John Stossel on the White House's Economics

**Blakeman** · 10-01-09, 02:34 PM

This Friday, September's job-loss total will be announced. Whatever the numbers, administration officials surely will tell us that life is better-because of them. "We brought the global economy back from the brink," President Obama said at the close of the G-20 meeting last week. "(B)ecause of the bold and coordinated action that we took, millions of jobs have been saved or created; the decline in output has been stopped; financial markets have come back to life."

This has been the president's theme: His so-called stimulus package, bailouts for politically connected banks and industries, ludicrously wasteful programs like Cash for Clunkers, etc. have saved America from the greatest disaster since the Great Depression.

But this theme runs up against some rather unfortunate facts.

In January, the administration's economic models warned that unemployment would hit 9 percent next year if its $787 billion "stimulus" wasn't passed. Passing it would keep the jobless rate under 8 percent before it begins to fall.

Well, the packaged passed-and unemployment in August rose to 9.7 percent.

Oops.

OK, economic forecasters make mistakes. Fair enough. But neither the administration experts nor President Obama will acknowledge that their models and strategy are flawed. Instead, they spin the numbers and proclaim success, insisting that the plan is working even though unemployment is higher than they said it would be.

For example, Christina Romer, chief of the president's Council of Economic Advisers, preferred to emphasize that the 216,000 jobs lost in August were about half a million less than six months before. Never mind that the economic strategy hasn't restored any of those 700,000 jobs previously lost. They'd rather distract us by focusing on the slowing rate of loss rather than the losses themselves.

But, New York University economist Mario Rizzo writes, to take credit for this is to imply that "in the absence of fiscal stimulus, the rate of increase in unemployment never falls." That's ridiculous. Should Obama get credit anytime things aren't as bad as they might have been?

"The stimulus apologists are ignoring the original prediction based on a model. By that prediction, the stimulus is doing harm," Rizzo commented.

As Harvard economist Greg Mankiw writes, "In light of the shifting baseline, it is impossible to hold the administration accountable for whether its policies are achieving their intended effects."

"The administration, however, has not been particularly forthright in admitting to this lack of accountability. Indeed, the act of releasing quarterly reports on how many jobs have been 'created or saved' gives the illusion of accountability without the reality."

This lack of accountability-this claim of success no matter what happens-should surprise no one. Many of us warned about it months ago. Remember, Obama didn't promise to create 3.5 million jobs. He promised to create or save that many. There is no way to test that. If you still have your job, does that mean Obama saved it? If an entrepreneur created a new job, in spite of Obama's destructive anti-business regulatory apparatus, does Obama still deserve the credit?

As I wrote in February: "Given time, the economy, unless totally crippled by government intervention, will regenerate itself. That's because an economy is not a machine that needs jumpstarting. It is people who have objectives they want to achieve. They will not sit on their hands forever waiting for government to 'fix' things. Instead, they work to overcome obstacles to get what they want. Some banks are struggling, but there are still people who want to lend money and people who want to borrow it. They will find each other without government help."

But I underestimated this administration. I expected it to say, in the face of continued rising unemployment, that the "stimulus" wasn't big enough. Instead, it claims success.

I suppose I should be relieved. Claiming success is far less destructive than another irresponsible "stimulus." I'm grateful for small favors.

http://reason.com/archives/2009/10/0...no-matter-what

I found it interesting, thought I would pass it along.

**Red_Lizard2** · 10-01-09, 10:33 PM

i disagree with him, does he or anyone really think that if we had let a bunch of banks fail (in particular) that the economy would be in much better shape? consumer confidence would be next to nothing and people wouldn't spend, thus fucking things up even worse. Not to mention the even tighter credit market, causing a lot of small businesses to go *poof*

I would have rather seen more tax incentives for starting a small business in the stimulus. Still i think it has had an effect, even though not as much.

**Blakeman** · 10-02-09, 07:53 AM

Originally Posted by Red_Lizard2

i disagree with him, does he or anyone really think that if we had let a bunch of banks fail (in particular) that the economy would be in much better shape? consumer confidence would be next to nothing and people wouldn't spend, thus fucking things up even worse. Not to mention the even tighter credit market, causing a lot of small businesses to go *poof*

I would have rather seen more tax incentives for starting a small business in the stimulus. Still i think it has had an effect, even though not as much.

Might want to read it again since I didn't see anything where he thought that letting the banks fail was a good thing, but that the spin on the stimulus was worded in a way that no matter the outcome the current administration didn't look bad. It's not so much about what was done, but how it was proposed and what was 'promised' as far as what it would do.

**Fovezer** · 10-02-09, 10:56 AM

I'm sorry, but John Stossel is an idiot. No wonder why he went to Fox News.

In January, the administration's economic models warned that unemployment would hit 9 percent next year if its $787 billion "stimulus" wasn't passed. Passing it would keep the jobless rate under 8 percent before it begins to fall.

