[Note: It's been a while since I've posted here, but that's only because I'm too busy posting at PJMedia and too short of time to always cross-post here at zombietime. To rectify matters, here's my latest essay:]


President Obama’s instantly infamous “You didn’t build that” speech is a major turning point of the 2012 election not because it was a gaffe but because it was an accurate and concise summary of core progressive fiscal dogma. It was also a political blunder of epic proportions because in his speech Obama unintentionally proved the conservatives’ case for limited government.

This essay will show you how.

When Obama implied at the Roanoke, Virginia rally that some businessmen refuse to pay for public works from which they benefit, he presented a thesis which, like a three-legged stool, relies on three assumptions that must all be true for the argument to remain standing:

1. That the public programs he mentioned in his speech constitute a significant portion of the federal budget;
2. That business owners don’t already pay far more than their fair share of these expenses; and
3. That these specific public benefits are a federal issue, rather than a local issue.

If any of these legs fails, then the whole argument collapses.

For good measure, we won’t just kick out one, we’ll kick out all three.

“Small Government” Is Not the Same as “No Government”

Progressives critique the fiscal conservative/Tea Party/libertarian position by purposely misrepresenting it as anarchy. When fiscal conservatives say “We want smaller government,” progressives reply, “Oh, so you want no government?”

“Government” in this particular discussion is shorthand for “communal pooling of resources for mutual benefit.”

Fiscal conservatives have never called for no government — that’s the anarchist position, and contemporary anarchism is actually dominated by extreme leftists, not extreme conservatives. Instead, fiscal conservatives clearly and consistently call for limited government, or for smaller government — but not for the absence of government altogether.

So when President Obama and his mentor Elizabeth Warren justify their call for tax hikes by pointing out that all entrepreneurs benefit from communal infrastructure, they’re committing the classic Straw Man Fallacy by arguing against anarchy — a position that their opponents do not hold.

Here’s the shocking truth: President Obama and Elizabeth Warren are correct — we all benefit from certain taxpayer-funded collectivist government infrastructure projects and programs. And here’s the other shocking truth: Therefore, we should limit government expenditures to just those programs. Why? Because most of the other government programs either

• hinder, constrict or penalize entrepreneurial activity; or
• benefit some people to the detriment of others; or
• waste money on bureaucracy, overhead or ill-considered expenditures that end up indebting the nation and by extension all Americans.

Below are videos and transcripts of Obama’s speech as well as the Elizabeth Warren speech that inspired it. First watch or read both speeches, and then we’ll list all of the programs that they both mention, and see what percentage of our taxes goes toward those programs.

Obama’s Speech

Here is Obama’s game-changing speech from Friday, July 13 in Roanoke, Virginia:

And here’s the transcript:

There are a lot of wealthy, successful Americans who agree with me — because they want to give something back. They know they didn’t — look, if you’ve been successful, you didn’t get there on your own. You didn’t get there on your own. I’m always struck by people who think, well, it must be because I was just so smart. There are a lot of smart people out there. It must be because I worked harder than everybody else. Let me tell you something — there are a whole bunch of hardworking people out there. (Applause.)

If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business — you didn’t build that. Somebody else made that happen. The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet.

The point is, is that when we succeed, we succeed because of our individual initiative, but also because we do things together. There are some things, just like fighting fires, we don’t do on our own. I mean, imagine if everybody had their own fire service. That would be a hard way to organize fighting fires.

Warren’s Speech

And here’s Elizabeth Warren’s original 2011 speech, upon which Obama’s was based:

And the transcript:

There is nobody in this country who got rich on his own. Nobody. You built a factory out there — good for you!

But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did. Now look, you built a factory and it turned into something terrific, or a great idea — God bless. Keep a big hunk of it.

But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.

