Today, I came across a variation of the employment chart below in an Obama campaign ad. In this ad, the old adage holds: There are “lies, damned lies, and statistics.” In this campaign season, this truism will likely apply to both parties.
If the chart above is the Obama administration’s distortion of its record – after all, no one can credibly claim that all is well with American employment — the chart below will likely be the right’s version of reality. This version is also a distortion. After all, President Obama did inherit an economy in free fall.
The Democrats will argue that the economy would have been worse without Obama’s policies, while Republicans will argue that Obama’s policies hampered the recovery. Both the charts and the narratives have some elements of truth, but each taken in isolation is a distortion of reality. After all, that’s what politics is all about, isn’t it?
the chart below will likely be the right’s version of reality. This version is also a distortion. After all, President Obama did inherit an economy in free fall.
It would be a distortion if the right claimed that the reason the unemployment rate was so high at all was that Obama is the President. “After all, President Obama did inherit an economy in free fall.” *
The fact is that Obama and his administration claimed, not anyone on the right, that if we pass his stimulus, the picture would look like this……That he is wrong is his burden.
* This too may be debatable. The fact that the curve began to bend on inauguration day is more indicative of previous actions than future ones.
I am just trying to be balanced.
Your point is fair about Obama putting out the “promised” unemployment rate if Congress passed the stimulus. Someone on the left would argue that these charts were released by the administration in late 2008, before I truly knew the extent of the downturn. I don’t necessarily agree, but that would be the most likely argument you’d hear.
The curve started bending before inauguration day and is probably a result of TARP. Though TARP is universally despised, it might have turned an exponantial acceleration of job losses into merely a continuing, steady rate of job losses. But that’s all it did. It’s a little hard to tell the whole story in a little graphic. You’d need a footnote saying “This is probably due to TARP, which everyone hates but may have had some positive effect. It was signed by Bush, but Obama strongly supported it and helped keep it going in 2009 so he really does deserve some of the credit”
An excellent point that highlights the difficulty of assigning blame or credit to one individual or policy. The economy is so complex and dynamic that people will tend to see what they want to see.
uh no, the first chart is based on one line, the other chart has one curve upside down. science and math teachers will be very disappointed in your graph skills, but when has math been an obstacle to the right wing agenda?
Other than your ad hominem argument, I don’t quite understand what point you are trying to make. Neither chart is upside down. The chart on the left represents private sector job growth or losses. The chart on the right represents the unemployment rate.
Please provide more detail on exactly what you think is wrong with it.
The Stimulus didn’t fully go into effect until January of 2010, so why is there a discrepancy before that time. Oh, yeah! It’s because the right-winger who created that graph just pulled those numbers out of his ass! 🙂
I literally replicated an Obama ad I saw on CNN.com today that looks very much like the one that is posted here. Don’t take my word for it. You can watch it here:
Okay, Obama is taking credit for job growth that he had nothing to do with. It’s probably due more to the bank bailouts than anything.
My apologies. Your last two comments ended up in my spam filters and I only checked them today.
“Okay, Obama is taking credit for job growth that he had nothing to do with. It’s probably due more to the bank bailouts than anything.”
Who knows? The economy is so dynamic and complex, that it is difficult for either side to claim success.
I don’t know if my post went through. Obama may be trying to take credit for something he had nothing to do with, but right-wingers are just plain lying. The growth immediately after Obama took office was more due to the bank bailouts than anything.
The bank bailouts certainly helped. Without them, the monetary system would have gone into free fall. That said, there could have been other contributors as well. Who knows?
Whiplash effect. Just ask Rick.
Republicans will argue that Obama’s policies hampered the recovery.
Right, but there’s no evidence to support that view. See, e.g., “More Obama Criticisms Fail Reality Test” at Frum Forum. They’ll also argue that reducing revenues balances the budget, that climate change is a socialist plot, that we found Saddam’s nuclear weapons, that the president went on an apology tour, that regulatory uncertainty is plaguing the economy, that government regulations and subprime mortgages caused the financial bubble, etc.
