NYC Letter: Trust Team Barry, Part III

Day 111 of CHOPE

This budget builds on the steps we've taken over the last 100 days to move this economy from recession to recovery and ultimately to prosperity. We began by passing a Recovery Act that has already saved or created over 150,000 jobs and provided a tax cut to 95 percent of all working families.

Mr. Obama,
bragging on his largely unspent $787B stimulus plan
claiming 150,000 undocumented jobs created or saved
PRESS CONFERENCE April 29, 2009 (White House)

It's all about jobs.

There is no metric for "saved" jobs. Claims of "saved" jobs at best are guesses, at worst airy fictions. If Mr. Obama wants to take credit for jobs "saved" since enacting his stimulus plan then he must also take blame for jobs lost. There's no guessing about job losses.

Mr. Obama took office in January (unemployment rate 7.6%). He immediately began pushing for passage of a hastily cobbled up Democratic $787B stimulus bill, warning of an "irreversible" crisis should it be delayed by debate or even being read. The bill was passed and Mr. Obama signed it into law February 17 (unemployment rate 8.1%).

• Increase in unemployment in March: 851,00 (unemployment rate 8.5%).

• Increase in unemployment in April: 611,000 (unemployment rate 8.9%).

That's 1,462,000 net jobs lost against Mr. Obama's undocumented 150,000 jobs "created or saved". That's roughly 9 jobs lost for every 1 job "created or saved" by Mr. Obama with a 1.3% concomitant jump in unemployment.

WHITE HOUSE FORECASTS NO JOB GROWTH UNTIL 2010

May 10, 2009 (NYT) - Speaking on C-SPAN, Christina Romer, chairwoman of the White House Council of Economic Advisers, said that she expected the G.D.P. to begin growing in the fourth quarter of this year. ... But Ms. Romer also said that she expected unemployment to rise even after the economy turns, saying that the G.D.P. has to grow at a rate of about 2.5 percent before unemployment will fall. Before that happens, she said, it is “unfortunately pretty realistic” that the unemployment rate could reach 9.5 percent. A reasonable estimate for the G.D.P.’s growth rate in 2010, she said, is three percent.

Robert Reich, who served as labor secretary under President Bill Clinton and advised the Obama campaign, said on Sunday that the rate of growth would have to be higher — 4.5 percent — to reverse rising unemployment.

In January, Ms. Romer and Jared Bernstein, Mr. Biden's Chief Economist and Economic Policy Adviser,* released a white paper advancing the argument for a stimulus plan.

A key goal enunciated by the President-Elect concerning the American Recovery and Reinvestment Plan is that it should save or create at least 3 million jobs** by the end of 2010 [p.3]. ... In the absence of stimulus, the economy could lose another 3 to 4 million more [jobs]. Thus, we are working to counter a potential total job loss of at least 5 million. As Figure 1 shows, even with the large prototypical package, the unemployment rate in 2010Q4 is predicted to be approximately 7.0%, which is well below the approximately 8.8% that would result in the absence of a plan [p.5].

FIGURE 1 (A)
[Graphic Source: Job Impact Of The American Recovery
And Reinvestment Plan, January 9, 2009]

In Figure 1 (A), the light blue line is the forecast trend of the unemployment rate without swift enactment of Mr. Obama's stimulus plan. The dark blue line shows the meliorated trend with Mr. Obama's plan. With or without the plan, unemployment is shown to trend down to 5% by 2014.

FIGURE 1 (B)

In Figure 1 (B) we have plotted out the actual monthly unemployment rates since Mr. Obama's stimulus plan went into effect and the President's chief economic advisor's forecast through 3Q09. [Shock.] With Mr. Obama's $787B stimulus plan -- $12B more than the white paper's assumed plan -- in force unemployment is trending higher than the no-plan trend. [Pause.] The economy would have been better off without a cent of stimulus, a position the CBO advanced before passage.

This is what job creation by a community organizer looks like.

CHOPE.

$787B + Obamanomics = Massive job loss

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* Mr. Bernstein has a bachelors in fines arts, a masters in social work, a masters in social welfare, and a Ph.D. in philosophy. He holds no degree in economics.

** Or four million.

Posted by Damian at May 11, 2009 11:45 PM