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News New Twist on Obama Unemployment Prediction

  1. Sep 1, 2011 #1

    russ_watters

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    The Obama 8% unemployment claim/prediction has popped up again and there's a new twist to it that I found very interesting. Here's the Politifact entry on the counterclaim (ie, that Republicans claim Obama said XXX): http://www.politifact.com/truth-o-m...bama-said-stimulus-would-cap-unemployment-8-/

    First, two quick diclaimers on Politifact:

    1. I consider them liberally biased and as a result of that, they missed the implications of a key piece of fallout from this that forms the basis of this thread.
    2. They changed their rating system labeling scheme so that "Barely True" is now "Mostly False". I don't think the two labels are equivalent, I don't know if they were intended to be, and I don't really consider their rating relevant to the discussion.

    Now, the key facts of the claim/counterclaim that form the basis of this: Obama never said explicitly that if you don't do the stimulus you'll have XXX% unemployment and if you do, you'll have 8% unemployment. The "claim" comes from a report done by his staff and it does include the appropriate disclaimers about accuracy and everyone now agrees with the obvious fact that they - and most others - badly underestimated the severity of the unemployment situation at the time. That's the limit of Politifact's analysis and not coincidentally, imo, the limit of where most liberals go with the analysis.

    What's missing from that basic analysis is the actual justification for the stimulus! Here it is:

    http://www.cnbc.com/id/28559492/Text_of_Obama_Speech_on_the_Economy [Broken]
    There are other specific claims/predictions, but I'll set them aside for now. What isn't often pointed out is that his claim/prediction, while not being as specific as what is typically attributed to him, follows-along pretty closely with it. The commonly cited unemployment graph shows up to around 9% unemployment predicted without the stimulus and 8% without it: http://www.google.com/search?q=obam...AEsrt0gHYmviDAw&ved=0CDoQsAQ&biw=1335&bih=910

    Equally telling, it shows most of the benefit to have worn-off by the end of 2011 and all of it to have worn-off by 2014. So his "lingering for years" is mostly just 2009-2011.

    Now he mentions the possibility of 10%+ unemployment if nothing is done. That's a fair bit higher than his projections, but whatever - it doesn't change the issue much: If 10% unemployment is a disaster that is worthy of an extra trillion dollars in debt to prevent and it isn't prevented, that to me is a significant failure. If the goalposts are allowed to be moved and 10% is now a success, then the justification was flawed to begin with. His real justification, then, is that regardless of where we are or where we are going, a temporary 1.5% point drop in unemployment is worth an extra trillion dollars in debt. Or put another way, pumping-up the GDP in 2009-2011, at the expense of the GDP in 2014 and beyond is worth being able to say 'the recession ended in 2009' instead of 'the recession ended in 2010'. And that's not good enough to me and other conservative critics.

    Where it gets interesting is the vague implications that there will be long-term benefit and additional long-term risk if the stimulus was not done. Ivan was kind enough to provide a justification for the stimulus based on short-term benefit alone by showing that since the stimulus can be seen to be wearing-off, the short-term benefit is real:
    http://www.cnn.com/2011/OPINION/08/31/bernstein.obama.recovery/