Dean Baker wrote on the effects of the stimulus here:
“Right, but there’s no evidence to support that view.”
We’ll have this argument forever. But here’s some evidence from the past (https://reflectionsofarationalrepublican.com/2011/08/10/regulatory-uncertainty-in-the-obama-administration/, https://reflectionsofarationalrepublican.com/2011/08/14/regulatory-uncertainty-in-the-obama-administration-part-ii/, and https://reflectionsofarationalrepublican.com/2011/08/16/regulatory-uncertainty-in-the-obama-administration-part-iii/) as well as a recent Harvard Business School alumni survey from actual business leaders who actually hire people as opposed to economists who do not (https://reflectionsofarationalrepublican.com/2012/01/22/why-business-leaders-think-americas-economy-is-ailing/). They see government, particularly regulatory uncertainty (on both sides of the aisle) as a key headwind for growth of the American economy. Though, as others have argued, the economy is too complex an animal to put blame on any one person or policy. The same claim can be made for the stimulus. Did it work? Maybe. I think it did, but I cannot prove it conclusively (nor can anyone else). Was the TARP more effective than the stimulus? Maybe, or maybe not. I cannot prove it. That said, the Obama Administration ought to be held to its own standard. If the results of the stimulus failed to measure up to even the administration’s projections for the unemployment rate without a stimulus, it is certainly fair for people to hold it accountable.
“They’ll also argue that reducing revenues balances the budget”
Are you arguing otherwise? Increasing taxes also balances the budget. Some combination of both is ideal.
“that we found Saddam’s nuclear weapons”
We did? Who said that? George W. Bush never argued Saddam had them. Only that Saddam was working on them.
“that government regulations and subprime mortgages caused the financial bubble”
Well, they all had a part in the mess as did exotic derivatives, low interest rates, and a variety of other factors. Do you honest believe that government regulations and subprime mortages didn’t have an impact on the financial bubble?
“that the president went on an apology tour”
Well, this is a matter of perception and not fact.
Anyway, both sides will have their “blue paint” and “red paint” ready for the campaign season. It should be interesting to watch.
But there’s no empirical support for that view; there’s just a few people saying so. See, e.g., here (Bruce Bartlett looks at the data, and concludes, “No hard evidence is offered for this claim; it is simply asserted as self-evident and repeated endlessly throughout the conservative echo chamber. … regulatory uncertainty is a canard invented by Republicans that allows them to use current economic problems to pursue an agenda supported by the business community year in and year out.”)
No, cutting revenues doesn’t increase revenue. We saw that with the Bush fiscal policies, and it remains true. The Heritage Foundation projected in 2001 that cutting revenues would lead us to pay off our debt entirely by about 2009. It didn’t happen.
George W. Bush never argued Saddam had them. Only that Saddam was working on them.
Based on what was, at best, a slanted reading of the intel, perhaps deliberately so. In any event, we know that, no one competent looking at the intel in good faith would have argued for invading (thereby kicking out the weapons inspectors) on the basis of the nuclear-related program activities. (It is, of course, correct to say that the Democratic Party was also skewed too far to the right on invading Iraq. We are fortunate that our current president was driven enough by data not to support that baseless, failed invasion and occupation.)
Do you honest believe that government regulations and subprime mortages didn’t have an impact on the financial bubble?
Yes. There’s no evidence to support the other view. See, e.g., here (“Using a regression discontinuity approach, our tests compare the marginal areas just above and below the thresholds that define eligibility, where any effect of the CRA or GSE goals should be clearest. We find little evidence that either the CRA or the GSE goals played a significant role in the subprime crisis. Our lender tests indicate that areas disproportionately served by lenders covered by the CRA experienced lower delinquency rates and less risky lending. Similarly, the threshold tests show no evidence that either program had a significantly negative effect on outcomes.”)
Well, this is a matter of perception and not fact.
