Jobs forecast not the only ‘dumb’ thing about stimulus (video)

Agreeing with Barney Frank twice in two months? Don’t worry, the Massachusetts Democrat wasn’t right about everything in his interview with Fox Business Network yesterday. But he did finally acknowledge what has been obvious to everyone outside the Democratic Party for some time now (starting at the 3:37 mark):

Here’s a transcript of the relevant part of the exchange:

President Obama, whom I greatly admire … here’s the mistake he made. When the economic recovery bill — we’re supposed to call it the recovery bill, not the stimulus bill; that’s what the focus-group people tell us — with the economic recovery bill, he predicted, or his aides predicted at the time, that if it passed, unemployment would get below 8 percent. That was a dumb thing to do. In the first place, nobody knows. In the second place, what they should have said is, if we pass it, it’ll be better than if we don’t pass it. (emphasis added)

But what about the supposed reliability of the Keynesian models Obama’s economic advisers used then — and still use now to assure us that the money that was spent really did work?

We all know why the Obama team put out that “dumb” counterfactual about what unemployment would do absent the stimulus — because otherwise, too few people were willing to believe that borrowing and spending $787 billion (now bumped up to $862 billion) was such a great idea. Now that the prediction has proven not just politically dumb but substantially wrong, why should we believe the new counterfactuals, based on the same models, being put out to convince us that the stimulus really did work — and that what we really need is more borrow-and-spend stimulus?

Isn’t that a little dumb, too?

176 comments Add your comment

Question Authority

August 18th, 2010
12:20 pm

Keynesian economics is a fraud and a farce. If the first Depression should have taught anyone anything it was that Keynesian economics doesn’t work.

Austrian economics on the other hand completely explained the first Depression, predicted every growing and bursting bubble since, and correctly explains what is happening in this Depression. Yes, Keynesians say that somehow you can have your cake AND eat it too. Austrians fully realize that this very behavior is the source of the problem.

No easy way out folks.

http://www.mises.org if you finally want to get a good, sound, solid economic foundation and understanding of what is happening, how much worse it is going to get, and what we need to really do to get back to sound economic footing.

Ayn Rant

August 18th, 2010
12:34 pm

At last, I’m able to submit a comment early enough to make the first page instead of the third or fourth.

I’d like to take this opportunity to thank the AJC, in particular Cynthia and Kyle, for sponsoring the reader forums in the opinion section of this on-line newspaper. I can’t find such lively, popular forums in any other web newspaper. Perhaps we should buy a copy of the printed AJC occasionally to show our appreciation.

At random times throughout the week Cynthia and Kyle toss out a handful of bait to a bunch of ravenous hyenas at keyboards, triggering a frenzy of aggression, frustration, and revulsion. It’s dumb as pig drool; but it’s fun!

Yet again today, we can vent our prejudices, display our ignorance, cite mis-information as authority, confuse fancy with fact, and propose simple solutions to the complex problems of the nation and the world. Free speech is extended to everyone, even to those who have nothing worthwhile to say but can’t stop talking!

Kyle has just tossed us another installment of his never-ending series, “ain’t Obama awful”. Let’s go to it fang to jugular!

CrazyInGA

August 18th, 2010
12:46 pm

President Obama has always been in a NO WIN situation with people who think like Kyle.
DO NOTHING, DO SOMETHING; same end game blame results.

Jefferson

August 18th, 2010
12:54 pm

One day people will figure out most of the problems in their life have little to do with what goes down in DC.

RW-(the original)

August 18th, 2010
12:58 pm

Isn’t that a little dumb, too?

That or Cloward/Piven in action.

Kyle Wingfield

August 18th, 2010
12:58 pm

Jefferson: Oh, for the day that the people in D.C. figure that out — and start acting accordingly.

Road Scholar

August 18th, 2010
1:03 pm

Yes it was stupid to predict the specific results (8%) of the stimulus, esp since the economy was in the midst of a free fall. I wonder what the unemployment would have been w/o it though. I laugh at those who said that we shouldn’t have done this and/or bail out the financial system. Do those naysayers live in a paralleel universe and know, for a fact, what the results would have been? Esp those who have no clue about the economy, business, or the state/degree of the downturn! The economy is a “ship” that cannot turn “on a dime”. Time is needed for the results to be seen, esp if additional steps are taken.

