Wherein Michele Bachmann (Again) Displays Her Economic Ignorance

Michele Bachmann is standing by her bizarre promise to bring the price of gasoline under $2.00/gallon, and displaying her ignorance about economics in doing so:

On Friday, The Washington Times reported, Bachmann stood by her comments in an interview with the paper’s radio affiliate.

“The price of gasoline the day that Barack Obama took office was $1.79 a gallon,” she said in the Times account.”If the price of gasoline was $1.79 a gallon just two and three years ago, certainly we can get it back down to that level again. Why wouldn’t we be able to do that? We’re a ‘can-do’ America.”

Allow me to explain, Michele:

Gas prices where on a sharp upward tick from mid-2007 until mid-2008, and then they dropped precipitously until they reached a level unseen since a brief drop in 2003, and before that unseen since 2001. From 2003 onward, gasoline prices were on a clear upward trajectory, largely because the price of oil itself was also heading upward. Supply and exploration issues are certainly one factor in the price spike, as are tensions in the Middle East, but the largest factor that was driving oil (and gas) prices up during this time was increased demand from nations such as India and China.

What caused the 2008 collapse, then, a collapse so dramatic that it’s echoed when you adjust the price figures for inflation? Obviously, it was the 2008 worldwide financial collapse and recession, with its subsequent decreases in demand, that led gas prices to reach levels we haven’t seen in nearly ten years now. Once the crisis was over and the world economy started to recover, prices started going back up again as demand returned to normal, pre-crisis, levels.

The only reason that gas prices were as low as they were in January 2009 is because the world economy was still suffering the impact of a worldwide financial crisis, credit crunch, and resulting recession. Unless Bachmann proposes to recreate those conditions, her promise is either cynical pandering or complete nonsense.

 

FILED UNDER: Campaign 2012, Economics and Business, Quick Takes, US Politics, ,
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010 and contributed a staggering 16,483 posts before his retirement in January 2020.

Comments

  1. Tsar Nicholas says:

    Not to nitpick but as far as Bachmann’s rantings about gas prices I believe they fall into the categories of cynical pandering and complete nonsense.

    On a different but related topic, the fact that Bachmann is considered a serious presidential candidate of a major political party speaks volumes about the extent to which the body politic has degenerated into farce.

  2. Derek Wain says:

    An exceptionally clueless screed from Team Obama mouthpiece Doug Mataconis. Everyone who read or heard Bachmann’s comments on gas prices knew she was doing what every politician does every day. She uses political metaphor, namely that freeing the U.S. energy industry from hostile overregulation will lower energy prices.
    Doug Mataconis perversely and intentionally distors Bachmann’s plain meaning, which the voters understood.

    The ad hominem attacks against Bachmann by the media jackals have boomeranged against the Left and hugely helped Bachmann.
    http://www.washingtonpost.com/blogs/the-fix/post/how-attacking-michele-bachmann-is-making-her-stronger/2011/07/27/gIQAWdz4cI_blog.html
    Whenever the press attacks Bachmann, she gets a flood of support and money. She becomes ‘Every Woman,’ a misunderstood Tea Party mother of five facing down an elitist, arrogant, Obama-leaning press corps” The dogs bark, but the caravan moves on.
    8/14/11 Bachmann wins Iowa Straw Poll.

  3. In truth this piece is economically illiterate. If the international purchasing power were at 2007 levels,
    We would already have $2 gas. if this administration hadn’t destroyed the dollar with massive deficits
    And QE1, QE2 – the price of oil today would $49 ie. $2 gas http://t.co/4nnOXF7

  4. @Ax_D_Whiteman: Uh, right, it’s been the Obama administration that’s has destroyed the dollar, and not the eight straight years of the Bush administration whose stated goal was a weaker dollar.

  5. sardonic_sob says:

    What do you mean, “Unless?”

