Recession tea leaves ‘misread’

The Obama administration’s latest lame excuse for its failed stimulus spending plan is that it underestimated the severity of the recession.

“We misread how bad the economy was,” Vice President Joseph R. Biden Jr. said Sunday on ABC’s “This Week.”

The White House has been coming up with a lot of half-baked reasons why the president’s massive $800 billion plan has not made a dent in the mushrooming unemployment rate, but this was a beaut.

Misread? Throughout his presidential campaign, and the early months of his presidency, President Obama repeatedly compared the recession to the Great Depression when one-third of the work force was unemployed.

Even his own economic advisers have since said such a comparison to a decade-long depression is preposterous. But Mr. Obama kept comparing the current difficulty to the worst economic catastrophe in modern American history — if anything, exaggerating the recession, not underestimating it.

Mr. Biden, speaking for the administration, said it was unfair to say the stimulus has failed, because “no one anticipated, no one expected that recovery package would in fact be in a position at this point of having distributed the bulk of the money.”

But not too long ago, the White House was predicting that the stimulus plan would soon be creating or preserving (which no one can verify with any accuracy) hundreds of thousands of jobs.

Then, when polls began showing increased public doubts that the plan was working, the administration said it would begin “ramping up” the snail’s-pace stimulus spending over the next 100 days.

Now Mr. Biden says the plan is going to take more time than they anticipated because so many of the contracts for construction and other public works projects have only recently been completed or were in fact still in the pipeline.

Critics of spending stimulus programs warned of such delays last year when Mr. Obama was selling his idea to the nation, and later when it was about to be sent Congress. Even the Congressional Budget Office, the nonpartisan auditing arm of Congress, projected that the lion’s share of the money would not be spent until 2010 when many economists said the recession would be over.

If doubts about Mr. Obama’s spending scheme were growing last month, they were mushrooming last week when the U.S. Commerce Department reported that nearly half a million jobs were lost in June — pushing the unemployment rate to a 26-year high of 9 1/2 percent. Workers saw their weekly wages fall, too, as forecasters said the jobless rate would likely exceed 10 percent before year’s end. Construction spending was down along with consumer confidence.

Indeed, even administration officials are saying unemployment will get a lot worse before it gets better. “The unemployment rate will likely be higher in 2010 than in 2009,” said Jared Bernstein, the vice president’s chief economist and economic policy adviser.

The latest numbers not only rattled the White House but Democrats on Capitol Hill, too, including those who helped craft the deeply flawed stimulus bill. There was talk of revising and expanding the plan.

Senate Banking Committee Chairman Christopher J. Dodd, Connecticut Democrat, admitted last week that the big spending bill was not working as Democrats hoped it would. If matters worsened, Congress might have to re-examine the plan and “do it again,” he said.

“One of the mistakes that were made as we go about it … we did not get these dollars into the job-producing sectors, a lot of it wasn’t targeted as it should have been,” Mr. Dodd told reporters.

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