Jim McTague of Barron’s recently participated in a 2 ½-hour economic spin session from the Obama administration. It was aimed at financial journalists whose work appears online.
What I gathered from this cozy encounter is that President Obama will ignore the first two years of his presidency, when a Democratic-controlled Congress gave him carte blanche, including an $831 billion stimulus package that failed to deliver his promised four million jobs by 2010. Obama will run as if he’s been in office only since late 2010, when the GOP routed Nancy Pelosi and her Democratic colleagues in the midterm elections. Using an argument from his chief economic advisor, Alan Krueger, Obama will contend that the 8.2% unemployment rate is a direct result of the power shift. The House Republicans have blocked jobs bills that would have lowered unemployment substantially, he will contend.
What about the truth behind the spin?
I ran the numbers by Columbia University economist R. Glenn Hubbard, who advises GOP presidential front-runner Mitt Romney. “Having to demonstrate you are in a vigorous recovery likely means that you are not,” Hubbard says, stressing that, despite massive fiscal and monetary stimulus, 2.4% growth over the past 10 quarters is all that’s been achieved.
Hubbard notes that if one focuses on jobs created 50 months after the peak in a business cycle, a different picture emerges. Fifty months after the economic peak in 1990, 4.6 million jobs had been created. After 2000’s peak, the number was minus-400,000 jobs; and 50 months after ’07’s peak, we’re at minus-4.8 million jobs. He adds that the current long-term unemployment rate is a new experience for the U.S. In other words, the administration is comparing apples and oranges.
