Economics21 has updated the graph produced in 2009 by Christina Romer and Jared Bernstein to justify the Obama Administration’s stimulus package. Economics21 characterizes itself as nonpartisan but judging by its roster is pretty darned conservative. However, not “batshit crazy conservative” which James Joyner assures me is a technical political science term.
The red line dots are the update and constitute the real-life results. I think the most charitable comment you can make is that their model was wrong.
Read the whole thing. They also link to a report that suggests that the stimulus resulted in a net loss in jobs.
Right now my position on stimulus packages (defined as debt-financed spending other than via the tax code) is that, while I still believe that a well-timed and well-constructed stimulus package could produce actual economic stimulus just as Lord Keynes advised us eighty years ago, our political system is incapable of producing a well-timed and well-constructed stimulus package.
You can decide that Timer et al were excellent forecasters and the stimulus did not work. Or, you can decide they were poor forecasters and the stimulus accomplished something, or some combination of the two. I think it was pretty clear that at the end of 2008 we still did not know how bad things were going to be. If you recall, in 2008, esteemed economists like Steve Verdon denied that thereeven was a recession, IIRC.
Steve
“Batshit crazy conservative/liberal” has no meaning for me outside of policy prescription or attribution. Data is just that, and knows no politics. The verdict is in.
steve invokes the “we did not know how bad” garbage. But if we will all recall, when it was convenient for the campaign, Team Obama told us that we were just short of economic death – so vote for them. And subsequently, it became the predicate for any and all policies they wanted to apply. It may work for steve – but not for me – that now that those policies have fallen flat on their collective face, with real and substantial, ahem, “unintended” consequences –
that some might look back and say variously “you didn’t know what you were doing” and “you blew it.” But accountability has never been a priority of the left. Just the rationale for another round of government intervention.
As for Dave’s observations:
“I think the most charitable comment you can make is that their model was wrong.”
Indeed. You are, as always, a gentleman.
“……while I still believe that a well-timed and well-constructed stimulus package could produce actual economic stimulus just as Lord Keynes advised us eighty years ago, our political system is incapable of producing a well-timed and well-constructed stimulus…”
Consider a perfect sphere, travelling through an ideal gas with no energy losses from friction………ignore elasticity effects; ignore gravity………..assume no exogenous variables…..
Did that in Physics 101…..
Anyone who argues a stimulus reduces jobs has moved to high order sophistry. It defies common sense, but of course, there is an ugly vein of such defiance running through economics.
We can always get the answer we want, if we make a few assumptions …
BTW, Drew really loves him his contradictions:
It was worse than everyone thought, and so Obama was wrong when he told us it was bad.
(Really dudes, shouldn’t you f’n point to your study that DID have the right answer back then?)
“It was worse than everyone thought, and so Obama was wrong when he told us it was bad.”
That’s not waht I said, and you know it. Intoxicated mid-day?
that was my post-hike summary of:
I was feelin’ kind of funny. Endorphins maybe, but I’ve had a nap now.
“steve invokes the “we did not know how bad†garbage.”
The election was held in November. Romer and co had the rest of November and December to put together a forecast. Do you really think that by then we knew what was where in the shadow banking system? In the mega banks? You have much more confidence in economists than I do.
Steve
I wonder if they had the kind of data Wolfers presents at the link?
http://www.freakonomics.com/2011/06/08/were-halfway-to-a-lost-decade/
Steve
Here is a good wrap-up of where we are on the stimulus/austerity cycle:
How fiscal ideology trumped job creation
That’s Felix Salmon at Reuters, and good economic journalism.
No. Get your facts right.
Link
Link two
Link three
Link three
In other words I was noting the possibility of a recession about half way through 2008 and near the end was pretty damned sure. My position predates the NBER statement on the recession.
The second “link three” should read as:
Link four
And yes, I was unsure of how bad it would be back at the beginning of the crisis, but I don’t think that uncertainty necessitated doomsday like rhetoric. If anything creating even the perception of greater uncertainty and even fear is counter productive. Going out saying that, “We learned painful lessons from the 1930s and we wont repeat them. The Federal Reserve is standing by to protect the integrity of our banking system and your savings and money. We are looking at other measures, and we will get through this,” would have been good.
In fact, I recall mentioning that if Obama had shifted gears and come out and said something like, “Given the current situation, my focus is going to be on restoring the economic health of the country,” vs. pushing his campaign agenda we might be in much better shape right now. Instead Obama and company realized that the crisis presented them with a golden opportunity to do things they’d never be able to do if the crisis had not come along. And as a result I think they’ve increased the feeling of uncertainty in the business community and that has lead them to hold back on investing. This in turn has hampered job growth. And that has restrained consumer spending, which further increases businesses desire to invest and expand.
Regarding Felix Salmon,
And I have a cute cuddly puppy for Salmon. The notion of long term sustainable fiscal path is impossible. We have been on an unsustainable path for at least 30 years if not longer.
That is not good economic journalism, it is magical thinking.
Yeah Steve, we all died years ago … nothing but a zombie horde now.
BTW, leaving aside the Eeyore moment, really the important thing in the Salmon piece is the history, not the projection(s).
Most adult males base their political views on an economic policy that is kind of made-up.
They haven’t grasped the path, semi-austerity I call it, we’ve been on since 2009.
Yes, I see that in almost every post you make.
Do you really think cheap shots like that are going to impress me? Seriously? I laugh both at you, and your transparent attempt to shift from austerity as a topic.
Listening to you whine of cheap shots is amusing.
Stop using the word austerity you don’t know what it means. We haven’t been pursuing a policy of austerity in decades. We got lucky for a few years during the Clinton Administration, but overall we’ve had a situation where our fiscal path has been one that is unsustainable.
That’s probably why I used “semi” in there so many times Steve.
An adult could engage with that, without yet again making the argument not about data, but about me. At is the ad hominem attack to a tee.
It’s really your forte’ isn’t it? Never build a logical case when you can attack the messenger.