OK, now that we have both speeches in front of us, let us list the exact government programs and projects that Obama and Warren use to justify their position:

Education (Obama: “There was a great teacher somewhere in your life.” Warren: “You hired workers the rest of us paid to educate.”)
Transportation (Obama: “Somebody invested in roads and bridges.” Warren: “You moved your goods to market on the roads the rest of us paid for.”)
Public Safety (Warren: “You were safe in your factory because of police forces and fire forces that the rest of us paid for.” Obama: “There are some things, just like fighting fires, we don’t do on our own.”)
The Internet (Obama: “Government research created the Internet so that all the companies could make money off the Internet.”)

…and that’s it.

OK. Fine. Let’s absolutely concede this point to Obama and Warren: There are some government activities that benefit us all, including business owners.

And for the sake of argument let’s just allow for a moment that the federal government is the best, most efficient and only supplier of these benefits. You win, Elizabeth and Barack.

But having conceded this central point, let us now ask the key follow-up question, which is the first leg of their three-point hypothesis: What percentage of the federal budget is devoted to these universally beneficial public works?

And if you’re a progressive reading this, you’d better get off the stool because it’s about to fall down.

The Numbers

Here is the Federal government’s budgetary breakdown for a recent fiscal year:

What percentage of this is devoted to education, transportation, public safety, and creating the Internet (i.e. basic research)?

I’m going to be as generous as possible to the progressive position and include ALL of defense spending in their column, since defense aids both basic research and public safety. Highways and roads are covered by the Department of Transportation. The Department of Education covers, well, education. And various other smaller departments — Department of Justice, National Science Foundation, etc. — contribute in varying degrees to public safety, research, and so forth.

Ready? Here we go:

Below is a list of all government expenditures, with Obama’s and Warren’s “public benefit” programs highlighted:

Social Security 19.63%
Department of Defense 18.74%
Unemployment/welfare/other mandatory spending 16.13%
Medicare 12.79%
Medicaid and SCHIP 8.19%
Interest on the national debt 4.63%
Health and Human Services 2.22%
Department of Transportation 2.05%
Department of Veteran’s Affairs 1.48%
Department of State 1.46%
Department of Housing and Urban Development 1.34%
Department of Education 1.32%
Other on-budget discretionary spending (1.8%): $149.67
Other off-budget discretionary spending (1.3%): $108.10
Department of Homeland Security 1.21%
Department of Energy 0.74%
Department of Agriculture 0.73%
Department of Justice 0.67%
NASA 0.53%
Department of Commerce 0.39%
Department of Labor 0.38%
Department of Treasury 0.38%
Department of the Interior 0.34%
EPA 0.30%
Social Security Administration 0.27%
National Science Foundation 0.20%
Corps of Engineers 0.14%
National Infrastructure Bank 0.14%
Corporation for National and Community Service 0.03%
Small Business Administration 0.02%
General Services Administration 0.02%
Other agencies 0.56%
Other off-budget discretionary spending 2.97%

So, let’s clear away the irrelevant government expenditures and list just the ones noted by Obama and Warren:

Department of Defense 18.74%
Department of Transportation 2.05%
Department of Education 1.32%
Department of Homeland Security 1.21%
Department of Justice 0.67%
National Science Foundation 0.20%

TOTAL: 23.4%

And that, of course, is being absurdly generous to the Obama position, since in reality huge portions of the defense budget, the Department of Education budget, and so on, have basically nothing to do with promoting public safety or educating workers. And let’s be even more generous and round that 23.4% up to 25%, or one-fourth of the budget.

So what Obama and Warren are really stating is this:

Only one-fourth of your federal tax dollars go to projects and programs that benefit the general public and entrepreneurs; the other three-fourths are essentially a complete waste, or are at best optional.

Which of course is exactly what fiscal conservatives have been arguing all along.

So yeah, I agree with Obama: Let’s slash the federal budget by 75%, and only fund services and programs that directly serve the public good.

The first leg of their argument has snapped, and the stool has toppled over. Since the essential programs aiding “the commons” are only a small percentage of an overall bloated budget, we don’t need to raise taxes to fund them.

And now for the second leg.