  6. Jay Tea says:

    You wanna talk economic ignorance? Obama announced that before the government took over GM, it hadn’t made a profit in decades. Turns out they’d turned profits at least 12 of the last 20 years. Oh, and “New GM” isn’t responsible for the problems you have with your car made by “Old GM.” So much for Obama saying your warranty was even better than before, because it was now backed by the US government.

    Or how about the administration officials who say that unemployment and food stamps stimulate the economy?

    Doug, it would be fascinating to see you pry your attention off cutting down Bachmann, Palin, and other Republicans and turn your gimlet eye towards those currently in power…

    J.

  7. anjin-san says:

    Obama announced that before the government took over GM, it hadn’t made a profit in decades.

    Link?

  8. Ben Wolf says:

    @Ax_D_Whiteman: Inflation over the past four years has been minimal. You also seem to be forgetting oil prices spiking to their highest ever levels in 2008. There ain’t enough cheap oil left in the ground for sustained $2.00 per gallon gasoline.

  9. anjin-san says:

    Oh, and Jay? Not that lame cheese from “before it’s news”. A real source. Obama’s statements are well documented, it should not be hard.

  10. anjin-san says:

    You also seem to be forgetting oil prices spiking to their highest ever levels in 2008.

    That and the post spike price trough, which combined with a further decline in gas prices when the economy tanked in late 2008, makes it easy to make craft an argument about how gas prices soared when Obama took office. But it is an argument that only works with people who don’t get out much. In other words, pretty much everyone at your average tea party meeting.

  11. Herb says:

    @Jay Tea: Bush approved the bailout the month before Obama was inaugurated. Obama spins for it because his job is to enforce it.

    If your problem is with the policy, maybe you should direct your gimlet eye at the Republican who signed it into law.

  12. @Jay Tea: So GM was making a profit despite their collective bargaining agreement which conservatives said was destroying the company?

  13. Jay Tea says:

    My apologies for omitting the link — here it is:
    http://www.weeklystandard.com/blogs/gm-profitable-most-last-20-years_590375.html

    And being profitable for 12 of 20 years does not mean they were in the peak of health. GM was in serious trouble when Obama chose to set aside the bankruptcy laws (darn that pesky Constitution and the “uniform Laws on the subject of Bankruptcies throughout the United States” clause!) and make sure his backers in the unions were well taken care of.

    The point is not that GM wasn’t in trouble. It’s that Obama said it hadn’t been profitable “in decades,” while GM had actually turned profits from 1993 through 2004.

    He also said that the car makers couldn’t make a profit on SUVs. SUVs are extremely profitable vehicles.

    J.

  14. Jay Tea says:

    Oh, my god, it’s even worse than I thought. Here’s from the White House official transcript:

    And so we turned around those auto companies — they are now making a profit for the first time in decades, they’re gaining market share for the first time in years. (Applause.) But what we said was, if we’re going to help you, then you’ve also got to change your ways. You can’t just make money on SUVs and trucks. There’s a place for SUVs and trucks, but as gas prices keep on going up, you’ve got to understand the market — people are going to be trying to save money.

    And so what we’ve now seen is an investment in electric vehicles, and then what we did was we put investments in something called advanced battery manufacturing, because those electric cars, how well they run depends on how good the batteries are — how long they can run before they get recharged. We only had 2 percent of the advanced battery manufacturing market when I came into office. We’re on track now to have 30, 40, 50 percent of that market. (Applause.) We are making batteries here in the United States of America that go into electric cars made here in the United States of America. It creates jobs, and it creates — (applause) — and it creates energy independence, and it also improves our environment.

    http://www.whitehouse.gov/the-press-office/2011/08/15/remarks-president-town-hall-meeting-cannon-falls-minnesota

    To paraphrase Dave Bowman, “My god, it’s full of fail!”

    SUVs are very profitable vehicles. GM made a profit in 12 of the last 20 years. Automakers would lose money on electric cars if they weren’t subsidized — if the government wasn’t literally paying people to buy them. And the batteries are made by LG in Korea, using rare earths from China.