No, it’s a matter of fact. The president never went on anything remotely resembling an “apology tour”. There is a perception otherwise because the Republican critique of the Obama presidency is based almost entirely on lies. As with the light bulb blowup, the perception is there solely and entirely because of the Republican lie factory.
You’re right that the two sides will say different things. The question is, which side is more accurate? The answer is, at the moment, the Democrats. Hasn’t ever been thus, shall not ever be thus, but for the time being, if you’re interested in a solidly grounded, empirical policies, you can’t vote for Republicans, at least at the national level. I’m under the impression that many Democrats were in a similar spot in the 1960s and 1970s, but don’t know enough to be sure. That’s where the GOP is today.
There’s no empirical support that the stimulus worked either since you cannot ever measure what would have happened without it. That still doesn’t mean it didn’t have a positive impact. For instance, the number of offshore drilling rigs declined precipitously in the Gulf of Mexico after President Obama put an moratorium on offshore drilling. As a result, fewer people were employed drilling for oil in the Gulf of Mexico. Sure it is difficult to find direct causation in the data, but common sense tells me that if I don’t know how much it will cost me to hire someone, I will wait and see before I do so. The dramatic decline in the rate of hiring coincided with the passage of the healthcare bill. It’s logical and it makes sense. Can I prove it empirically? No. But I also cannot prove empirically that the stimulus would have worked better than no stimulus at all.
I never said that. Cutting costs decrease costs, and increasing revenue increases revenue. You can balance a budget by either cutting costs, raising revenue, or both. Do you dispute that?
That’s simply not true. The current Deputy Secretary of Defense testified before Congress to state that the entire national security establishment as well as the United Nations believed Saddam had WMD. The United Nations had no evidence whatsoever that Saddam destroyed the stockpile they inventoried following the First Gulf War. In fact, these weapons have never been accounted for.
Notice, the study does not say it had no negative effect on the outcomes. Additionally, you haven’t made a case for why subprime mortages didn’t have an impact on the financial bubble. I think it is self-evident that they had a decisive impact on it, and were fueled by toxic derivatives that enabled people to get subprime loans. Without sub-prime loans, the financial bubble wouldn’t have happened. Period.
No. It’s not. Forgive me for quoting Fox News as a source. Fortunately, they quote President Obama, so there is less of an opportunity for them to distort the story. Again, it is all perception. My perception is that these comments seem indicative of an apology tour to me.
Gotta run, but short version: you’re selling economists short. It’s not simply a matter of eyeballing things that happen near the same time and thinking that maybe x caused y. There’s stuff economists can do to see which policies work. See, e.g., http://www.econ.berkeley.edu/~cromer/Written%20Version%20of%20Effects%20of%20Fiscal%20Policy.pdf
There’s no support for the view that the government caused the bubble. See, e.g., http://modeledbehavior.com/2010/08/27/fannie-freddie-acquitted/
If the president admitting to foreigners that America isn’t omniscient and omnipotent counts as an “apology tour”, then conservatism has collapsed even further into tribalism than I’d thought.
The causus belli the Bush administration stressed was the nuclear program, not the WMD we helped Saddam get in the 1980s. And we were putting a thumb on the scales.
This is exactly what I’m talking about. You cannot prove or disprove a counterfactual, yet that is exactly what Christina Romer attempts to do:
“One way we tried to estimate this counterfactual when I was at the Council of Economic Advisers was to construct a fairly simple statistical forecast”
I could make a convincing empirical case that not invading Iraq would have resulted in worse oil prices than we see today, and no one would ever be able to prove or disprove my thesis.
I never said that government “caused the bubble.” I said that government was a contributor, as were banks, and greedy homeowners.
That’s a matter of opinion, but not fact, which was my original point. My opinion is that those statements unnecessarily debase the United States of America. When you have troops in the field and at war, you send mixed signals to them when you communicate to other countries that what they are sacrificing their lives for is a “mistake.”
Perhaps. However, the bulk of Colin Powell’s testimony focused on mobile biological labs rather than the fictional Nigerian aluminum fuel rods. The military’s focus was on the Chemical side of NBC as well.