The Wealthy Already Pay Far More Than Their “Fair Share”

Are you ready for the happy news? If we stick to Obama and Warren’s “essentials only” budget, we can eliminate all taxes for 99% of Americans, and even lower taxes for the top 1%, and still have enough to pay for defense, transportation, public safety, education and all the rest. How? Because the top 1% of all taxpayers — the wealthy elite businesspeople who benefit from roads and schools and firefighters — pay about 37% of all federal taxes, far more than enough to cover the essentials, plus interest on the debt and plenty of extras besides.

Clonk. That’s the second leg hitting the floor.

Kicking Out the Third Leg: Education, Public Safety and Roads Are Covered by Local Taxes, Not Federal Taxes

The final component in Obama’s thesis is far and away the weakest, but for some reason few pundits have noted it. Obama and Warren have intentionally conflated local taxes with federal taxes. In most localities across the country, public education, police and firefighters, and street repair are primarily paid for by property taxes, local sales taxes, and state taxes. Federal grants can supplement local funds, but rarely is a school district or a police department propped up entirely with federal money.

So if we revisit Obama’s and Warren’s speeches, they’re actually making an argument for increased local taxes. And yet they and their audiences somehow imagine that the arguments given are a legitimate rationale for increased federal taxes.

As I said at the beginning of this essay, Obama has just unintentionally proved the conservatives’ case for limited government, and for decentralization and local control.

The stool is now in pieces on the floor. But I just can’t stop kicking.

Obama’s Fallacy that the Goal of Government Research Is to Benefit the Private Sector

“The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet.”

Now, everybody agrees that a great number of scientific and engineering breakthroughs have happened as a result of “government research,” primarily military research: not just the Internet but nuclear power, GPS systems, jet aircraft, and many more. But Obama is sorely mistaken in claiming that the Internet was created “so that all the companies could make money” off it. Actually, the Internet was created to facilitate defense-related research as well as to strengthen military command-and-control capabilities. It was most definitely not created “so that all the companies could make money,” as a very early ARPANet handbook explained:

It is considered illegal to use the ARPANet for anything which is not in direct support of Government business….Sending electronic mail over the ARPANet for commercial profit or political purposes is both anti-social and illegal.

Ooops.

In this instance as well as almost every other instance, government-funded engineering or scientific breakthroughs were originally and exclusively for military purposes; it was only much later that entrepreneurs came along and found a profit-generating and society-benefitting civilian use for military hardware.

Similar contravening facts undermine other aspects of Obama’s and Warren’s emotional arguments. Take transportation, for example. Prior to 1956, the vast majority of roads and highways and rail lines in the United States were built either privately, by local communities, or by states. It was not until the arrival of the Interstate Highway System in 1956 that the federal government became deeply involved in building roads — and even then, as with the Internet and most other massive federal projects, it was originally for defense, not for commerce.

But the highway system is by now already in place. And the cost of maintaining it and building whatever new highways are needed is a tiny fraction of our federal budget, far less than even 1%. And the business owners who benefit from roads are already paying more than enough taxes to cover their cost.

Rebuttal?

Progressives have been so intoxicated first with Warren’s speech and now with Obama’s that I’m not so sure they’re even aware that anyone has presented a criticism; progressives probably think that conservatives just avoid this whole topic because the entire arc of Warren’s and Obama’s line of reasoning is so convincing and devastating that it’s best to change the subject. But I predict that the pushback against this speech will grow so large that eventually word of it will reach the far left, and when that happens they may come back with the following retort:

Warren and Obama were just presenting a few examples, not a comprehensive list of public benefits from taxation. These were just off-the-cuff speeches, not policy papers. There are many other federal programs from which business owners benefit and toward which they should therefore contribute.

If so: Let’s see that list. Let’s get down to the nitty-gritty.

Did businesses benefit when in cities across the country HUD built massive housing projects which instantly turned into pre-fab ghettos?

Do businesses benefit when the EPA awards itself unilateral power to impose its interpretation of environmental laws, with no hearings and no warning?