    Did Obama get ANYTHING right there?

    J.

  15. john personna says:

    What a funny thread. Michele Bachmann says something economically crazy, and so (broadly speaking) defenders have two choices:

    1) say something else economically crazy
    2) talk about some other issue entirely

  16. Jay Tea says:

    @john personna: Just trying to establish a baseline for “crazy,” john. It’s a subjective term — it needs something to be compared to in order to have any meaning.

    Likewise, Bachmann is running for president. I think it’s eminently fair to contrast her “craziness” with that demonstrated by the guy she wants to replace.

    J.

  17. john personna says:

    @Jay Tea:

    You told a partial history of the GM bailout. There are two missing facts that shred it as an example, for me.

    First, while GWB did not bail out GM he did provide bridge funding knowing full well that he was passing the ball to Obama, who would.

    Second, it is a massive misunderstanding of politics to think that any president of any party would let an institution like GM fail on their watch. It was completely off the table.

    Combine those realities, and it’s kind of hard to see GM as something personally tied to Obama, though it is is very common for ideologues to see it as such. They are just incapable of stepping back, to see the nature of the US political system, what parties and individuals control, and what they do not.

  18. john personna says:

    BTW, I think the GM saga suffers from a “complexity” that the $2 gas thing does not.

    $2 gas is “simply” crazy. You don’t even need to get fancy to explain why.

  19. john personna says:

    To put it another way, to NOT bail out GM you’d need a president like Ron Paul, but that’s the reason you’ll never have a president like Ron Paul.

    Ideological purity NEVER makes it to the oval office.

  20. Jay Tea says:

    @john personna: Excellent explanation, john. It sums up perfectly why it was so critical to bypass the existing bankruptcy laws to benefit key Obama backers, and why Obama was so woefully ignorant of the circumstances surrounding one of his key claimed accomplishments.

    …except that it doesn’t.

    Oh, and to the others: by noting that the first steps for the bailout were done while Bush was president obscures how it also happened after the election, where Bush was doing all he could to go along with Obama’s plans to smooth the transition. It also overlooks how Obama holds up the bailout with pride — he wants ownership of it, and I’m more than willing to give him all the credit, not just the 95% or so that happened under his administration.

    J.

  21. john personna says:

    I explain that it was a political necessity for any president, and you complain that this president is happy he pulled it off?

    That’s kind of silly, and shows that lack of understanding.

    Any president, even one ideologically opposed to a bailout, would have sat there at night visualizing the television impact of GM plant closures, dealership closures, and on and on. And he would have bailed them out to avoid that imagery being attached to him.

    That’s the bottom line.

    And yes, when the government spends billions on anything the apparatchiks get in there to chisel a piece. That is also a universal.

    NONE OF THIS is about economic ignorance. This is an IDEOLOGICAL DIVIDE.

    This is not something stupid like “I can promise $2 gas because it used to be $2.”

    Hey, can Bachman get me some $600 gold? After all, gold used to be $600.

  22. john personna says:

    BTW, as I said at the time, I would have been fine with an orderly bankruptcy for GM. That was my ideological preference. I also could see that it was never going to happen.

  23. Derek Wain says:

    Bachmann’s gas comment was obviously political metaphor for an energy friendly policy from a Bachmann adminstration vs. the extemist anti-energy policy of Obama. The deliberate and perverse misinterpreation of her political metaphor by Team Obama media jackals was political propaganda, not reporting.

  24. john personna says:

    @Derek Wain:

    Metaphor! ROTFLMAO.

  25. Jay Tea says:

    @john personna: No, you state that it was a necessity. And a lot of dealerships did get closed anyway. You want a picture of a boarded over Saturn dealership? I got one a few miles from here.

    There very well could have been an orderly bankruptcy, with the bond holders not getting boned (you know, people who had invested in GM) and the union contracts set aside and renegotiated. But that would have been harmful to Obama’s backers, so it absolutely was a political necessity for him to save his backers. Not quite kosher with the aforementioned section of the Constitution, but required for Obama.