The stimulus was needed, as well as an additional infrastructure stimulus bill to create and maintain commerce, jobs, etc. This has been done in previous downturns with great success.

With all the debate on what should have been/be done, other than tax cuts for businesses, where are the Repub ideas and legislation (in writing with specifics)? It’s easy to say “no”/ I don’t support that, but heard little other than reduce the deficit. Tax cuts contributed to the deficit, esp since the wars were kept off line.

Horrible Horrace

August 18th, 2010
1:04 pm

Recovery/Stimulus…who cares. The Country is in a mess and Obama is busy scampering about in the Gulf with lil Sasha.

Horrible Horrace

August 18th, 2010
1:05 pm

Obama is so far in over his head its really getting scary.

@@

August 18th, 2010
1:06 pm

Shortly after Obama went into action, I predicted that his downfall would come from his talking too much. Now his fellow dems are getting in their two-cents worth, which basically attests to the fact that Obama’s worth about two cents.

On that we can agree.

Obama’s in waaayyyyyy over his head. The dem’s sacrificial lamb.

barking frog

August 18th, 2010
1:07 pm

Jefferson 12:54 The Problem is that what goes down
in DC has more to do with the problems in their
lives more and more each year.

Bill Balasky

August 18th, 2010
1:10 pm

But wasn’t most the spent stimulus money geared towards tax cuts and credits? Isn’t that THE SOLUTION as spoken by the neocons?

@@

August 18th, 2010
1:16 pm

In the beginning, it was like we were flying on auto-pilot.

Now that the passengers (dem pols) realize Obama doesn’t know how to fly a plane, they’ve all jumped in the pilot’s seat, and are wrestling for the controls.

Mayday…Mayday…Mayday…we’re goin’ down!!!!!!!!!!!!!!!!

Richard

August 18th, 2010
1:17 pm

“Now that the prediction has proven not just politically dumb but substantially wrong…”

Except you still have no way of knowing what would have happened without the stimulus spending and you have no way of knowing what will happen when the rest of the money is spent (assuming people start spending a greater percentage of their money driving up the supposed Keynsean multiplier).

In this case, hindsight isn’t 20/20, it’s nonexistant.

Bosch

August 18th, 2010
1:19 pm

So when are you going to admit that the trickle down theory of tax cuts are on the dumb side as well?

CJ

August 18th, 2010
1:21 pm

Now that the prediction has proven not just politically dumb but substantially wrong,…

Of course, the stimulus not working as well as hoped (or Obama stupidly predicted out loud) is a very different thing from the stimulus not working. But such distinctions are incomprehensible to those who insist on allowing ideology to get in the way of facts, evidence, and logic.

The so-called liberal media hasn’t reported about the scores of Congressional Republicans who voted against the Recovery Act and then showed up at ribbon cutting ceremonies to take credit for stimulus projects and corresponding jobs (that they opposed) in their districts. In addition, Kyle makes fun of “Keynesian models” while advocating on behalf of Keynesian models, albeit a twisted version of them, when advocating that we maintain the Bush tax cuts for the wealthy to, wait for it, stimulate the economy. In short, these guys are arguing with themselves.

Kyle Wingfield

August 18th, 2010
1:23 pm

Bill Balasky: Not most of it, about a third of it. But here again, as I’ve said before, not all tax cuts are created equal. Getting all workers to mindlessly spend an extra $8 a week (”mindlessly” fwiw refers to the way the tax cut works, not a comment on the workers themselves) does not change incentives to work, invest or create jobs. Alternatives mentioned at the time that probably would have worked better include reducing payroll taxes.

Richard: You’re right, we have no way of knowing what didn’t happen. What we know is that the policy was sold on the premise that it would do X, and it didn’t do X. Now, why should we consider the policy a success?

HDB`

August 18th, 2010
1:25 pm

Jefferson and Kyle: What you fail to note is that Washington sets the CLIMATE for economic determnation….and that climate is translated to the states. The economic climate IS changing…albeit slowly!! Remember….s#!t rolls downhill — the only time “trickle-down” works!!

Redneck Convert (R--and proud of it)

August 18th, 2010
1:28 pm

Well, all I got to say is if we had the Rev. Huckabee (R–Ark.) in the White House right now, we wouldn’t have no unemployment and we could listen to some bass playing for free. And we’d all be Saved to boot. The reason we’re in such a mess is because we went away from the Divine Path and put a Moslem Towelhead in the White House. Him and the Jews and the gays.

