It isn't that President Obama's policies aren't working. It is just that the economy was so much worse off than anyone realized. -- Or so the Obama administration claims.
Vice President Joe Biden repeated the mantra again this past Sunday on ABC's "This Week." Host George Stephanopoulos asked him how the 9.5 percent unemployment rate in June squared with the administration's prediction that if the stimulus package was passed, "unemployment will peak at about 8 percent." Biden replied: "we and everyone else misread the economy. The figures we worked off of in January were the consensus figures and most of the blue chip indexes out there."
Translation? The economy being much worse than ever predicted isn't Obama's fault, the Bush administration supposedly left us a worse economy than anyone realized. Even to Stephanopoulos, the alternatives were only two: "either you misread the economy [that the economy was worse than Team Obama realized] or the stimulus package is too slow and to small." A low and behold, here's this headline in today's Wall Street Journal reports "Calls Grow to Increase Stimulus Spending."
Biden is factually wrong. The administration never just "worked off" data from January, and the economy was not much worse than they thought. The administration's economic advisor Jared Bernstein contends that the 8 percent estimated unemployment "was before we had fourth-quarter results on GDP, which we later found out was contracting on an annual rate of 6 percent, far worse than we expected at that time." Even the president made the claim again today while in Moscow: "It was only after the [fourth]-quarter numbers came in, if you recall, that suddenly everybody looked and said the economy shrank 6%."
But despite the administration's claims and the typical misinformation by groups such as Media Matters, the administration predicted only a 8.1 percent unemployment for 2009 on February 28th (Click here for more) -- this was after the 6.2 percent drop in GDP during the fourth quarter of 2008 was publicly released.
There was plenty of warning even before that. In a piece published by The Wall Street Journal on December 11 with the telling headline"Fourth-Quarter GDP: Worse and Worse" the paper estimated a drop in GDP of 6 percent at an annual rate for the fourth-quarter. It is also a little hard to ignore business economists and forecaster expectations about what was going to happen to unemployment and GDP for the rest of the year and it got worse right when the stimulus spending bill was passed.
The alternative explanation should be obvious: the stimulus made things worse. The notion that "the stimulus package is too slow and to small" implies that massive government spending helped the economy. But the resources the government spends has to come from some place. Spending almost a trillion dollars on various stimulus projects means moving a lot of resources from where the private sector would have spent it, eliminating the jobs many people currently have.
On "FOX News Sunday," this past week Steny Hoyer, the Democratic House Majority Leader, raised yet another possibility: "we inherited 2 million jobs being lost in the three months before we took office. The policies that were put in place about 130 days ago -- not eight years ago, but 130 days ago." But job loses have accelerated under the Obama administration. Since 1990 there have only been three months where the unemployment rate has increased by as much as a half a percentage point, and two of those have been since Obama became president. During the last five months of 2008, 2.15 million jobs were lost. From February through June, 2.64 million jobs were lost.
Of course, the 130 days were claimed to be more than enough time for the stimulus to work before the stimulus was passed. On January 25, Larry Summers, Obama's chief economic adviser, said that the economy would start improving "within weeks" of the stimulus plan being passed.
Rewriting history may work for Media Matters, but it would be nice to hold the rest of the media to higher standards. Not all documents have conveniently disappeared down the memory hole. But if they are going to invent history they might start with finding a single example where massive government spending has worked in the past.