Hyping hope
By TigerHawk at 7/01/2009 08:20:00 AM
Hope is not a strategy:
In the weeks just before President Obama took office, his economic advisers made a mistake. They got a little carried away with hope.
To make the case for a big stimulus package, they released their economic forecast for the next few years. Without the stimulus, they saw the unemployment rate — then 7.2 percent — rising above 8 percent in 2009 and peaking at 9 percent next year. With the stimulus, the advisers said, unemployment would probably peak at 8 percent late this year.
We now know that this forecast was terribly optimistic. The jobless rate has already reached 9.4 percent. On Thursday, the Labor Department will announce the latest number, for June, and forecasters are expecting it to rise further. In concrete terms, the difference between the situation that the Obama advisers predicted and the one that has come to pass is about 2.5 million jobs. It’s as if every worker in the city of Los Angeles received an unexpected layoff notice.
The author of the article suggests that there are two possible explanations -- that the stimulus has not worked, or that the economy was in much worse shape than understood and would be even worse without the stimulus -- and elects the second. There is, of course, a third, which is that the Obama administration could not honestly forecast the depth of the recession (even as it was pushing for the stimulus package) because then the Congressional Budget Office would have projected deficits even worse than now foreseen, and that would stoke opposition to President Obama's vast and expensive program to redesign the health care, energy, and financial sectors of the economy. Call me a cynic, but I pick the third.
tigerhawk.blogspot.com
By Blogger JPMcT, at Wed Jul 01, 03:41:00 PM:
I disagree. The stimulus bill worked.
The purpose of the bill was to award favored Democrat interest groups with vast amounts of cash.
The damn thing was written long before the market crash, for God's sake. How do you think they pulled it out of their underwear on a moments notice?
From that perspective, the purpose of the bill has been well surved. Everybody is getting the vigorish they were promised. It worked.
God help us...
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