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Friday, November 4, 2011

I Love This Article!!

The following article appears in today's New York Times, and I love it.  It goes on and on about how Obama's economic team got the forecast wrong, poor babies, and it wasn't their fault.

Of course it was their fault!  They simply do not know how the real economy works.  For just one example, go back in this rant and read about the utter stupidity of Christina Romer's Cash For Clunkers.

They got the forecast wrong because all of their complicated mathematical models are full of crap and utterly useless.  But you won't find that in this article.  If you do, please point it out to me.

November 4, 2011, 10:00 am

"Early Economic Projections Could Haunt Obama in 2012

Doug Mills/The New York Times  President-elect Obama and his economic team released a report in January 2009 that projected unemployment rates with and without a stimulus.
A year out from Election Day: an eon in political time, sufficient to alter circumstances substantially for or against either party. But Friday’s tepid jobs report brings a fresh reminder of the stubborn difficulty President Obama and his team face in overcoming one of their most enduring mistakes, one made before he even took office.
Stevenson On Politics
The Times’ political editor on 2012.
Ten days prior to Mr. Obama’s taking the oath of office in January 2009, his economic team released a report outlining the estimated benefits of the $775 billion stimulus plan he was seeking. The projections were quite specific. The stimulus legislation passed just a few weeks later at about the size the White House had sought. Had all gone as promised by the report, the unemployment rate right now would have been around 6.5 percent, heading down to around 6 percent by the end of this year and a little over 5 percent at the end of next year.
The Labor Department announced Friday that the unemployment rate for October was 9 percent, down from 9.1 percent a month earlier, and that job growth for the month was just 80,000, nowhere near the rate necessary to drive joblessness toward anything like 6 percent. The Federal Reserve has already projected that the unemployment rate will be at least 8.5 percent at the end of next year, meaning the next presidential term would start with a higher rate than the 7.3 percent Mr. Obama inherited when he took office.
The gap between the projections his team made in early 2009 and the grim reality of the last three years has produced a substantively debatable but politically powerful argument for Republicans. It has helped rally conservative opposition to most of Mr. Obama’s subsequent agenda, and going into the thick of the presidential race it has become the primary basis not only for the Republican case against a second Obama term but also for the most intensive conservative assault in decades on Keynesian economics and the role of government.
Sometimes in factually exaggerated ways, Republicans on the campaign trail are using the busted projections to assert that the stimulus bill failed, that government cannot create jobs and that it is time for less spending rather than more.
“He has proven for once and for all that government spending will not create one job,” Gov. Rick Perry of Texas said of Mr. Obama at one Republican presidential debate, adding: “Keynesian policy and Keynesian theory is now done. We will never have to have that experiment on America again.”
Mitt Romney’s economic plan highlights the chart in the 2009 Obama report showing the projected path of the unemployment rate following the stimulus and an additional line showing the (much higher) actual unemployment rate. Other than its caution about significant margins of error, Mr. Romney’s plan states, the Obama projections “failed to fulfill the predictions of its authors and their White House sponsor” and make clear that Mr. Obama’s approach has not worked.
The two parties would no doubt be engaged in a spirited ideological debate over economic policy right now even if that early 2009 report had gotten it exactly right.
And for those interested in the underlying economics, there’s a persuasive case that the report actually did not get it all that wrong. While the report seriously underestimated the severity of the recession and therefore the job losses the nation would suffer in 2009, it was proven right in its basic point that the stimulus plan would yield substantial job-creation compared to doing nothing. In other words, it was correct in projecting a significant, positive impact on jobs from the stimulus spending, but wrong in its assumptions of the depths of the job-loss hole the stimulus was trying to fill.
Despite repeated Republican claims to the contrary, the stimulus bill created at least hundreds of thousands of jobs, according to nearly all nonpartisan analysts, including the Congressional Budget Office.
But it’s impossible to compress the nuance onto a bumper sticker. As a political matter, Republicans have used the shortfall relative to the projections to establish a narrative that the stimulus failed, and with it Mr. Obama’s presidency. To the White House’s intense frustration, the chart showing the early 2009 projections has become the centerpiece of the closing Republican argument against Mr. Obama’s re-election and against the economic policies his party stands for, including the jobs package Congress is debating and largely rejecting now.
“It’s the most destructive non sequitur in the history of economic policy,” said one of the authors of the report, Jared Bernstein, who was economic adviser to Vice President Joseph R. Biden Jr. until earlier this year. “Somehow because we got the forecast wrong, they don’t have to do anything to help the unemployed.”
“The fact that the recession was deeper than we and the majority of other forecasters realized at the time is no reason for Congress to give up on helping the jobless,” he said. “If anything the numbers suggest that we should still do more.”
Christina Romer, who served as chairwoman of the Council of Economic Advisers and was the report’s other main author, has similarly called for additional stimulus measures, and the White House has labored to produce counternarratives to offset the damage from the 2009 projections.
But so far the White House arguments, while sound on the merits, have been largely defensive in nature and hardly inspiring politically: The economy’s condition three years ago was much worse than anyone realized. Without the stimulus job losses would have been much worse. If nothing further is done to address the problem, it’s the fault of the Republicans.
The best hope now for the White House may be convincing voters not to judge Mr. Obama based on those nearly three-year-old projections of how the stimulus would work, but instead on whether the economy is substantially improving from a year ago, when unemployment peaked at 10.1 percent.
The jobless rate is down more than a full percentage point since then, not a small improvement. Friday’s jobs report held mixed signals about the economy’s strength. But there are not many months left for Mr. Obama to persuade the nation to measure his performance by a different benchmark."

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