Obama's self-congratulatory back-patting from yesterday - which echoed Biden's much dumber Early Show smirking - assumes a lot of things. One of the things it assumes is that the multiplier for government spending is above two:
Did the stimulus help? Sure. But Recovery.gov currently has a nifty graphic showing that of ARRA's $787 billion in budget authority, the government has currently disbursed about $287 billion. You'd have to posit some really remarkable multipliers for the stimulus to think that this prevented us from sliding into the Great Depression. For comparison's sake, in 1930, GDP fell by 8.6% in real terms. In 2009, the BEA says that it fell about 2.4%, or about $300 billion. Had it fallen by anything close to 8%, that would have meant a decline of roughly a trillion dollars. So the administration is claiming that by spending less than $300 billion, it managed to prevent more than $700 billion in economic decline--in other words, that the multiplier for their spending was higher than two. They're saying that every dollar they spent increased GDP by more than $2.
Unsurprisingly, the multiplier is not above 2. Per CBO projections it's actually much lower than 2. And the CBO assumed that funds were being allocated efficiently, not getting bottled up by state-level Transportation Departments or channeled into signs touting the government's awesomeness.
Still, it's good to see that the WH resolved that little internal disagreement they were having about stimulus numbers. Trotting out three different advisers with three different estimates on the same morning - that was just too reminiscent of Obama's knowledge-challenged Afghanistan dithering. It was distracting from all those places where the President was just outright lying.
Like his smug statement about how "every economist from the left and right" agreed that the stimulus created or saved two million jobs. That was a pretty brazen lie.
Seriously. Some of his statements can be explained by simple narcissism. I'm assuming that's his "century of law" Supreme Court attack got into the SOTU because he wanted it to be true, regardless of what even HuffPo acknowledges. Ditto for his declaration that stimulus funds would create Caterpillar jobs, even though Caterpillar's CEO said the opposite. In both cases you can see kind of sort of see how the thinking went: "my theories about the world are super-keen, they say stimulus funds create jobs and campaign funding limits are Constitutional, ergo..."
But he can't really believe that every rightist economist credits the stimulus with two million jobs, right? I mean, not if he has even a basic sense of reality. Right?
References and related after the jump...
References:
* Obama on the stimulus: You're welcome [Hot Air]
* CNSNews.com Biden Says U.S. Got 'Money's Worth' From Stimulus Spending [AP]
* Did the Stimulus Save Us? [McArdle]
* CBO Fiscal Policy Multipliers [DeLong]
* Shovel Ready or Ready to Shovel? [NYT Freakonomics]
* Signs of waste? $1 million used to tout stimulus funds at work in Ohio [CNN]
* White House brass split on stimulus stats [Politico]
* Civilian, Military Officials at Odds Over Resources Needed for Afghan Counterinsurgency[WaPo]
* President Obama: "Every Economist from the Left and Right" Says Stimulus Has Saved or Created At Least Two Million Jobs [Tapper]
* Alito Was Rude (But Right) [HuffPo]
* Obama: Caterpillar will re-hire people if stimulus passes; Caterpillar CEO: No, we won't [Hot Air]
Related Mere Rhetoric Categories:
* Economy
* American Politics
* Democratic Politics