Well, the packaged passed-and unemployment in August rose to 9.7 percent.

Oops.

Those numbers were based on projections done in January of how the economy was going to go. They were just that, projections,and if you want to fault the Obama administration for something, the underestimated how bad the economic situation was. The economy was worse than the projections. Without the stimulus, the unemployment level could be 11%+. It is dishonest an ignorant to look back at projections and claim failure when things got worse than what was initially thought.

For example, Christina Romer, chief of the president's Council of Economic Advisers, preferred to emphasize that the 216,000 jobs lost in August were about half a million less than six months before. Never mind that the economic strategy hasn't restored any of those 700,000 jobs previously lost. They'd rather distract us by focusing on the slowing rate of loss rather than the losses themselves.

In order to turn things around, you have to stop job loss, but you can't stop it on the dime. What did he expect, immediate positive gains of jobs?! Is he that naive? But as fewer and fewer jobs are lost, that is the indication of a recovering economy.

As I wrote in February: "Given time, the economy, unless totally crippled by government intervention, will regenerate itself. That's because an economy is not a machine that needs jumpstarting. It is people who have objectives they want to achieve. They will not sit on their hands forever waiting for government to 'fix' things. Instead, they work to overcome obstacles to get what they want. Some banks are struggling, but there are still people who want to lend money and people who want to borrow it. They will find each other without government help."

Some said the same nonsense after the Crash of 1929.

But I underestimated this administration. I expected it to say, in the face of continued rising unemployment, that the "stimulus" wasn't big enough. Instead, it claims success.

I suppose I should be relieved. Claiming success is far less destructive than another irresponsible "stimulus." I'm grateful for small favors.

I don't think the stimulus was big enough to have as drastic an effect as it could have had. It was definitely the responsible thing to do, though, and certainly has been more successful than had nothing been passed.

**Blakeman** · 10-02-09, 11:43 AM

Originally Posted by Fovezer

I'm sorry, but John Stossel is an idiot. No wonder why he went to Fox News.

In January, the administration's economic models warned that unemployment would hit 9 percent next year if its $787 billion "stimulus" wasn't passed. Passing it would keep the jobless rate under 8 percent before it begins to fall.

Well, the packaged passed-and unemployment in August rose to 9.7 percent.

Oops.

Those numbers were based on projections done in January of how the economy was going to go. They were just that, projections,and if you want to fault the Obama administration for something, the underestimated how bad the economic situation was. The economy was worse than the projections. Without the stimulus, the unemployment level could be 11%+. It is dishonest an ignorant to look back at projections and claim failure when things got worse than what was initially thought.

Still, it was passed in part on how immediate the effects would be.

For example, Christina Romer, chief of the president's Council of Economic Advisers, preferred to emphasize that the 216,000 jobs lost in August were about half a million less than six months before. Never mind that the economic strategy hasn't restored any of those 700,000 jobs previously lost. They'd rather distract us by focusing on the slowing rate of loss rather than the losses themselves.

In order to turn things around, you have to stop job loss, but you can't stop it on the dime. What did he expect, immediate positive gains of jobs?! Is he that naive? But as fewer and fewer jobs are lost, that is the indication of a recovering economy.

He never said stop on a dime, you do tend to read into things in a certain mindset anytime something has fox news associated with it. Any loss is still a loss, you can't say that things are getting better because "oh we lost less than last week". Any loss hurts the economy so he is just pointing out the terminology used to try and make thing sound better than they are.

As I wrote in February: "Given time, the economy, unless totally crippled by government intervention, will regenerate itself. That's because an economy is not a machine that needs jumpstarting. It is people who have objectives they want to achieve. They will not sit on their hands forever waiting for government to 'fix' things. Instead, they work to overcome obstacles to get what they want. Some banks are struggling, but there are still people who want to lend money and people who want to borrow it. They will find each other without government help."

Some said the same nonsense after the Crash of 1929.

Yet the crash of 1929 was a completely different set of circumstances, which I wish folks would try to quit comparing the two.
A good example of a failure of government is cash for clunkers, which only boosted sales for the time it was active and did not drastically affect sales over the long term.

But I underestimated this administration. I expected it to say, in the face of continued rising unemployment, that the "stimulus" wasn't big enough. Instead, it claims success.

I suppose I should be relieved. Claiming success is far less destructive than another irresponsible "stimulus." I'm grateful for small favors.

I don't think the stimulus was big enough to have as drastic an effect as it could have had. It was definitely the responsible thing to do, though, and certainly has been more successful than had nothing been passed.

I agree that something had to be done, but I also agree with Stossel that the plan from this administration has not 'saved us all' like some of the spin on it tries to claim. I think a longer term and slower use of fund would have been wiser rather than an injection have a slow steady program of stimulus.

**Glitch** · 10-02-09, 02:01 PM