April 17, 2012
Is today Tuesday? Some people say it is and others say it isn’t. It’s just so hard to decide.
That is pretty much what NPR told us about President Obama’s record in turning around the economy this morning. It cited Alan Blinder, an economist who has served in past Democratic administrations, saying that President Obama’s policies helped the economy. It then cited Douglas Holtz-Eakin, who served in the Bush administration and was the chief economic advisor to John McCain saying that his policies harmed the economy.
It would have been helpful to give us the assessment of neutral observers such as the Congressional Budget Office. It also would have been helpful to try to evaluate the claims of the Romney campaign that the stimulus harmed the economy.
NPR reported that the Romney campaign said:
“The president made the recession worse, the statement says, ‘by pursuing a series of disastrous, partisan policies that created uncertainty, discouraged investment and stifled job creation.'”
There is a simple claim that can be evaluated here. The Romney campaign says that investment would have been higher had it not been for Obama’s actions. This can be evaluated by comparing the path of investment with what might have been predicted absent the bad policies from President Obama.
Investment in equipment and software is currently close to 7.5 percent of GDP. It was 7.9 percent before the downturn in 2007. Given the huge amounts of excess capacity in large sectors of the economy, it is difficult to envision a scenario in which investment would have been much higher than it is today. If the Romney campaign is to be taken seriously in this claim then it should have to present some evidence that would establish its counter-factual as being credible. On it’s face, it is not.
This piece also included a very misleading assertion from Holtz-Eakin. Referring to Holtz-Eakin the piece reported:
“He says any president would have acted to stop the economic free fall in 2009. The issue, he says, is the quality of the president’s responses.”
Actually, the free fall begin in September of 2008. President Bush did nothing to stop the free fall in the last four months of his presidency. Perhaps he would have eventually taken some action to boost the economy had he been in office longer, but given President Bush’s track record it is far from clear that any president would have taken action to stop the free fall.
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