    Thanks for that -- that's the crux of the conservative argument against it, provided for me by a member of Obama's administration itself, via a supporter! Now naturally, neither Ivan nor Obama actually believe that the stimulus is only a short-term benefit, it's just a convenient/easy way to attack a strawman. What they actually believe is that the long term prospects would be much, much worse without the stimulus. But while Obama has some vague implications of that in the speech, he doesn't say it explicitly. More importantly, his own analysis doesn't show a permanent impact or a Great Depression II scenario. And that's where the new (not that new, but new to me) information makes this very interesting:
    Uh, what? 15% unemployment? While I agree that 50% higher unemployment than was seen at the peak would be a much bigger disaster, where is that number in any of the predictions/projections? What we have here is a reinforcement of the claim he was previously bashed about, but now with specific numbers, out of his own mouth. Paraphrasing, he's claiming that The 10% unemployment rate we saw could have been 15% if not for the stimulus. He and other liberals have long been implying that, he's since made it much more clear. The problem is his own analysis and the analysis of 3rd parties, such as what Ivan provided, contradicts that claim. Obama has taken a weakly supported Republican claim (due to his own vague language) and solidified and strengthened it and proven it to be an accurate representation of his position. And I think he didn't have much of a way around that. Because here's the thing: if Obama really did give us 10% unemployment instead of long-term 15% unemployment for an extra $1 trillion in debt, that would probably be worth it. But he didn't - he didn't come anywhere close to that, and his own specific claims and those of his followers show it. And now that the debt is being made an issue, he's having to try to exaggerate the benefit because he's taking heat for an insufficient cost/benefit ratio. So I expect that he and his supporters will have to continue to ignore the cost and exaggerate the benefit, even if it means digging himself a deeper hole.
     
    Last edited by a moderator: May 5, 2017
  2. jcsd
  3. Sep 1, 2011 #2
    This Time article from 2009 is quite clear regarding the failure of the Obama stimulus spending plan.

    http://www.time.com/time/business/article/0,8599,1910208,00.html

    "Obama's Stimulus Plan: Failing by Its Own Measure
    By STEPHEN GANDEL Tuesday, July 14, 2009

    The $787 billion stimulus plan is turning out to be far less stimulating than its architects expected.

    Back in early January, when Barack Obama was still President-elect, two of his chief economic advisers — leading proponents of a stimulus bill — predicted that the passage of a large economic-aid package would boost the economy and keep the unemployment rate below 8%. It hasn't quite worked out that way. Last month, the jobless rate in the U.S. hit 9.5%, the highest level it has reached since 1983. "


    Perhaps they read this (Romer) report - (see graph) page 4?

    http://otrans.3cdn.net/ee40602f9a7d8172b8_ozm6bt5oi.pdf

    "Aggregate Effect of the Recovery Package on GDP and Jobs in 2010Q4
    Real GDP (billions
    of chained 2000 $) Payroll Employment
    Without Stimulus $11,770 133,876,000
    With Stimulus $12,203 137,550,000
    Effect of Package Increase GDP by 3.7% Increase jobs by 3,675,000
    Source: Authors’ calculations based on methodology described above and multipliers
    described in Appendix 1.
    The table shows that we expect the plan to more than meet the goal of creating or saving 3 million
    jobs by 2010Q4. There are two important points to note, however:
    First, the likely scale of employment loss is extremely large. The U.S. economy has already lost
    nearly 2.6 million jobs since the business cycle peak in December 2007. In the absence of stimulus,
    the economy could lose another 3 to 4 million more. Thus, we are working to counter a potential
    total job loss of at least 5 million. As Figure 1 shows, even with the large prototypical package, the
    unemployment rate in 2010Q4 is predicted to be approximately 7.0%, which is well below the
    approximately 8.8% that would result in the absence of a plan
    ."

    my bold
     
  4. Sep 1, 2011 #3

    Ivan Seeking

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    I don't have time to review this is in detail, but the implication seems to be that the stimulus was intended to buy jobs. Everything said in the op suggest to me that the notion of a stimulus is not understood.

    It was a stimulus; not a purchase of future properity. This isn't supposed to equate dollar for dollar. To an extent it does but that isn't the only measure of success. It was intended to change the direction of the economy, which it did. Ideally, the economy would by now have enough strength to recover more fully, which is why the stimulus is now trailing off. But with significant drags due to Europe, Japan, the housing market, and additional complications such as the inability to relocate for a job due to excessive mortgage debt, the recovery is still struggling.

    What I hear time and time again from the right is that Obama is responsible for a Republican crash and the depth of the damage. Sorry, but we all know what Obama inherited from the Republicans. You can't change the facts. That the damage from Republican and conservative policies was deeper than expected is a no brainer in retrospect. Now we have to live with the consequences.

