As these embarrassing moments often do in government, the first hint came late on a Friday afternoon. Administrations like to release damaging information at this time, so much so that the practice has its own name: the Friday afternoon document dump. The hope is that more pressing news will swamp out the setback and distract the media from failure.
Unfortunately for Barack Obama, that didn't happen this last weekend, when the Office of Management and Budget finally got around to admitting that they'd underestimated the deficits over the next ten years. Back in February, when the White House and OMB first claimed that they had knocked two trillion dollars off of the projections thanks to the superpowers of their economic stimulus package, the CBO sounded quite pessimistic. OMB director Peter Orszag at the time replied on the OMB blog that the CBO didn't give enough consideration to the power of Porkulus:
During last Thursday’s briefing on the President’s FY 2010 Budget, CEA Chair Christina Romer was asked many questions about the economic forecast underlying the Budget – and since then some news reports have highlighted differences between the Administration’s forecast and the Congressional Budget Office (CBO) forecast.
The problem with this comparison is that our forecast includes the effects of the American Recovery and Reinvestment Act, which has now been signed into law. The CBO forecast, by contrast, was published in January and did not take into account the effects of the Recovery Act.
To put the forecasts on an "apples-to-apples" basis, one can take the CBO forecast and add in the effects from CBO’s macroeconomic analysis of the Recovery Act—which included both a "high" and "low" estimate for the projected effect of the act. ...
The results show that the Administration’s GDP forecast is entirely consistent with CBO’s forecast (and indeed right in the middle of CBO’s "high" and "low" estimates) once the effects of the Recovery Act are included.
This is an important point, and one which the media seems largely to have missed. The CBO estimate turns out to have been quite accurate, perhaps even a bit optimistic, but at least now almost entirely in consonance with current OMB projections. If that's the case, then the data shows that the economic stimulus has had no impact on the nation's economy, despite its hefty $787 billion price tag.
Consider: the OMB had the same economic data as the CBO from which to build baseline projections of economic activity. Orszag in his blog post says that the OMB reached the same conclusions as the CBO without including their estimates of stimulus reaction. The “apples to oranges” that Orszag references is that OMB included those promised effects when calculating deficits for the future decade, not – as he claimed later – that the recession was deeper before OMB and CEA concocted those projections. In fact, estimates of first-quarter GDP got revised upward later this year, and the Obama administration hailed the Q2 result of -1% GDP growth as an “improvement” in the economy, a small demonstration of economic illiteracy.
The Obama administration certainly understood the implications of the results. They hid the results in July while pushing Congress to pass two massively expensive programs that would have fundamentally reshaped the economy, cap-and-trade on energy production and an overhaul of the American health-care system. When neither passed before the August break, Obama had no choice but to reveal the delayed budget reconciliation numbers – but he did have the choice to bury them in a Friday afternoon document dump.
The White House has no more fig leaf to cover their ineptitude. A Democratic Congress passed a stimulus plan demanded by a Democratic administration, and both eschewed any cooperation with Republicans in Congress to adjust the bill. Obama, in fact, reminded his former colleagues in the Republican caucuses on Capitol Hill that he had a mandate from the election to ignore them; he told them, I won.
Obama won. America lost, both $787 billion in a useless stimulus bill and in wasted time when targeted investments and tax cuts might have actually saved jobs and created wealth. And America will keep on losing where it counts, as Keith Hennessey notes from the CBO analysis:
CBO and OMB project a weaker economy in the remainder of 2009 and in 2010 than they projected at the beginning of this year before enactment of the stimulus.
How much weaker?
Based on CBO’s forecast for the average unemployment rate in calendar year 2010, 2.3 million fewer people will be employed on average next year than they projected in January.
Even a Friday afternoon document dump won't hide the failure if the CBO and the OMB projections on jobs turns out accurate.
Edward Morrissey's Bio
Ed Morrissey writes for Hot Air, where he also has a daily political talk show. Ed has written for the Washington Post, the New York Post, the New York Sun, and has made numerous television and radio appearances. He lives in Minnesota with his wife, son, and two granddaughters.
Posted
08-27-2009 1:05 AM
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