NYC Letter: Trust Team Barry, Part VIII

Day 148 of CHOPE

OBAMA SEES 10% UNEMPLOYMENT RATE

June 17 (Bloomberg) - The jobless rate will continue to climb from its current 25-year high of 9.4 percent as employers are slow to take on new workers, the president said. “Jobs are a lagging indicator,” he said, while adding that he didn’t have “a crystal ball” to predict when unemployment will start to decline.

In January then-president-elect Obama asked Christina Romer, his designated chairwoman of the White House Council of Economic Advisers, and Jared Bernstein, Mr. Biden's Chief Economist and Economic Policy Adviser, to gaze into the CEA "crystal ball" and forecast unemployment. Ms. Romer and Mr. Bernstein dutifully worked up a white paper that argued under Mr. Obama's stimulus unemployment would peak at 8% then trend down to 7% in 4Q10. Without Mr. Obama's stimulus, unemployment would skyrocket to 8.8%. They even thought to provide us a chart (p.5) so there would be no mistaking Team Barry's grasp of the situation and the urgent necessity for Mr. Obama's magic stimulus.

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

Mr. Obama got his stimulus as he wanted and three months later unemployment is 9.4%, when, if you believed Team Barry, it should be under 8%. In fact unemployment is .6% higher than Team Barry predicted it would be without the stimulus.

FIGURE 1 (B)

This past Sunday on Meet The Press, Joe "Hi-Q" Biden explained. We quote the extensive exchange because we believe it is destined to become a textbook study of the thematic lie. Our comments are intercalated and bracketed in [red].

MR. GREGORY: You are in charge of monitoring the stimulus.

VICE PRES. BIDEN: That's right.

MR. GREGORY: Eight hundred billion dollar stimulus. A hundred days after it was signed, the president said 150,000 jobs had been created or saved.* Can you explain where that number comes from?

VICE PRES. BIDEN: Sure. Yes, look, there's an econometric model that, that economists have been using for decades to correlate the economic circumstances of the nation with the creation of jobs. It is a model known as question, it's a model the Council of Economic Advisers have used to come up with that 150,000 jobs.

[Only last week complex job formularies were above Mr. Biden's "paygrade". Mr. Biden:

I’m sorry I’m not an economist. My background is foreign policy and the constitution. ... I’m a little above my pay grade here as I try to explain in more detail how they count spinoff effects of actual jobs created.

Not that Mr. Biden answers the question here either. He simply omits excusing himself.]

But in fact--and by the way, I think we're going to create 600,000 jobs in the next 100 days, because now this thing is beginning to roll out. We actually have let these contracts, the governors with--who have money for road contracts and so on, they're now just putting spades in the ground, just hiring people. And so I don't know anybody who's argued with the model that we've used.

[Here is an unacquainted disputant. Here is another.]

But the key here for us is not whether or not we're going to argue about how many jobs, you know, there, there are out there, it's whether or not are we in fact producing employment for people? And it's undeniable.

[In fact there is no documentation for Mr. Biden's jobs number. It is disingenuous to say you won't argue "how many jobs" because "producing employment" is the key indicator. Especially since Team Barry -- and Mr. Biden in his next breath -- continues to brag on its 150,000 jobs "saved"* or created. What is undeniable is that 2,198, 000 jobs have been lost since February, at least 1,547 of which since enacting Mr. Obama's stimulus.]

MR. GREGORY: But--well, but that's an important point. You say people aren't arguing about that; in fact, they are. I mean, you're suggesting that this is an accepted model.

VICE PRES. BIDEN: Well, no, I...

MR. GREGORY: Your own economic adviser said this on Tuesday: "[Jared] Bernstein, Biden's economic adviser, said in an interview that the president's citation of [saving or creating] 150,000 [jobs] is `an estimate' based partly on what the economy would look like in the absence of the stimulus package. But Bernstein said he could not break down how many of those jobs were created vs. saved.* `That's a division we're not able to make at a level of accuracy we're comfortable with.' he said." And now you're talking about another 600,000 jobs. Should America just accept that level of progress?

VICE PRES. BIDEN: Look--yeah. No, no, they shouldn't. Look, whether this is, whether this was 147,000 jobs or 158,000 jobs is not the relevant point. Look, let me put it this way. Prior to us taking office, the job loss for the month was over 700,000 jobs. It's been over 600,000. Since we've taken office the job loss has dropped now to 343,000 jobs; below other people's estimates, below the consensus estimate. Can I claim credit that all of that's due, due to the recovery package? No. But it clearly has had an impact.

[Mr. Biden is confused, uninformed, and wrong all at once. Prior to Team Barry taking office between the start of the recession in December 2007 and January 2009, the largest monthly decline in nonfarm payroll -- the 343,000 (sic, 345,000) number Mr. Biden references -- was 598,000 in December 2008. The only months the job loss number was over 600,000 were February and March of this year -- after the stimulus was in force.