Will businesses benefit when they are forced to abide by byzantine, onerous and expensive Obamacare regulations?

The progressive stance might be: “But we all benefit when everyone is healthy, when global warming is stopped, when children have high self-esteem, when no American goes hungry!”

But by this stage we’ve already passed from measurable physical benefits like roads to fire-fighting to vague claims about intangible potential benefits for which there is no proof. Obama said, “Somebody invested in roads and bridges” because the audience could understand a concrete example; he didn’t get up and say “Somebody invested in high self-esteem” because it would expose the slippery slope underneath this line of reasoning.

Should businesses pay enough taxes to support the nation’s basic physical infrastructure? Yes. Of course. And they already do. But should they pay taxes to fund every progressive social fantasy? That’s open for debate, and that’s not the point Obama and Warren were making. Overtly, at least.

We should thank President Obama for finally revealing the central justification for his economic policy. Now that we see what’s at the heart of his fiscal philosophy, we can demonstrate that he has only ended up proving the opposite of what he intended.

Others Debunking Obama’s Speech

This wouldn’t count as a comprehensive takedown if I didn’t note and link to some of the other pointed critiques of Obama’s speech. Here are some of the best, many of which cover points I didn’t even mention here:

- LauraW at Ace of Spades HQ

- Richard Fernandez at the Belmont Club

- Paul Ryan

- Mitt Romney

- Rick Moran at PJM’s The Tatler

24 Responses to “The Ultimate Takedown of Obama’s ‘You didn’t build that’ Speech”

  1. 1Scott on Jul 19, 2012 at 5:59 pm:

    The thing with Obama and his close circle is that they really believe the three tenants you outline…as government bureaucrats, they know nothing of business or private enterprise. This is why Obama’s gaffe “the private sector is doing just fine” illustrates his ignorance. He doesn’t understand what it takes to be successful in business. And, as a big government buffoon, he only sees private business as a “revenue opportunity” from which he can extract “more fair share” to pay off his constituents for putting him (and people like him) in office again and again. Consider that public programs are all that Obama knows. In his most recent television interview, he states that his biggest effort to date has been to “get the policy right”. Public policy, of course. That is all he knows…an all-powerful government full of bureaucrats telling all the Fox News dummies how to do stuff. For Obama, it is inconceivable for business owners to be smarter or more savvy than he is…a Harvard educated lawyer. And of course business owners don’t pay their fair share…obviously, by extension, this means you should only make so much (and then that needs to be capped). This gives him more to redistribute. As far as the fed being more powerful than the states and local governments, the Washington bureaucrats have been very successful with creating federal dependency, and therefore creating a blackmail environment…”you’ll do it our way, or we’ll cut you off!” This is natural for a big government bureaucrat like Obama…he’s never known anything different. This is what he means when he says “we’ll do it anyway!” Executive Orders, or overlooking laws or parts of law is a natural for Obama and Eric Holder. The Constitution is a “living, breathing” document that is malleable according to leftist dogma, but untouchable if you are a conservative. Your essay is right on, Zombie, but to Obama and his powerful friends, your argument is odd, since they only see things through a Communist prism. I can’t wait for them to lose in November!

      

  2. 2Puckles on Jul 20, 2012 at 10:59 am:

    You might add Thomas Sowell, writing in Lew Rockwell’s blog, to the list of eloquent commenters on Obama’s speech.

      

  3. 3Alfanerd on Jul 20, 2012 at 7:07 pm:

  4. 4JustVic on Jul 22, 2012 at 10:16 pm:

    Small point but worthy of consideration, IMHO. Federal Highway Funds come mostly from user fees or fuel ‘tax’ which is also a user fee under the theory that most gas and diesel fuel is used for highway transport. ( Farmers, rancher, and construction companies can buy offroad fuel that doesn’t carry the tax, or get a refund from the government at the end of the year.) So everyone who drives, or pays for goods tranported by trucks, pays the user fee which should fund the highway system. It is not supposed to be paid for from income or other taxes.
    Dirty little secret: many times the Highway Trust Fund has been left with a surplus at the end of the year so as to make the Federal Deficit look smaller, even if that meant not paying for needed repairs to bridges, roads etc.