There’s only one way to get people back to work. First Congress has got to pass a big Tax Cut for the rich. Then the big shots will have so much money they’ll be forced to hire people with it just to be able to clear a path to their front door. We’ll have Trickle Down big-time.

But you go right on not listening to me and see how poor you get. Pretty soon you’ll be trotting along behind my beer truck and begging me to toss you a can.

Have a good p.m. everybody.

Churchill's MOM

August 18th, 2010
1:29 pm

If you want to know why the stimulus isn’t working go to Wal Mart & try to buy something made in the USA. While the USA is still the leading manufacturing country, we no longer make consumable retail goods. Our tax law over the years has simply exported these jobs off shore.

Kyle Wingfield

August 18th, 2010
1:32 pm

Well, HDB, we sure have a lot of it rolling downhill toward us right now! LOL

Bosch

August 18th, 2010
1:36 pm

“What we know is that the policy was sold on the premise that it would do X, and it didn’t do X. Now, why should we consider the policy a success?”

Maybe because economic policies aren’t like microwave popcorn. It takes a while to determine a policies’ effectiveness — and we certainly need to hold judgment until the stimulus has been fully implemented.

wallbanger

August 18th, 2010
1:37 pm

Obama is in over his head? To bad he isn’t standing in water. That so called recovery bill hasn’t been spent out yet, but additional recovery bills have been passed and piled on top of the first one. It is completely nonsensical to say that government jobs stimulate anything except govt employee pockets. These employees do not produce a thing for sale in this economy. That is up to private industry, which has been taking it up the bum. Obama doesn’t particularly care for entrepreneurs and successful businessmen. He has made that abundantly clear by demonizing them every time he can. His people aren’t wealthy, don’t create anything, don’t create jobs, and most of them don’t even hold jobs. That is what we need for a continuing freefall–a trainwreck President.

B-fan

August 18th, 2010
1:43 pm

The stimulus should have come from the private sector, like Fox News giving $1 million to the GOP Governor’s Assoc. They’re about as fair and balanced as this article.

StJ

August 18th, 2010
1:51 pm

Not to mention the trainwreck Vice President, who trumpeted the stimulus BS and the 8% figure louder than anyone and has since said that 8 million jobs aren’t coming back at all.

These people demonize and denigrate wealthy people (and working people) and then wonder why all this money is sitting “idle” on the sidelines. They can’t buy a clue…even with $800+ million.

Kyle Wingfield

August 18th, 2010
1:53 pm

Bosch: But the Obama team didn’t talk about what the stimulus would eventually do. They talked in terms of what it would keep from happening at all — unemployment rising above a certain level — during this recession and recovery. Now, do you think they said such a “dumb” thing about the impact of the stimulus because they needed to oversell it for political reasons, or because they were just that bad at predictions? And do you think either case presents a suitable reason for disregarding their past advice and listening to them now?

B-fan: You’ve stumbled onto the opinions page. We give opinions here.

Linda

August 18th, 2010
1:54 pm

“We have tried spending money. We are spending more money than we have ever spent before & it does not work & I have just one interest & if I’m wrong, someone else can have my job. I want to see this country prosper. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. I say after eight years of this adm. we have just as much unemployment as when we started…& an enormous debt to boot.” Henry Mortenthau, Treas. Sec., 5/39, under oath before the House Ways & Means Committee, one of architects of the New Deal & best friends of F.D. Roosevelt.

History repeats itself once again.

RW-(the original)

August 18th, 2010
1:55 pm

Look at paragraph 13 from that FOX/GOP donation story.

Until now, the News Corp./Fox political action committee had given 54 percent of its donations to Democrats and 46 percent to Republicans, according to the Center for Responsive Politics — including $8,000 to Senate Majority Leader Harry M. Reid’s campaign committee and $5,000 to House Speaker Nancy Pelosi’s organization. News Corp. also gave $45,000 each to GOP and Democratic campaign committees on Capitol Hill.

http://www.washingtonpost.com/wp-dyn/content/article/2010/08/17/AR2010081704338_2.html

Southern Comfort

August 18th, 2010
2:04 pm

It is completely nonsensical to say that government jobs stimulate anything except govt employee pockets.

Do government workers not pay for food, gas, clothes, mortgage/rent, etc…? That statment was a waste of bandwidth.

