The White House’s spin-meisters did their best Friday morning after news broke that the official unemployment rate ticked up slightly to 8.3 percent. Alan Krueger, chairman of the Council of Economic advisors, insisted the rate hadn’t really risen. “[M]ore precisely, the rate rose from 8.217 percent in June to 8.254 percent,” he said. So, you see, the rate was “essentially unchanged.” Those 45,000 newly unemployed represented by that figure? Just a rounding error.
President Obama cautioned on Friday that “we all knew when I started this job it would take some time.” But did “we” really know that? It doesn’t seem that Obama’s team did, judging from the rosy economic rhetoric they have used whenever it was in their interest to do so.
A month before Obama’s stimulus bill passed in early 2009, two of his top economic advisors issued a report titled, “The Job Impact of the American Recovery and Reinvestment Plan.” In the report, Christina Romer and Jared Bernstein predicted that if the stimulus package became law, unemployment would never rise past 8 percent and would peak just under that in the third quarter of 2009 before steadily declining to around 5.6 percent by today. If the stimulus did not pass, they predicted, unemployment would peak at around 9 percent in the third quarter of 2010 before declining to around 6 percent today. And they based their estimates on a $775 billion stimulus — about $50 billion less than the one that actually passed.
Their report proved to be one of the few things connected to the stimulus bill that was truly shovel-ready. The unemployment rate hit 10.1 percent in late 2009. It has since declined, but it has remained above 8 percent for 41 months straight. Even adjusting their predictions for the unclear circumstances in which they wrote (unemployment was worse than they knew, and later revised upward in the official statistics), their prediction for today was 6.3 percent unemployment and falling — not 8.3 percent and rising.
Less expert members of the Obama administration have been even more sanguine, speaking as though the stimulus package is always just around the corner from delivering a recovery. Remember the “Recovery Summer?” Vice President Joe Biden declared in June 2010, “We have turned this economy around…. Instead of falling off the abyss, it is on firm ground. It is heading in the right direction. And every aspect of the economy is growing.”
In August 2010, Treasury Secretary Tim Geithner wrote an optimistic New York Times op-ed titled, “Welcome to the Recovery.” He proclaimed that the economy was making “an encouraging turnaround,” and that “businesses have repaired their balance sheets and are now in a strong financial position to reinvest and grow.” He even employed the past tense when he wrote, “The economic rescue package that President Obama put in place was essential to turning the economy around.”
So when Obama says “we all knew” things would be this bad for this long, it isn’t quite accurate. The White House had its shot with the stimulus, thought it would work and maintained that it was working right up until it was obvious that it wasn’t. That is what “we” all know.
