Home > posts > White House Mea Culpas, Part I
February 3rd, 2010 12:26 pm
White House Mea Culpas, Part I

It must have been Groundhog Day yesterday, because another major Democratic politician was accused of severely damaging the profitability of an American industry. This time it was President Barack Obama, who said at a New Hampshire town hall meeting:

“When times are tough, you tighten your belts,” the president said. “You don’t go buying a boat when you can barely pay your mortgage. You don’t blow a bunch of cash on Vegas when you’re trying to save for college.”

Not much to quibble with there – unless you happen to live and work in Las Vegas. The president’s sensible remarks (which would be totally un-remarkable if not said by a major politician) didn’t sit well with the Las Vegas Convention and Visitors Authority, which claimed that a previous critical statement about corporations using bailout money for Vegas junkets cost the city millions in cancelled trips.

Even if that’s true, though, is the president wrong? Trips to Vegas – or Disney World, a Red Sox game, or an evening at the movies – are luxuries that (should) depend on disposable income. If you can’t pay your mortgage, or in the case of bailed out companies, your debts, you shouldn’t be jetting off to expensive locales at taxpayer expense. The same holds true for a family on a budget.  Isn’t this the paradigmatic “kitchen table conversation”?

Nonetheless, Nevada’s senators responded with bipartisan denunciation, and extracted a written apology from the president. One hopes it was delivered in the form of an IOU.

Ironically, the president’s truth telling about where Sin City fits on the priority list did a lot less verifiable damage than Senator Harry Reid’s cryptic comments about a “major American insurer” “whose name is familiar to everyone” last October. After pairing those talismanic phrases with a statement that the mystery company was about to go bankrupt, MetLife, The Hartford, and Prudential all lost between 11 and 32% of their stock value within a day. Other than backtracking a bit, Senator Reid apparently didn’t feel the need to write a public apology to these companies. Maybe they’d prefer he save the stationary and pass some regulatory relief instead.

The president is wrong about a lot of issues, but using Vegas as an example of how not to spend your nest egg isn’t one of them. America isn’t going to get its savings rate and overall economy back on track by spending more money at casinos. Then again, his insightful criticism not to spend gobs of credit card money on fleeting emotional experiences probably won’t migrate into the president’s thinking on how best to structure his deficit-exploding progressive agenda.

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