You cannot prove or disprove a counterfactual,
Not in the same way you can prove that the sun rose in the East this morning, but you can use math and data to have a pretty solid idea of how things might have gone. I thought that Figure 1 and Figure 2 in Romer’s lecture were a nice illustration of that.
I never said that government “caused the bubble.” I said that government was a contributor
I’m unaware of empirical support for the view that government contributed more than a negligible amount to the bubble. Or as Barry Ritholtz put it, “Fannie Mae and Freddie Mac “contributed to the crisis but were not a primary cause.” (Or as I called them, they were just two more crappy banks) The various home ownership goals set by the government were not culprits either.” In fact, Fannie & Freddie were victims of the bubble– they lost market share, and tried to lower their standards to catch up to the private lenders who’d already gone lower than Fannie & Freddie ever would.
My opinion is that those statements unnecessarily debase the United States of America.
That’s only possible if you’re determined to feel that way. No one would read all of Pres. Obama’s speeches in their entirety and come to the conclusion that he is apologizing for the US. He often talks of his pride in the unique greatness and world role of America. E.g., “not just a place on a map, but the light to the world”; “the first nation to be founded for the sake of an idea — the idea that each of us deserves the chance to shape our own destiny”; “America’s moral example must always shine for all who yearn for freedom and justice and dignity.”
The only reason that the “apology tour” lie has any salience is because the Republican Party has abandoned all policy views, driven by a manic obsession to bring down our Commander in Chief.
So Republican affiliates like Fox News zealously scrutinize all the administration’s public statements for any indication that the speaker doesn’t believe that the US is omnipotent, omniscient, and benevolent, rip that sentence from context, and repeat it far and wide. Then Republicans get to bask in the warm resentment they get to feel from fantasizing that They are out to get Us, and that policy doesn’t matter in evaluating a president, just their most treasured, negative emotions.
Keep in mind that Romer was the same person who projected that if we didn’t pass the stimulus, we’d be at a horrible 6.5% unemployment by this point. Not only is she attempting to prove a counter-factual, but she has little credibility as she has been spectacularly wrong in the past.
Again, this is an opinion, not a fact. It all depends on the eye of the beholder. If a CEO sniveled this way on an earnings call, his stock would collapse the next day.
Keep in mind that Romer was the same person who projected that if we didn’t pass the stimulus, we’d be at a horrible 6.5% unemployment by this point.
You’re overlooking the inadequacy of the stats we were relying upon at the time. “By the time the stimulus had passed, economic forecasts had darkened considerably. In March of 2009, the OECD predicted that unemployment in the U.S. would reach 10.3% in 2010. CBO predicted that, with the stimulus, unemployment would top out at 9.4%, which is almost exactly what happened.”
Here is a play to help make it easier to understand the debate about the stimulus. Just to make things clear, Little Billy Republican is a metaphor for the Republican Party; his mother is a metaphor for everyone who likes America enough to stick to empirical arguments to determine what might work best for the country.
Little Billy Republican: “You said that if I did my chores for six months, we’d get a pool. Now where is my pool??!?
Mother: “Well, Little Billy Republican, it turned out that there were ten feet of granite just under the surface in the back yard. So it’s going to be much more expensive than anyone had thought to build the pool. Also, the fiscal policies you pushed for, and the invasion and occupation of Iraq, have depleted our resources far more and far quicker than you’d said they would.”
LBR: “But Maa-aaahhh! You PROMISED!!!!
If a CEO sniveled this way on an earnings call, his stock would collapse the next day.
There was no sniveling of any sort.
What’s happening here is, it is a truth universally acknowledged that George Bush Jr.’s fiscal and foreign policies made us weaker as a nation. Republicans know this, but can’t admit it, because, if there’s any one thing that characterizes GOP membership over the past 20 years, it’s reverence for George W. Bush. So when Pres. Obama makes statements of American exceptionalism, they don’t hear about it. And no Republican anywhere has been able to talk about the mistakes Bush made. So Republicans select the one or two clauses from ten or 15 speeches that demonstrate, to them, that Pres. Obama doesn’t believe in the omniscience, omnipotence, and perfect benevolence of America.
in short, Republicans are hoping that you are stupid.
