Daniel Patrick Moynihan, the former senator from New York who died in 2003, bequeathed us one of the killer lines of American politics: "Everyone is entitled to his own opinion but not his own facts."
It's in that spirit that Bloomberg News' James Dowling and Mike Dorning report that some of the assertions made by Speaker John Boehner's in the big economic policy speech he gave in New York earlier this week seem to fall into the "his own facts" category.
Boehner's statement in his Wall Street speech that government spending "is crowding out private investment and threatening the availability of capital" runs counter to the behavior of credit markets.
"Look at interest rates. Look at capital spending," said Nariman Behravesh, chief economist of IHS Inc., a research firm based in Englewood, Colorado. "It's very hard to come to a conclusion that there's any kind of crowding out."
The cost of borrowing is low by historical standards. Yields on 10-year Treasury notes were 3.21 percent and yields on 2-year Treasury notes were 0.59 percent at 5 p.m. in New York yesterday, according to Bloomberg Data. Average spreads on investment-grade corporate bonds have narrowed from 1.64 a year ago to 1.39 on May 9, according to Barclays Capital.
It's true, the Bloomberg story points out, that Boehner isn't alone in his view that federal spending-borrowing is crowding out private investment. Economists of no less stature than Alan Greenspan, the former Federal Reserve chair, and John Taylor of Stanford University who worked in the George W. Bush administration.
But Greenspan has been wrong before. He's admitted, for instance, that before the housing bubble popped, he thought the financial sector and markets generally could police risks on their own.
Also, he and Taylor have reputations as solid conservatives. So you'd expect Boehner to line up on their side of the political line of scrimmage just like you'd expect Paul Krugman to line up on his.
More from Bloomberg:
In his speech, Boehner criticized a 1990 budget deal that included a tax increase, saying "the result of that so-called bargain was the recession of the early 1990s." The speaker said, "it wasn't until the economy picked back up toward the end of that decade that we achieved a balanced budget."
The speaker didn't mention a 1993 tax increase that raised the top individual marginal rate to 39.6 percent, where it stood until 2001. In 1998, the government recorded its first budget surplus in almost 30 years.
The U.S. economy grew at an annual rate of 4.1 percent in 1994, the year after Congress passed the second tax increase of the decade. The growth rate dropped to 2.5 percent in 1995, and thereafter rose to 3.7 percent in 1996. The economy grew more than 4 percent a year from 1997 through 2000.
The 1990s were a period of "stalemate between the Republican Congress" and President Bill Clinton, a Democrat, that paved the way for balanced budgets because there was "no major giveaway legislation," said Eugene Steuerle, a former Treasury Department official who is Institute Chair at the Urban Institute, a nonpartisan research center in Washington.
Liberal Democrats, of course, often have their own sets of facts, too, which the aforementioned John Taylor of Stanford cogently points out on his Economic One blog. So its clearly not a tendency any one political party or ideology has a corner on.
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