Saturday, November 21, 2009

Lies that destroy good policy

So, it turns out that there is a growing consensus among economists that the stimulus, while not as big as it should have been, has done pretty well.

These long-running arguments have flared now that the White House and Congressional leaders are talking about a new “jobs bill.” But with roughly a quarter of the stimulus money out the door after nine months, the accumulation of hard data and real-life experience has allowed more dispassionate analysts to reach a consensus that the stimulus package, messy as it is, is working.

The legislation, a variety of economists say, is helping an economy in free fall a year ago to grow again and shed fewer jobs than it otherwise would. Mr. Obama’s promise to “save or create” about 3.5 million jobs by the end of 2010 is roughly on track, though far more jobs are being saved than created, especially among states and cities using their money to avoid cutting teachers, police officers and other workers.

“It was worth doing — it’s made a difference,” said Nigel Gault, chief economist at IHS Global Insight, a financial forecasting and analysis group based in Lexington, Mass.

Mr. Gault added: “I don’t think it’s right to look at it by saying, ‘Well, the economy is still doing extremely badly, therefore the stimulus didn’t work.’ I’m afraid the answer is, yes, we did badly but we would have done even worse without the stimulus.”

Certainly, economists who feared the package was too small were probably right and the administration's forecasts were probably too rosy, but all in all, preventing what looked like at the time as an inevitable "Great Recession," seems to have been accomplished.

Among Democrats in the White House and Congress, “there was a considerable amount of hand-wringing that it was too small, and I sympathized with that argument,” said Mark Zandi, chief economist of Moody’s and an occasional adviser to lawmakers.

Even so, “the stimulus is doing what it was supposed to do — it is contributing to ending the recession,” he added, citing the economy’s third-quarter expansion by a 3.5 percent seasonally adjusted annual rate. “In my view, without the stimulus, G.D.P. would still be negative and unemployment would be firmly over 11 percent. And there are a little over 1.1 million more jobs out there as of October than would have been out there without the stimulus.”

Politically, however, the president is saddled with his original claim that, with the stimulus, the jobless rate would peak at 8.1 percent — a miscalculation that Republicans constantly recall. While the administration has said its economic assumptions were in line with private forecasts, most of which also underestimated the recession’s punch, it was more optimistic than most.

“That was a mistake,” said Jeffrey A. Frankel, a Harvard University economist and former Clinton administration official who is a member of the National Bureau of Economic Research panel that judges when recessions start and end. “I thought so at the time.”

Christina D. Romer, chairwoman of Mr. Obama’s Council of Economic Advisers, said attention to that too-rosy projection “prevents people from focusing on the positive impact of the fiscal stimulus. So of course I find that frustrating.”

Here are the charts.

Unfortunately, "it coulda been worse," is a tough political platform to embrace, particularly as foreclosures continue to rise and job creation remains elusive.

But making things worse has been the ongoing drumbeat of Republicans who, as Romer understates, prevent us from focusing on the positive. Quite the contrary.

House Republican leader John Boehner of Ohio, citing the growing unemployment rate, said Sunday the president's economic stimulus program has done nothing but increase the size of government. He said businesses are "sitting on their hands" because of government spending and proposals for health care and other initiatives he contended would increase taxes.

"Business people are afraid to invest in their business, afraid to grow their business, because they don't know what's going to happen next," Boehner said on CNN's "State of the Union."

All to be expected, I suppose. He is, the "leader" of the opposition. But the mendaciousness, and the constant argument against government stimulus to help jump start a stalled economy, showing either ignorance or cynicism...or both... has no doubt fed into poll results that show 51% of Americans think that canceling the rest of the stimulus would create more jobs. Which is...insane. But reflects the talking points of the Republican Party.

We're seeing a similar dynamic in the recent suggestions that women wait to begin having mammograms until fifty, and to delay pap smears until later in life (I realize I'm simplifying the recommendations in my haste). Although the recommendations are years in the making and are the results of numerous studies, Republicans have inevitably pounced on them as proof of Democrats' dastardly plans to "ration" health care and that effectiveness research -- a key aspect of health care reform -- will result in denying life-saving tests and procedures in order to save money. Despite the fact that medical effectiveness, not cost-effectiveness is the only thing mentioned in the recommendations.

These are medical recommendations, not directives, and women can make informed choices on what types of preventive medicine they want (especially if they have health care, something Republicans are pretty set on denying them anyway). They are intended to empower women, not deny them of care. But instead it's science be damned. Let's react to these recommendations as if they were political slogans of the other party. It feeds the distrust people have towards the medical community and government in general, making the possibility of informed, useful policy decisions more and more difficult.




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