Kyle

Instead of just stopping with the stimulus, why not write an article on how stupid it is to allow investment banks and investors to dictate the direction of our economy versus things such as manufacturing that produce a tangible product? We’re pretty much being led around by, for lack of a better term, a huge Vegas-type casino. We all know that in casinos, the house is the overall winner, right?

@@

August 18th, 2010
2:04 pm

I just read an article where Medvedev and Putin have called a meeting of 6 Russian oligarchs to assist with recovery from the wildfires. I recall another article back in 2008 during the economic collapse, when Putin called in 16 oligarchs and demanded they fork over wealth in the interest of the state. If they didn’t…they would be targeted by the Kremlin.

The 6 now being summoned were the initial holdouts during 2008.

The funniest part? Putin said it’s their patriotic duty.

Didn’t Joe Biden say that same thing? Isn’t Obama applying economic policies that would DEMAND that same thing?

Kinda scary, the comparisons.

retiredds

August 18th, 2010
2:11 pm

Kyle, what you and the other dreamers fail to realize, much less admit, is the fact that the years and years of a boom bubble (funded by deficit spending and very poor tax policy) was bound to burst. It had been predicted in the 1990’s and early 2000’s. But the dreamers kept on going, just like the energizer bunny: taking out home loans with no down payments and only paying on the interest, politicians thinking we could fight two wars and cut taxes, people using their credit cards as if credit limits were infinity, rampant speculation all segments in the real estate markets, etc., etc. And, yes, the Obama administration overshot by saying that the unemployment rate would not exceed 8%. But, just because Obama made the statement does not release the American public from digging its own mess. And the mess will be with us for at least a decade from the beginning of the recession/depression that began in December of 2007. So, at best the bloom won’t get back on the rose until at least 2017. Anyone who believes differently if being delusional. So the smart money plans accordingly.

@@

August 18th, 2010
2:11 pm

Oops! Shoulda been Obama’s tax proposals.

Jefferson

August 18th, 2010
2:15 pm

We never should have bailed out the banks and automakers, should have just gave the money to the poor and middle class with the stipulation they had to spend it. It would be up to the bankers and auto dealers to get the money from them, thus saving their asses.

JF McNamara

August 18th, 2010
2:19 pm

Someone actually took the time to fact check one of Kyle’s articles. Are you really that big now?

http://beyondthetrestle.com/blog/quick-fact-check-kyle-wingfield

Bruno

August 18th, 2010
2:20 pm

Kyle–Sorry for the interruption, but I wanted to share a most amazing/inspiring video that I just saw of a Chinese piano player who lost both arms in an accident as a child:

http://new.music.yahoo.com/blogs/realityrocks/385927/armless-pianist-liu-wei-defies-odds-on-chinas-got-talent/

Every so often we need to remind ourselves of how fortunate we really are.

Bosch

August 18th, 2010
2:24 pm

Kyle,

Well of course it was for political purposes to sell the stimulus, but why hold them accountable for making such statements and not all politicians in regards to policy? And please, you want to talk brass tacks about what a politician says is going to happen and what actually does? Does “they will greet us as liberators?” or “the war will pay for itself” ring any bells? Because we do have actual hindsight, facts and history to look at in regards to some policies set forth by our POTUS, and in my opinion, spending a trillion or so in the sand ghettos half way around the world did more to damage our economy which, in turn, forced Obama to make the decision to spend money here (i.e. stimulus).

But as to the topic at hand, either side could argue success or failure. Again, that is pure politics in motion. No matter what Obama and his team does, I find it hard to believe that you would analyze their actions with an unbiased eye.

CJ

August 18th, 2010
2:26 pm

Getting all workers to mindlessly spend an extra $8 a week [$400 per worker and $288 billion total tax cuts]…does not change incentives to work, invest or create jobs.

Yet, that is exactly the argument that faux-conservatives are making when advocating for extending the Bush tax cuts for the wealthy—that spending (i.e., customers) no matter how mindlessly, creates incentives to work, invest, and create jobs (again, arguing with themselves). The nuance (faux-conservatives don’t like nuance) is that cuts for those at the top (costing trillions over the course of a decade) are more likely to be pocketed, leaving the economy little or no better off as a result.

On the other hand, spending on economic and physical infrastructure (e.g., rapid transit, education, bridges, highways, dams, levies, clean energy, manufacturing), something conservatives simultaneously oppose when voting and take credit for when the ribbons are cut, will continue to create jobs far into the future.

