July 08, 2012
In the middle of Washington it can be difficult to get your hands on publicly available government documents. This is undoubtedly why George Will continues to misrepresent what President Obama’s economic advisers said about the stimulus package.
On This Week, ABC’s Sunday morning talk show, Will claimed that Obama’s advisers told him that if he did the stimulus that the unemployment rate would never get above 8.0 percent. Actually, if Will could find the publicly available document written in early January by Christine Romer, the head of the Council of Economic Advisers and Jared Bernstein, Vice-President Biden’s chief economist, he would know that they said the stimulus would create between 3-4 million jobs.
They expected that this rate of job creation would keep the unemployment rate from rising above 8.0 percent. While the stimulus package that got through Congress was somewhat smaller and less stimulatory (more tax cuts, less spending) than the package President Obama proposed, most independent analyses put the job impact in the 2-3 million range.
What Obama’s advisers got wrong in a big way was the severity of the downturn. The economy lost more than 3.1 million jobs in the first four months of 2009. This was a much sharper falloff than they had anticipated, as is clear from reading the document. The stimulus did create roughly the number of jobs projected, the problem was that we needed 10-12 million jobs, not 2-3 million.
President Obama’s team can and should be criticized for underestimating the severity of the downturn (like most of the economics profession). However, none of the evidence to date suggests that they were wrong about the effectiveness of the stimulus.
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