    And I see you don’t want to discuss Obama’s “economic ignorance.” How he had no clue about the auto industry, how his administration thinks food stamps and unemployment are economic stimuli.

    You say that Bachmann is “ignorant” or “crazy” on economics. I postulate that even if true, she’s less crazy and ignorant than those currently running the show.

    J.

  26. Jay Tea says:

    Let me clarify that last paragraph: Obama HAS no clue about the auto industry, but still presumes to dictate how they need to succeed. This from a guy who’s never held any kind of management position in the private sector. He seems to think that because he bought two of the companies with our money, he is suddenly an expert.

    Don’t work that way.

    J.

  27. john personna says:

    @Jay Tea:

    @john personna: No, you state that it was a necessity.

    lolz. It happened. It never even came close to not happening.

  28. OzarkHillbilly says:

    “I can promise $2 gas because it used to be $2.”

    I remember 25 cent gas. As long as we are dreaming, why be a piker?

  29. john personna says:

    @Jay Tea:

    Let me clarify that last paragraph: Obama HAS no clue about the auto industry, but still presumes to dictate how they need to succeed.

    The paranoia is important to your message, isn’t it? You need to have Obama out there “dictating” to validate your sense of dis-empowerment and oppression.

  30. Jay Tea says:

    @john personna: Don’t get philosophical here. Just because it happened, doesn’t mean it had to happen. For example, I responded here, but I didn’t HAVE to respond.

    J.

  31. Jay Tea says:

    @OzarkHillbilly: Geezer. I remember $0.57 a gallon.

    J.

  32. Jay Tea says:

    @john personna:

    But what we said was, if we’re going to help you, then you’ve also got to change your ways. You can’t just make money on SUVs and trucks. There’s a place for SUVs and trucks, but as gas prices keep on going up, you’ve got to understand the market — people are going to be trying to save money.

    You wanna spin that into NOT “dictating?”

    J.

  33. john personna says:

    @Jay Tea:

    That is complete paranoia because GM will sell a lot of SUVs this year, and will sell a lot next year.

    No one took your SUVs away.

    The CAFE requirements are even very mild. Some people (like BMW, IIRC) just ignore them and pay the token fee.

  34. john personna says:

    BTW, the thing that did almost bankrupt GM was that they ignored gas price fluctuations. At a time they had small cars and large. When gas prices fell they sold the large. When gas prices rose, they sold the small.

    Remember Saturn? GM got it out of the small car business and into making SUVs just before the gas spike of the mid-2000s. Genius.

    So I’d say the advice that they be ready for high prices was good.

  35. Jay Tea says:

    @john personna: “Advice?” Here’s the guy who just bought the company and fired the CEO saying “you have to do this.” That’s a suggestion like “this is a nice shop you got here… shame if anything wuz to happen to it” is an insurance sales pitch.

    Further, small cars mean small profits. GM has such high costs — labor, pension, and health care — that it couldn’t compete on the small car front. Cavalier, Cobalt, Aveo — just not competitive against imported econocars.

    And it’s still got those high costs, thanks to the way the bailout was structured.

    Oh, and yes, I remember Saturn. I offered you a pic of a closed-up one several comments ago.

    J.

  36. john personna says:

    @Jay Tea:

    @john personna: “Advice?” Here’s the guy who just bought the company and fired the CEO saying “you have to do this.” That’s a suggestion like “this is a nice shop you got here… shame if anything wuz to happen to it” is an insurance sales pitch.

    So tell me when GM stopped making SUVs. Oh wait, they didn’t. Geez, if it wasn’t 7am on the west coast, I wouldn’t waste my time with this.

  37. WR says:

    @Jay Tea: Even for you this is an awful lot of work to change the subject from the fact that your current pinup is an economic moron. I realize you are desperate to never let anyone criticize your fantasy girls, but if it bugs you so much, why don’t you just not read the post? Really, La Michelle isn’t reading your comments and isn’t going to come to your house for that dream date anymore than Palin did.

