Congressional Republicans are trying to make it such. Their constant refrain, and
taunt, is: "Where are the jobs?"
The Obama administration set itself up for this with foolish predictions about the
effectiveness of its stimulus package. White House economists predicted that, if the
stimulus package passed, unemployment wouldn't exceed 8 percent and 3.5 million jobs
would be created or saved.
The stimulus package passed in February. The unemployment rate is now 9.8 percent.
The economy has lost 2.7 million jobs. Republicans are trying to pin the blame for
job losses greater than the predictions of White House economists on Obama's
The Obama administration retorts that, without the stimulus, things would be worse.
The latest pronouncement from the White House economists, who are still employed, is
that the stimulus has in fact already created or saved 1 million jobs.
This is a childish econometric game grownups should ignore. There's utterly no way
to measure jobs saved or even come up with a reasoned estimate, not that reasoned
estimates have proved to be the Obama administration's forte.
The stimulus has produced very few jobs directly. So, virtually all of the Obama
claim has to be of jobs saved. There are 131 million non-farm jobs in the United
States. So, which ones would have disappeared if the stimulus package hadn't passed?
There's no place to even begin an intellectually honest inquiry into that question.
So, it's a fair conclusion that, so far, the stimulus plan has been a bust. But
that's different than saying that Obama is to blame for the current high rate of
unemployment or the increase in it since he became president. In fact, there are
deep economic corrections taking place beyond the ministrations of politicians. The
alternative policies pushed by Republicans wouldn't have altered this contour much
American consumers have significantly retrenched in the wake of the housing bubble
bursting. Overall consumer spending has been rather stagnant but a more enlightening
indication comes from state sales tax figures. States try to tax the tangible things
consumers buy. According to the Rockefeller Institute, state sales tax collections
are down 9.5 percent over the previous year.
Businesses have responded to this contraction in consumer demand by shedding jobs,
costs and inventories. They've done a good job of it, which is why the stock market
Obama didn't cause the housing bubble while in the Illinois legislature. Obama
didn't cause the housing bubble to burst while he was in the U.S. Senate. And his
stimulus package hasn't caused the contraction in consumer demand.
Politicians don't want to say it because people don't want to hear it. But there's
not much government can do during periods of significant economic corrections except
expand the safety net to help people cope.
If government gives skittish consumers money directly through rebates, they save it
or use it to retire debt. And, as the stimulus experience demonstrates, government
just moves too slowly and clumsily to effectively compensate for a drop in aggregate
demand, as classical Keynesian economics calls for.
This nonsensical economic blame game is a bipartisan indulgence in cynical
opportunism. Democrats blamed George W. Bush for a recession that began in March,
2001, two months after Bush became president and before any of his economic policies
were enacted into law.
That's not to say that politicians don't have considerable influence on the
longer-term economic trajectory. Obama is pursuing many policies that are likely to
lead to sluggish economic performance even after this economic correction in
reaction to the bursting of the housing bubble runs its course.
If Obama's policies are adopted or still under active consideration and in two years
the economy is still sluggish, he can fairly be held partially to blame.
But not for the current high rate of unemployment.