Viewing the American Economy -- who is Desperate?

Writing in New York Magazine yesterday, Jonathan Chait says that Republicans are "desperately trashing" the Obama recovery. That's right, according to Chait we are in the midst of a big economic recovery and the Republicans are trying to obscure that fact. What complete garbage!

Chait first takes Republicans to task for pointing out the failure of the Stimulus to do what Obama promised. As most Americans recall, we were told in 2009 that if the Stimulus were passed, unemployment would peak at 8% and would be down to 6% by now. Well, the Stimulus got passed and unemployment blew through the promised maximum of 8% where it has remained ever since then. Chait complains that Republicans call this 8% figure a promise even though some economists said at the time that there were other possible outcomes. But the 8% figure comes from Obama's message to Congress containing the reasons why to pass the Stimulus; Obama and not some unnamed economist told the country that the maximum unemployment would be 8%. Except in the world of the loony left, that is a promise that most Americans would understand.

Chait also claims that things were worse than the Obama economists understood, and Obama cannot be held responsible for that. Huh? We all knew that things were really bad in 2009; you did not need to be a professor of economics to recognize that reality. If the geniuses who prepared the stimulus did not know that things were that bad, then they really were not geniuses; they were more like fools. As president, Obama had the responsibility to find out how certain it was that his proposed remedy would work. A president cannot simply just try things because they sound nice; a fair amount of investigation must first be done before deciding to spend a trillion dollars of taxpayers' money. think of it this way: When George Bush pushed for the invasion of Iraq to prevent that country from using its weapons of mass destruction, he was attacked endlessly by the Democrats for those missing weapons. Remember "Bush lied and people died"? Bush relied on the intelligence estimates of all of the American agencies as well as the analysis obtained from British, French, and Israeli sources. It seemed to the whole world that Iraq had WMD's. Obama, on the other hand, relied on the views of his economists to push a stimulus which he promised would keep unemployment under 8%. Unlike in the Iraq war, Obama's advisers told him that the results could be very different than what Obama was promising; even Chait acknowledges this. Further, anyone looking at the economy in early 2009 could see that things were really bad. The USA was losing 700,000 jobs in a month. So Bush relied on unanimous advice that seemed correct while Obama relied on split advice which seemed wrong. Chait, however, has condemned Bush for what he did, but Obama deserves a pass according to Chait. It is total hogwash.

Chait also attacks Republicans who say that this is the worst recovery since the Great Depression. It may be true that except for now, since the 1930's there has never been a recession where we could arrive at a point two and a half years after the end of the recession with total employment lower than before the recession began. Chait says that does not matter since this was not a recession, it was a financial crisis. Chait then compares our current problems with other financial crises, all of which occured in other countries. That's right, chait ignores the one financial crisis that took place in the USA during this time. In the late 1980's, the Savings and Loan industry nearly went under. Savings bank after savings bank failed, and many forced sales of shaky institutions took place. The federal government had to act in 1989 to spend hundreds of billions of dollars to defend the S&L's. In Chait's view, this should have led to a major decline in employment and a recession. But it did not. There was a mild recession that went into 1990, and within a year of the end of the recession employment had already exceeded the pre-recession numbers. What this means is that even if you look only at financial crises, the recovery from the Obama recession is still, by far, the worst since the Great Depression.