President Obama is like a pilot who took the controls of the plane in mid-flight after the engines fell out. It’s obvious that he didn’t cause the problem. But the passengers are going to focus on the fact that the plane was still airborne before he took over, and now, he’s crash-landing in the ocean.
That’s Obama’s problem in the debate over the economy. His arguments are true. The trouble is, they don’t feel true, and they feel less and less true as time goes by.
Republicans focus relentlessly on the simple fact that the economy is in worse shape now than it was before Obama took office. The trajectory may have improved, but the level has worsened--more people are out of work now than on January 20.
The Obama administration predicted in January that, if its stimulus package passed, unemployment would stay below 8 percent, yet it has crossed 10 percent. You have probably heard this statistic if you have heard any Republican in elected or unelected office open his mouth at any point over the last half-dozen months. The implication of this statistic--sometimes made explicit--is that the stimulus failed to alleviate, or even caused, rising unemployment.
The more plausible interpretation is that the Obama administration’s January forecast, along with most private forecasts at the time, underestimated the depth of the recession. One bit of evidence for that view is that unemployment hit 8 percent by February, which was about the same time that the stimulus passed and long before it could take effect.
What level unemployment would have reached without a stimulus is, of course, a total guess. Republicans have ridiculed the administration’s efforts to tabulate the jobs that the stimulus saved. The implication here is that, because you can’t count something, it doesn’t exist. It’s true that there’s no way to actually count the number of jobs saved by the stimulus. Even if you could accurately tabulate the workers hired by federal grants, you’d be missing all the jobs saved by the money those workers are spending. Not to mention the impact of the tax cuts, which account for two-fifths of the cost of the stimulus. So, while the positive effect of the stimulus is necessarily a guess, it’s a guess shared by nonpartisan government agencies like the Congressional Budget Office as well as all the leading macroeconomic forecasters.
If you look at a graph of jobs lost by month, it resembles a pyramid, with the stack building through 2008, peaking in January 2009, then dropping down around zero over the course of this year. No serious person could dispute that the rise in unemployment reflects anything but the aftershocks of an economic collapse that predate the Obama presidency. (This likewise holds true of the rising budget deficit: CBO numbers show that approximately 100 percent of the long-term deficit increase results from Bush policies and the effects of the slowdown.)
Maybe, the public is upset about the deficit because the impression is (entirely true) that the Obama administration prioritized saving Wall Street banks and brokerages ahead of the real economy. The administration claims that they had to do that first to save the rest of the economy. But that's bullshit. Haven't you read anything Simon Johnson says on your own site? Wall Street is a rent-seeking sector (i.e. parasite). It depends on the rest of the economy. If you'd given the TARP money to the American people, we'd be in much better shape today.
There were ways prevent a financial system collapse and still allow the banks that should have gone bankrupt to do so. Many of the commentato ... view full comment
Maybe, the public is upset about the deficit because the impression is (entirely true) that the Obama administration prioritized saving Wall Street banks and brokerages ahead of the real economy. The administration claims that they had to do that first to save the rest of the economy. But that's bullshit. Haven't you read anything Simon Johnson says on your own site? Wall Street is a rent-seeking sector (i.e. parasite). It depends on the rest of the economy. If you'd given the TARP money to the American people, we'd be in much better shape today.
There were ways prevent a financial system collapse and still allow the banks that should have gone bankrupt to do so. Many of the commentators on this site and other economists have suggested them, the fact is the Obama administration just didn't listen to anyone besides its friends at Goldman Sachs. For that he justly deserves blame, even if the recession itself is Bush's fault.
Excellent post acria multa.
Mr. Scheiber's post allows us to understand the way these guys still look at themselves. As incredibly as it may sound they still look at themselves delusionally as saviours that follow "the laws of Economics". The fact that those "laws" benefit them primarily and only in a very dubious and indirect way other people seems not to be a part of these guys worldvision.
The Reich would last for a 1000 years even after Stalingrad... Since the darwinistic "laws" would never allow for the master race to be beaten by the slave race... Even if the Eastern front was shattered into pieces, even if Berlin was being completely destroyed, people that saw that something was serious ... view full comment
Excellent post acria multa.
Mr. Scheiber's post allows us to understand the way these guys still look at themselves. As incredibly as it may sound they still look at themselves delusionally as saviours that follow "the laws of Economics". The fact that those "laws" benefit them primarily and only in a very dubious and indirect way other people seems not to be a part of these guys worldvision.
The Reich would last for a 1000 years even after Stalingrad... Since the darwinistic "laws" would never allow for the master race to be beaten by the slave race... Even if the Eastern front was shattered into pieces, even if Berlin was being completely destroyed, people that saw that something was seriously wrong simply did not understand "the laws"...
It always comes to this in these kinds of worldviews: regular people not understanding "the laws" while the world falls apart...
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