Like many of our readers, I can’t watch Mr. Obama’s SOTU.  His ability to distort reality is amazing, and simply raises my blood pressure.  So why watch?  Well, actually because I was hooking up a new TV setup while it was playing and had to check signal.  I wasn’t listening very long (maybe a few minutes) and here he goes again.

I believe a thriving private sector is the lifeblood of our economy. I think there are outdated regulations that need to be changed. There is red tape that needs to be cut. (Applause.) There you go! Yes! (Applause.) But after years now of record corporate profits, working families won’t get more opportunity or bigger paychecks just by letting big banks or big oil or hedge funds make their own rules at everybody else’s expense. (Applause.) Middle-class families are not going to feel more secure because we allowed attacks on collective bargaining to go unanswered. Food Stamp recipients did not cause the financial crisis; recklessness on Wall Street did. (Applause.) Immigrants aren’t the principal reason wages haven’t gone up; those decisions are made in the boardrooms that all too often put quarterly earnings over long-term returns. It’s sure not the average family watching tonight that avoids paying taxes through offshore accounts. (Applause.)

I could comment on almost all of this, but I’d like to drill down to the middle line:  “Food Stamp recipients did not cause the financial crisis; recklessness on Wall Street did.”    Really?  Mr. Obama points out two causal possibilities for the financial crisis, A) Food Stamp recipients, or B) Wall Street.  Given those two choices, what’s the average American to think?  “Yes, Wall Street had a lot more to do with the crisis than Food Stamp recipients–I have to agree with Mr.  Obama.”  And those that disagree our President?  “They must blame the financial crisis on poor people who get Food Stamps.  That’s ridiculous!  They must really just hate poor people.”  What’s the problem with the falseness of this dichotomy?

Mr. Obama’s characterization of the issue isn’t even a really fair straw man argument.  Usually a straw man argument just distorts the other side’s argument–Mr. Obama totally makes one up!  Has there been anyone that actually said that food stamp recipients caused the crisis?  Or even were remotely related to the financial crisis?  He well knows the usual counter–that government policies promoting home ownership, encouraging banks to take lower quality loan applications, Fed easy money policy are the real blame–i.e., that it was a lot of bad policies that incentivized private sector misallocation of capital.  Now I understand he doesn’t buy that argument, but why would he not at least be honest about what the argument is?  At least state generally what it is before he distorts it for political purposes?  You can believe that every word of every line was crafted for a particular messaging effect.  My translation: “Republicans are mean people who are clueless about the real problems of this country–they hate poor people and love Wall Street.”  All of this in a speech where he laments partisanship.

This is important since the global economy is once again reeling, while our own stock and bond markets are breaking down.  If we have another fiasco, who will the president blame?  Rest assured, it will not be zero interest rate policies at the Fed for the last seven years.  It will not be profligate spending by the government.  It will not be regulatory overreach.  But one thing Mr. Obama will be right on: it won’t be because of food stamp recipients.*

* While food stamp recipients did not have anything to do with creating the financial crisis, there is quite a bit of microeconomic evidence that the expansion of the welfare state (to include expanded food stamps) post the crisis is to blame for the lack of subsequent employment growth.  See Chicago economist Casey Mulligan’s The Redistribution Recession.