Dave

August 18th, 2010
2:26 pm

“Someone actually took the time to fact check one of Kyle’s articles. Are you really that big now?”

It’d be interesting to see if anyone would do the same thing w/Tucker’s and Bookman’s blogs :)

RW-(the original)

August 18th, 2010
2:29 pm

It’d be interesting to see if anyone would do the same thing w/Tucker’s and Bookman’s blogs

Dave,

I believe it’s illegal to hunt over a baited field.

left wing

August 18th, 2010
2:32 pm

I’m really unhappy, because your blog ate my original post. I’ll try and recreate as much as I can.

First, to the claim about promising to hold unemployment to under 8%; not so much according to Politifact:

politifact.com/truth-o-meter/statements/2009/jul/09/eric-cantor/Cantor-and-other-republicans-say-obama-promised-s/

“What we can rule on, however, is whether the Obama administration “promised” that unemployment rates would not rise above 8 percent if the stimulus were passed. We could find no instance of anyone in the administration directly making such a public pledge.

What we saw from the administration in January was a projection, not a promise. And it was a projection that came with heavy disclaimers.

There’s also a footnote that goes along with the chart that states: “Forecasts of the unemployment rate without the recovery plan vary substantially. Some private forecasters anticipate unemployment rates as high as 11% in the absence of action.”

Secondly, with regards to the stimulus (recovery) plan’s effectiveness, I found this from the council of economic advisors:

crfb.org/blogs/measuring-effects-arra

And I quote: “CEA estimates that the 2009 stimulus has boosted GDP by 2.7 percent and raised employment by 2.5 million jobs since February 2009, relative to what would have occured absent the stimulus.”

Seems to me that it’s been pretty effective.

Southern Comfort

August 18th, 2010
2:33 pm

I believe it’s illegal to hunt over a baited field.

That would be the case for all of them. Just because it’s their opinion doesn’t mean it’s completely factual. :mrgreen:

left wing

August 18th, 2010
2:34 pm

BTW, Ezra Klein at the Washington Post has an interesting graph comparing Bush’s tax cuts with Obama’s:

voices.washingtonpost.com/ezra-klein/

Dave

August 18th, 2010
2:36 pm

“On the other hand, spending on economic and physical infrastructure (e.g., rapid transit, education, bridges, highways, dams, levies, clean energy, manufacturing), something conservatives simultaneously oppose when voting and take credit for when the ribbons are cut, will continue to create jobs far into the future.”

Monorail!…. Monorail!…. http://www.youtube.com/watch?v=AEZjzsnPhnw

RW-(the original)

August 18th, 2010
2:37 pm

Some private forecasters anticipate unemployment rates as high as 11% in the absence of action.

That sure sounds like the administration was claiming that 11% number as a worst case scenario without Porkulous and we darn near got there with it.

stands for decibels

August 18th, 2010
2:37 pm

So Kyle, are you saying the US unemployment rate would’ve been lower absent the stimulus? or perhaps the same?

No More Progressives!

August 18th, 2010
2:38 pm

Bosch

August 18th, 2010
1:19 pm
So when are you going to admit that the trickle down theory of tax cuts are on the dumb side as well?

When you can demonstrate that they don’t work.

Dave

August 18th, 2010
2:39 pm

But we all know that the gov’t has our best interests in mind and would know how to spend our money better than we would ever know….

[sarcasm for thos of you who missed it]

left wing

August 18th, 2010
2:42 pm

RW-(the original) and, for that matter, stands for decibels Here’s what would have happened without the government intervention:

As I pointed out above, the stimulus itself created/saved 2.5 million jobs. Add to that another 3 million from bailing out GM and Chrysler. That means that if the Republicans had their way, we’d be (at least) another 6 million jobs in the hole.

BTW, Republicans were so unhappy that we were bailing out GM, but I see that they’re reporting a profit now, and are ready for another IPO to get out of government control, so gee, seems like another “big government program” that seems to have worked out quite well.

RW-(the original)

August 18th, 2010
2:46 pm

left wing,

Are you by any chance riding around town on a unicorn, sprinkling magic dust?

JP

August 18th, 2010
2:48 pm

I’ll never understand why politicians stupidly predict such crazy success in anything. Obama is the latest. Remember when Bush said the Iraq war would cost around $100 billion. Aren’t we closer to 10 times that amount?