Leadership: An incoherent press conference and contradictory explanation show that if the president thinks the answer to job-killing federal policies is boosting state and local governments with borrowed money, we're really in trouble.

'Tone deaf" fails to describe President Obama's statement at Friday's press conference that "the private sector is doing fine," when median income is down 10% in three years, family net worth has plunged 39%, 23 million Americans are out of work and the official unemployment rate tops 8% for the 40th month in a row, the longest sustained period at that level since the Great Depression.

Mitt Romney's charge that the president is "out of touch" might be more accurate, but we would prefer "clueless."

Then came the walk-back at a later press event: "It is absolutely clear that the economy is not doing fine. That's why I had a press conference," Obama explained to those who were wondering, and as if the two statements did not contradict one another. Cognitive dissonance has been redefined.

Lost in the commotion caused by the dueling teleprompters was the president's suggestion that, aside from job-killing ATMs, the economy was in the tank because state and local governments weren't big enough and spending enough.

He opined that the "weaknesses in our economy have to do with state and local government — oftentimes, cuts initiated by governors or mayors who are not getting the kind of help that they have in the past from the federal government and who don't have the same kind of flexibility as the federal government in dealing with fewer revenues coming in."

In other words, they can't print money. Yet they really don't have to, since state and local revenues have gone up 6% in the past two years. What they have to do is rein in state spending by severing the incestuous relationship between public-sector unions and the government that feeds them at taxpayer expense.

That's what GOP Gov. Scott Walker did in Wisconsin and what voters in San Diego (the nation's eighth largest city) and San Jose (the 10th largest) tried to do when they overwhelmingly approved big cuts to city workers' retirement benefits.

The answer is not to borrow money from China and send it to states that have done their best to become America's Greece.

It's Obama's public-sector political base that's doing just fine. As the Heritage Foundation notes, federal employment has grown nearly 12% since the end of 2007, and while the country suffers from 8.2% unemployment, the jobless rate for government employees is just 4.2%.

What Obama proposes now is what the patron saint of cowboy poetry funding, Senate Majority Leader Harry Reid, D—Nev., was pushing in a $35 billion bailout for state and local governments last fall. "It's very clear that private-sector jobs have been doing just fine," Reid argued.

Fact is, America succeeds when the private sector is unburdened by punitive taxes and regulations, when the successful are not demonized and when the public sector is as inconsequential in our lives as possible.

It succeeds when the private sector picks winners and losers, and when the winners are allowed to keep and reinvest their profits, and the losers are allowed to fail.

It's no coincidence that the public sector and the unions that support it form a key part of Obama's dwindling political base. The federal Treasury and taxpayers' wallets, however, are not a bottomless campaign slush fund.

The private sector is not fine, Mr. President, largely because the behemoth government you've built and supported has sucked all the economic oxygen out of the room.