  38. WR says:

    @Jay Tea: Could you point out the place in that quote you posted where Obama said SUVs arent profitable? Because it ain’t there, except maybe in you fantasies.

  39. CB says:

    Bachmann’s gas comment was obviously political metaphor for an energy friendly policy from a Bachmann adminstration vs. the extemist anti-energy policy of Obama. The deliberate and perverse misinterpreation of her political metaphor by Team Obama media jackals was political propaganda, not reporting.

    sorry for the useless comment, but this is one of the finest pieces of partisan pretzel twisting i have ever seen. a flawless 10 points, sir.

  40. Jay Tea says:

    @CB: Let’s not forget that Obama said, as a candidate, that under his administration, the price of energy would “necessarily skyrocket.” In a lot of ways, he’s succeeding at that.

    And I see no one wants to talk about Obama’s fiscal analysis of the auto industry, or his knowledge about where the Volt batteries are actually made.

    No, let me rephrase that. I see no one wants to acknowledge Obama’s lies about GM’s fiscal history and how the Volt battery is made in the US.

    Don’t feel like giving him the benefit of the doubt.

    J.

  41. Jay Tea says:

    @john personna: Obama just made the “you can’t make SUVs” statement. I’m quite comfortable in assuming that there are people at GM who actually have a clue are 1) praying that Obama was just talking out of his ass as usual, B) praying that this, like most Obama statements, comes with an expiration date, and III) working on ways to get him to change his mind.

    Remember, this is the guy who pushed them into getting the Volt out before it was ready, and they’re losing money on each one… and have a hefty backstock on hand. 22 days, last time I heard.

    J.

  42. john personna says:

    @Jay Tea:

    So you just need to look up “dictating.”

  43. Jay Tea says:

    @john personna: You mean “commanding?” As I noted in the Mafia analogy, it needn’t be phrased as a command to be meant as such. All that matters is that the recipient understands the message behind the words.

    J.

  44. john personna says:

    @Jay Tea:

    But he doesn’t have to follow them? Non-binding advice is the same as dictating actions to our auto industry?

    Do you eat too many pretzels?

  45. Jay Tea says:

    Oh, sure, GM could ignore Obama’s advice. I’m certain Rick Wagoner would endorse that move.

    Just like nobody HAS to pay protection money… as long as you are prepared to accept the consequences.

    J.

  46. Confused by J says:

    @J, how exactly did Obama saying, “And so we turned around those auto companies — they are now making a profit for the first time in decades, they’re gaining market share for the first time in years” turn into GM hasn’t made a profit. I don’t see GM mentioned anywhere in your quote…

    As far as the Volt goes, it isn’t profitable because there is very few places to charge the thing when someone travels which makes it useless in most places. That has nothing to do with Obama.

    Now who’s ignorant?

    BTW, since Obama came into office my stocks have been doing great, before he came in office, my stocks were stagnant or in decline. Translated for the slow: Obama did a good job with the economy, which is how and why my stocks are doing good, not bad.

  47. Confused by J says:

    Let’s just add this:

    “General Motor’s Chevy Volt, the all-electric car planned for 2010 production, dominated the grants. G.M. received $106 million for battery pack production in Brownstone, MI, for the Volt, which is estimated to go the first 40 miles daily on electricity and then the rest on gasoline.

    Compact Power received $151 million for production of cells for the Volt, to be manufactured in several Michigan towns. In addition, G.M. received $105 million for factory construction for the next generation of rear drive electric vehicles in White Marsh, MD, and Wixom, MI.”

    Those quotes were from http://www.greenlaborjournal.org/cleantech/advanced-batteries-will-be-made-in-america-

    Sounds like the Volt batteries should be made in America to me, or they are fraudulently using grant money to buy foreign batteries instead of making them in America.

    I guess Obama didn’t lie about making batteries in the US, instead, he gave GM money so they could make them in the US.