    .
     
  5. Sep 1, 2011 #4
    Personally, I think all that can be expected of us (2012 voters) at this point is hold the Obama Administration accountable to their promises - and move on with a more experienced candidate.
     
  6. Sep 1, 2011 #5

    BobG

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    All the talk about moving targets and such will go right over most people's heads (at least I found your post confusing). The real bottom line is results. No results and the talk becomes meaningless.

    Based on the changes to the electoral map because of the census, Obama would win 359-179 if things went the same as in 2008. But, Florida, North Carolina, and Nevada were 'close' elections in states where unemployment is too high for Obama to keep them.

    Colorado doesn't seem like an incredibly high unemployment rate (8.5%), but their unemployment rate grew a lot slower than the rest of the nation and 8.5% is very close to the peak. Obama will lose that state, as well.

    That takes the map to 300-238 for Obama. The Republican candidate needs 2 or 3 states to get the 32 necessary to flip the election from Obama to Republican.

    New Jersey, Oregon, Washington are possible flips where the margin of victory was at least less than 20% and unemployment is over 9% in all three states, but I think the margin of victory was high enough that Obama could hold on to them.

    Obama's message is intended for Michigan, Ohio, Indiana, Pennsylvania, and Minnesota. All the other high unemployment states are safely Republican or safely Democrat.

    Michigan's rate is very high (10.9%), but that's down from nearly 15%. Ohio is very high at 9%, but that's down from their peak as well. Indiana, Pennsylvania, and Minnesota are all between 7% and 9%, but that's down from their highs in all three states.

    The chances of getting that message across is very, very shaky (especially since counting NJ, OR, and WA in the D column might be overly optimistic), but the fact that things are getting better in all 5 of those states gives him a chance (especially in IN, PA, & MN).

    His chances would probably be increased if Republicans nominate a candidate that can't win those target states.

    Flipping Michigan and Ohio from D to R would be enough for a Republican candidate to squeak by, but the only reason Michigan is on my target list is because their unemployment rate is so high and because Romney, in particular, could do well there (Obama won MI by over 16% in 2008).

    Most bizarre result: Only Ohio and Washington flip, and Nebraska's 1st District (Omaha) comes down to a recount that could result in a statistical tie (269-269). At least it would only be one city, but Nebraska's split electoral votes would make it even more interesting.

    Unemployment rates by state
    2008 Election results
    Unemployment history from numerous sources
    Play with the electoral map yourself based on your own assumptions
     
    Last edited: Sep 1, 2011
  7. Sep 1, 2011 #6
    What I don't understand is why haven't the Republicans been taken to task?

    What have they done to increase jobs in America since they won the house?

    What bill have they put forward?

    Why do Republicans insist on "small" government - but expect the White House to create jobs?


    Obama blew it when it came to job creation but imo Republicans have not done any better - and quite honestly even if they had the White House they still wouldn't do better.

    They were losing 400,000 to 600,000 jobs a month when Bush left office - and all of the old guard were in the House and the Senate - why would anyone expect them to do any better this time around?

    It's sad really - as usual there are no real options in a system where both parties are beholden to corporate interests and lobbiests.
     
  8. Sep 1, 2011 #7
    And who is that experienced candidate who has a proven track record of bringing back a country from a financial crisis of this magnitude? Or an experienced person who has handled this successfully anywhere in the world?

    Edison should have stopped experimenting with lightbulbs after few failed attempts, right?

    All the weather forecasting and the physicists should be kicked out because they are still unable to come up with a perfect prediction system, right?

    We still have people dying and those doctors must be are all so incompetent, right?
     
  9. Sep 1, 2011 #8
    Are you kidding? The last time I checked the Republican field included former Governors, business leaders, and a former Speaker of the House. As for President Obama's experience (:rofl: can't say that word with a straight face) - he never ran ANYTHING prior to taking office - did he?
     