      

  5. 5CrowRobot on Jul 23, 2012 at 7:31 am:

    As a Libertarian. I don’t appreciate being lumped in with “conservatives” and Tea baggers. I identify more with Anarcho-Capitalists.

      

  6. 6KansasLib on Jul 27, 2012 at 3:20 am:

    A few questions from a ‘progressive’:

    1.) What percentage of the medicare and social security spending are offset by revenue generated from both categories? Until at least 2017, social security is cost-neutral–it brings in more revenue than is spent in payouts. A 2.2% increase in SS taxes would push that date back into the foreseeable future.

    2.) Unemployment/welfare/other mandatory spending–”Other mandatory spending”? Which is what exactly? As far as I’m aware, unemployment is an insurance program. That means, again, revenues should offset expenses. Would it be too much to see an honest breakdown of the three categories? Mandatory spending makes up 60% of the budget–so it would be interesting to see what exactly was lumped into the other categories in order to inflate the numbers.

    3.) Last I checked, I, and every other U.S. worker pays for medicare. So, they sure as heck better have expenses related to this. But, revenues only cover 57% of costs. In reality, that number is less than half of what’s in the chart, in terms of general tax burden.

    4.) As for federal funds only supplementing state and local funds for education–you’re an idiot. There isn’t a state in the country who could survive having federal education funds being cut off. This is why NCLB is such a big issue. Schools are shut down if people don’t meet progress requirements, and if states didn’t care, they would be able to pay to keep those schools open. Instead they bend over and take whatever federal requirements are passed down to them, because they couldn’t live without the money they get for education.

    5.) Regarding your take-down of the main point–what, are you expecting a few minute speech to cover every possible way companies benefit from the federal and local government (since the idea was they didn’t get there on their own, not that the fed is specifically responsible)? You mean to tell me that controlling inflation, efficient systems of importing products, zoning laws, banking insurance and regulations, SBA loans, etc, etc, etc all play apart. It wasn’t a comprehensive list, and to assume so is an ignorant way to win an argument.

    6.) With regard to the argument for, or against other public programs–let’s pretend you cut the federal government by, let’s say, half (you claim 75% is waste…). That just immediately more than doubled unemployment. Is the private industry ready to employ an extra 11 million people? Probably not. Now, you’re looking at doubling that unemployment expense, and adding to that, a drastic cut in tax revenues. If you’ve ever been on unemployment, you’re well aware that your expendable income is also next to zero. You’re just found another 8+% of the employable public who can no longer afford to buy your goods. That’s going to hit restaurants, online shopping, banks, dry cleaners, retailers of all kinds, and so on and so forth. As tax revenues decrease, and unemployment payouts (it’s an insurance program remember…?) increase, there will be a need to make more cuts–meaning more unemployment, and again contributing to the problem. Before you know it, America looks like Greece (economically, not geographically). This seems like a great idea to me to.

    There’s lots more to say, but I’m getting too angry. Poorly structured logical arguments, combined with misleading statistics and the anti-intellectual movement that’s sweeping the country will do nothing but drag this country, and this economy into the ground. I don’t think the ‘progressive’ talking points are all true, but the day Americans can talk honestly and openly about issues, without the press and government officials intentionally misleading them with charts like the one above (showing expenditures, without relative revenues), is the day America’s future will once again shine brightly. Until then, I think this is relevant: “The American Republic will endure until the day Congress discovers that it can bribe the public with their own money.” — Alexis de Tocqueville (1805 – 1859)

      

  7. 7Scott on Jul 27, 2012 at 6:49 pm:

    To KansasLib: You threw too many bombs here for them all to be addressed, but here is an article you might want to read about Social Security: http://www.nytimes.com/2010/03/25/business/economy/25social.html. In it, there is a piece discussing the solvency of the fund, (or lack thereof). I seriously doubt just a 2.2% increase in taxes will fix it, but even if it does, what about all of our other federal obligations that are insolvent? The USPS, for example. What do stamps need to cost before we can afford the unsustainable pensions to the postal workers union? Let’s just raise postage another $.50 a letter. No big deal, right? OK, now let’s make sure Medicare is solvent. We need to raise taxes for that…don’t want to throw grandma from the cliff, correct? So what does that cost? How about “Affordable Health Care”? What is that going to cost? Obama said it was under a $trillion. The CBO has revised that a few times, and now it is at least triple that. No big deal, let’s just raise taxes! Uh, but we have fewer employed people, and more regulation which is not helping the employment picture…so, let’s just raise taxes on the wealthy!!! Yeah, they need to pay their fair share! Bill Whittle does an excellent job of explaining this in one of his Firewall segments. Revenue neutral? The numbers don’t add up, sir. Get mad all you want, but the math doesn’t lie. Government, by the way, wasn’t nearly as onerous as the leviathan one we currently have say, just 100 years ago…mostly because there was no federal income tax. Woodrow Wilson, FDR, Harry Truman, and all of the other big government men who have expanded government through the years never foresaw what has happened under our current “progressive” president. If Europe is on the precipice of economic disaster (and I realize you probably do not subscribe to that fact), why then do we wish to follow them there? You should be asking yourself why we need a government with 22 million employees instead of asking “can private industry employ an extra 11 million people?” Of COURSE private industry can absorb 11 million people. Get rid of government and give it a decade, and no problem. Those 11 million people want to eat and have a house etc. This is a foreign concept to a “progressive” though. Am I being too obtuse for you?

      

  8. 8Sam on Aug 23, 2012 at 2:13 pm:

    I find it very interesting that years ago, you called out people for suffering from “Bush Derangement Syndrome” but you seem to suffer from the Obama equivalent.

      

  9. 9Scott on Aug 25, 2012 at 4:49 pm:

    Sam:

    Wanting someone else in the White House and completely hating Bush (BDS) are two different things. Bush derangement syndrome as illustrated by the left wing:

    John Mellencamp: (Bush was) just another cheap thug that sacrifices our young.”
    Meryl Streep: “I wondered to myself during shock and awe, I wondered which of the megaton bombs Jesus, our president’s personal savior, would have personally dropped on the sleeping families of Baghdad?”
    Jennifer Aniston: “Bush is a fucking idiot”
    Moby: “George Bush…who’s a big, fat, fucking liar.”
    Chevy Chase: “(Bush is as dumb as an) egg timer” oh, and the president is a “dumb fuck”.
    Sandra Bernhard: “The real terrorist threats are George W. Bush and his band of brown-shirted thugs.”
    Janeane Garafalo: “(The patriot act is) in fact a conspiracy of the 43rd Reich.”

    Go back and re-read Zombie’s essay. It is absolutely in opposition to Obama and his supporters; that is his right under the first amendment. But there is none of the vitriol displayed by our friends I’ve listed and what they said about Bush.

    Zombie essays = Opposition to Obama and his policies.
    Left wing BDS = Irrational and dangerous outward displays of hatred for the man.

      

  10. 10CtryCtyGal on Sep 2, 2012 at 11:33 am:

    This blog is a bunch of hooey. Where are your sources, why such anonymity? This website is making my mother thing crazy conspiracy theories. Thank you so much!

      

  11. 11The Libriarian on Sep 7, 2012 at 5:39 am:

    Telling cospiracy … into chapter 7 Naples Oubreak Comics ( season 1 )
    http://outbreakzone.blogspot.it/2011/11/episodio-7-big-tonino-teory.html

    Bye and be quiet!

      

  12. 12James on Dec 11, 2012 at 4:08 am:

    Bill Whittle does an excellent job of explaining this in one of his Firewall segments.

      

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