. The Standard & Poor's downgrade of U.S. Treasury bonds (from AAA to AA+) happened on the evening of Aug. 5. If you want to argue that rumors of the impending downgrade crashed the market, you'll have to explain why, after the crash, investors rushed to buy Treasuries. If they were worrying about the S&P downgrade, investors would have rushed to sell Treasuries.

In fact, investors were mostly freaking out about economic turmoil in the Eurozone. To the extent they were freaking out about anything happening in Washington, it was about the terrifying game of chicken that Boehner and his fellow House and Senate Republicans had just finished playing with the debt ceiling.

Update: Dean Baker, I just noticed, wrote about this bit of Republican mythology on TNR's Web site last month.

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