The Obama administration was out in full force defending the stimulus this weekend. The mantra is that the economy is getting better but Americans need to be patient to see progress. The problem is that, so far, there hasn’t been any economic progress.
White House economic adviser Austan Goolsbee promised on “Fox News Sunday”: “It’s going to take more than a few months to turn it around.” That contradicts White House economic adviser Lawrence H. Summers’ promise in January that the economy would start improving “within weeks” so long as the president’s $787 billion stimulus was passed.
The stimulus actually has dampened economic projections. In January, before the stimulus was passed, 53 business economists and forecasters surveyed by the Wall Street Journal expected gross domestic product (GDP) for the third quarter (July through September) to rise by 1.2 percent at an annual rate. Predictions became gloomier after the stimulus passed in March. In May, these experts forecast only a 0.6 growth rate for the third quarter.
White House adviser David Axelrod told CBS’ “Face the Nation”: “The president was very clear when he enacted the stimulus … unemployment was going to go up and go up for some time.” We only find administration officials back then warning about unemployment rates if the stimulus didn’t pass. The stimulus did pass, and unemployment rose to 9.4 percent in May.
On Sunday, Mr. Goolsbee claimed we are “in the midst of the deepest recession since 1929.” He must have forgotten about the Jimmy Carter recession, which brought 10.8 percent unemployment, a 13.5 percent inflation rate and similarly slow GDP growth. The unemployment rate was about 18 percent in 1938.
Mr. Goolsbee said that “Obama is cutting the deficit more than $2 trillion over the 10 years compared with what he was inheriting.” This claim conflicts with the Congressional Budget Office, which forecasts that the Obama administration will create a $9.3 trillion budget deficit over the next 10 years.
The Obama administration is trying to rewrite history even as it is being made. The stimulus appears only to have delayed the recovery that economists were expecting before it was passed.