  10. Sep 1, 2011 #9
    Again, all we can really do is hold our elected officials accountable for their promises - Obama promised jobs and has failed.

    As for the Republicans in the House - their hands are tied (somewhat by Nancy Pelosi in the House) by Harry Reid in the Senate, and President Obama. Reid has tabled (no debate) most of the Bills passed by the House under Boehner's leadership.

    Btw - how many new unemployment claims have been reported in the past month?
     
  11. Sep 1, 2011 #10
    No, he didn't. And that's a valid reason for one to not to vote for him (ah, I wish Mccain hadn't said he did not know anything about economy). But a group of "Governors, business leaders, and a former Speaker of the House" will be in the same situation when it comes to bring the economy back. It is not the problem with leaders. It is a systemic issue and it is foolish to expect it to get fixed within few years.
     
  12. Sep 1, 2011 #11
    Romney is both a former Governor and a successful business executive. His experience should not be discounted.

    Romney knows the effect of Government regulations and tax policy on business growth and he knows what it takes to pass legislation in a tough political climate (Republican Governor in a Democrat state). He can restore confidence to small business owners and corporate executives alike.

    Further, while many hold MA healthcare against him - he might be the ONLY serious candidate that can actually fix Obamacare (if it can't be repealed) - he knows what didn't work with his plan (much like when Hillary should have been taken at her word when she said she knew how to fix NAFTA-IMO).
     
  13. Sep 1, 2011 #12

    mheslep

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    Note that Politifact is fundamentally just an arm of a newspaper, the http://en.wikipedia.org/wiki/St._Petersburg_Times" [Broken] in 2008. I value Politifact for the references it digs up on subjects, not for its conclusions.
     
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  14. Sep 1, 2011 #13

    mheslep

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    Last edited by a moderator: Apr 26, 2017
  15. Sep 1, 2011 #14

    Evo

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  16. Sep 1, 2011 #15

    mheslep

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    Now we have the 2010 elections to observe. If 2010 means anything at all, Virginia, Florida, Wisconsin, Indiana, Iowa are gone for Obama 2012. That's 270 blue, 249 red. Ohio now has two Republican Senators from 2010 and 4 House seats went red. If employment is an issue on people's minds there, they might well remember not just that employment fell from 10 to 9%, but that also http://www.google.com/publicdata/ex...&idim=state:ST390000&ifdim=state&hl=en&dl=en"

    http://en.wikipedia.org/wiki/United_States_House_of_Representatives_elections,_2010
     
    Last edited by a moderator: Apr 26, 2017
  17. Sep 1, 2011 #16

    mheslep

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    I can't see any of the official employment figures (U3) in states without booming economies like Texas improving much before 2012. There is still a large pool of discouraged workers (reflected in U4). With continued slow growth, the discouraged all have to slowly come back into the labor market meaning there is a large amount of labor slack to be picked up by the economy before any fast improvements can occur in the official unemployment rate.

    Edit: If employment rates do figure large in the 2012 election and I expect they will, drops of a point or so from 9-8% won't satisfy with the Texas record on display.
    https://www.physicsforums.com/showpost.php?p=3463566&postcount=19
     
    Last edited: Sep 1, 2011
  18. Sep 1, 2011 #17

    Vanadium 50

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    I'm not sure I even buy that argument. There are 150M workers in the US, so we are talking $800B for 7.5M jobs, or $106K per job. The median AGI in the US is $33K. So the "multiplier" probably was not the 1.5 that we heard of, much less the 3.0 that some were touting.

    (Yes, AGI is not total income, and yes, the government would get $20K back in income taxes from anyone who got a $106K job, but it gives an idea of what the ballpark is)

    I'll make the same point I made two years ago - ARRA may have been a necessary step to economic recovery, but it was clearly not a jobs program.
     
  19. Sep 1, 2011 #18
  20. Sep 1, 2011 #19

    Evo

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  21. Sep 1, 2011 #20
    Just a fun find.
     
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