Because identifying as a Republican is solely and entirely about tribal affiliation (as there is no reasoned defense of Pres. Bush’s policies, which were wildly popular among conservative Republicans), Republicans are pleased to distort the president’s speeches to assist their fantasy that he hates America– here, that he’s “apologizing” for America. Of course, there’s no factual support for this proposition.
Perhaps. But in trying to prove a counter factual isn’t this precisely the problem?
A fair criticism if it actually were six months. But it hasn’t been six months. It’s been three years.
Again, that’s your opinion and not a universal truth, which is precisely my point. I found his comments demeaning and insulting to anyone who risked their lives in the Iraq and Afghanistan. But again, that’s my opinion.
You can never prove or disprove this because you cannot prove the counterfactual. What would have happened if Saddam were still in power? Would the United States be better or worse off? On the surface the answer seems obvious, but is it really? What would oil prices be if the United States had a less robust presence in the Gulf? Would we be able to focus on Iran’s nuclear weapons program today, if we still had to keep thousands of troops in Kuwait to hedge against Iraq?
One thing that I think muddles the issue is that people seem to look strictly at the “final” numbers to determine whether TARP or the Stimulus worked or didn’t, numbers which can’t account for phenomena like the “Bullwhip Effect” to answer the question “Was it effective?”. We have the numbers at the beginning and the numbers now, but no way to really gauge where the numbers would have been in the middle because of this effect (which I personally believe we were at tremendous risk of). To me TARP and the Stimulus, regardless of the ways I was against them or how they were packaged, were they only way to prevent the bullwhip effect they had to do what they did.
This hardly gives them a pass, however, because what they also did both before and after the mess was to put themselves in a position where the banks always had the upper hand and could easily use that bullwhip effect to their advantage, both then and now. Because of how stupid or careless the government was in their relationships with big finance and the position the banks were able to achieve as a result, they just had to play “chicken” with the government and do effectively nothing in order to get more, and that’s exactly what they did – people be damned. Since it was Bush who fell for it before 2008 and Obama who still fell for it after, that’s something to me that both administrations should be criticized heavily for – taking “Trust Me” from the banks to … well, the bank – making the “Who’s better, Bush or Obama?” argument on this topic kind of moot.
It seems like you are using the “one cannot prove a counter-factual argument.” I agree. One will never be able to compare the economy today with what it would have been without the stimulus. Therefore, it is impossible to invalidate the claim that it would have been worse without one. And that is the fundamental problem.
dont you mean whiplash effect?
The main problem with comparing unemployment to private jobs created is that the two numbers aren’t always clearly related.
Unemployment often has numbers which are not calculated in the final standings, including dropped out workers, those who were denied claims, and the underemployed. The nation had population growth which was not met under the Bush administration, leading to more people outside of the work force. People working part time and temporary jobs has increased, while even more people aren’t counted. (I’ve been ‘unemployed’ since Feb 2009, and was never counted because my unemployment claims were denied).
Looking at private jobs created doesn’t show how those jobs relate to the losses of public sector jobs, nor at population growth. It sounds good that you added 245k private sector jobs, until you realize that 245k is a small fraction of the 8 million lost jobs, in addition to population growth. It’s still an improvement though.
The statistics could be accurate for both parties in their attempts to paint a narrative for the November election. Sadly, one will be using blue paint, while the other uses red. Both charts may be correct with the numbers behind them, but they don’t show a clear picture, and won’t. That’s the problem with statistics. They show only a small proportion of the bigger picture.
You are completely right. The BLS does have some alternative figures that do measure the broader unemployment figures you suggested. That said, I’m sure the Republicans will be more than happy to present these figures the moment the general election begins. The most inclusive (and most negative) figure is U-6 unemployment, which currently stands at 16.2%. You can find these alternative figures here.