Mr. Biden here compares apples and oranges, the BLS Current Employment Statistics survey (CES), which calculates the lost or created (not "saved"*) jobs number (scil., nonfarm payroll), with the BLS Current Population Survey (CPS), which calculates the generally larger unemployed number. An explanation can be found here. The number of unemployed persons increased by 787,000 in May, which is an increase over the two months prior, further banjaxing Mr. Biden's banjaxed claims]

MR. GREGORY: But the point of the stimulus was it would stop the unemployment picture from getting worse, right? Wasn't that the claim?

VICE PRES. BIDEN: And it has.

MR. GREGORY: It has? Well, here...

VICE PRES. BIDEN: It's not getting worse.

[Here is Mr. Biden earlier this month:

And let me be very clear: A lower job rate loss is not our goal. "Less bad" is not how we're going to measure success -- we're going to measure success here in the White House. We will not be satisfied until we're adding jobs on a monthly basis; providing working Americans with a stable job, dependable income; ensuring that everyone who wants to make their way into the middle class has a shot to get into the middle class.]

MR. GREGORY: But here's the reality, and that is...

VICE PRES. BIDEN: Relative.

MR. GREGORY: ...that when this report was issued by your economic adviser...

VICE PRES. BIDEN: Yes.

MR. GREGORY: ...and Dr. Romer from the White House, the assertion was that you could keep unemployment at 8 percent and then it would go down after that. In fact, it's now at 9.4 percent. Was it oversold?

VICE PRES. BIDEN: No, look. No. What we did is we took the econometric models that were used by businesses as well as academics. At the time no one realized how bad the economy was. The projections, in fact, turned out to be worse. But it was--we, we, we took the mainstream model as to what we thought and everyone else thought the unemployment rate would be. But the fact of the matter is the--I don't think anyone can dispute the unemployment rate would be considerably higher, but for--at least 150,000 jobs higher, but for this economic stimulus package.

[Surprise! Mr. Biden is in possession of the very crystal ball that Mr. Obama lacks. Alas, his puny 150,000 saved* or created jobs "in a total employment pool of 140,000,000 is barely more than 0.1%, which is the relative sampling error of the employment survey."]

MR. GREGORY: Right. But the, but this package was sold on the premise that it would in fact keep unemployment at 8 percent. It's exceeded that...

VICE PRES. BIDEN: No, no, no, no, no, no, no.

MR. GREGORY: ...with the recovery plan.

VICE PRES. BIDEN: It wasn't sold on that. It was sold on it would create...

MR. GREGORY: That's what the report said, Mr. Vice President.

VICE PRES. BIDEN: ...or--no, it said it would--what would happen was it would save or create jobs. It's doing that. It is doing that. Everyone guessed wrong, at the time the estimate was made, about what the state of the economy was at the moment this was passed. Now, we're going to recalibrate this in terms of what we've inherited, what in fact is going on out there. But look, the bottom line is that jobs are being created that would not have been there before. All you've got to do is go into New York City. There's 14,000 teachers working who got their, got their notices. Go with me up to New Flyer bus company up in Minnesota, come--I mean, there--it's--throughout the country, it's creating jobs.

[Not everyone guessed wrong. Everyone guessing wrong is hardly the issue. That Team Barry guessed wrong is the issue.]

MR. GREGORY: Regardless, though, the economy is worse off with or without this stimulus plan that this administration expected.

VICE PRES. BIDEN: The economy was worse off when we made the assessment than anyone thought it was. The economy is actually getting better, things are getting better. We have a long, long way to go. But now you see what's happening. We're having a, a situation where housing is starting to improve, where lending is starting to come forward, where we have a situation where we've gained some control of the automobile companies who otherwise would have had to been liquidated in terms of them staying in business and having a prospect of growing. So I think if you ask out there, look--and look at what the, you know, these measures of confidence in the economy are. Everyone feels mildly better about where the economy's going.

MR. GREGORY: One more point about the stimulus, and that is you said when this thing was being debated, most of it would get out the door right away, $800 billion. And yet just this week there were reports about the fact that only 6 percent of that money has been spent so far.

VICE PRES. BIDEN: No, I don't know who said...

MR. GREGORY: Where are the projects?

VICE PRES. BIDEN: ...we're going to get $800 billion out the door in 100 days.

[Here is Mr. Obama, January 28, 2009:

Most of the money we're investing as part of this plan will get out the door immediately and go directly to job-creation, generating or saving three to four million new jobs.]

We have over 2,000 projects approved. We have now a situation where you have people--you're going to see in the next--and let me--this is an important point. You let a contractor build a highway. It's $42 million, like I was just--did one in the state of Kansas, $42 million dollars. Now what's happened? The governor, the governor gets that approval. What's he doing? Puts it out to bid, competitive bid. It took somewhere between a month and three months to get those bids back. Now the spades are in the ground. Now it's working. That's why we're confidently going to predict that we will increase fourfold what went--and now $150 billion--$140 billion has been obligated now. But obligation requires, then, the states to go forward and get the contracting done according to the rules that they have within the state for competitive bidding.

CHOPE.

No crystal ball. No jobs. Relative.

------------------------------------
* There is no metric for "saved" jobs (and this).