The Obama Stimulus: Predictions vs. Reality
June 7, 2009
In this video, I take a look at the economic predictions that President Obama made in February regarding the stimulus plan and how those predictions are corresponding to reality.
The answer is: Not well.
But first, some references.
- I got all my data from one extremely boring source, the Bureau of Labor Statistics. At the moment, all the data is in the economic summary, but I assume that will change as the weeks go on, so you can also check the historical unemployment tables.
- The chart that President Obama used is in this document on how the stimulus will effect the economy.
- Special thanks to Geoff at Innocent Bystanders. Last month, he started charting how the numbers Obama used to sell the stimulus were matching to the actual numbers. So I can’t claim the idea as my own.
OK… now into the math. The chart that everyone is using does not have a corresponding table with hard number (at least no table that I could find), so I had to guess-timate what they were predicting the unemployment rates would be in May. I assumed that, because their graph divergence began immediately after the Q1, 2009 line, that that line represented the beginning of Q1 2009 (as opposed to the middle). So I estimated that the May would be just a shade before Q3, which is about the same place that Geoff put his May data.
Based on that, I estimated the points on the line like so:
|Unemployment Rate||Unemployed Population|
|Predicted Unemployment without the Stimulus||8.7%||13,492,000|
|Predicted Unemployment with the Stimulus||7.9%||12,251,000|
|Actual Unemployment with the Stimulus||9.4%||14,511,000|
Now… here is the problem. In order to make our data symmetrical, we would have to have another row… a row called “Actual Unemployment without the Stimulus”. This, of course, is a row we cannot have because we sadly live in a space-time of collapsed quantum possibilities. We can never know what that row would hold.
This is where I start getting a little less analytical and a little more irritated. The president’s predictions have been shown to be completely off the mark… almost laughably so. And yet he acts as if he alone knows what would have happened if we hadn’t passed the stimulus because he keeps making statements like “we’ve saved 150,000 jobs“.
It is clear that, if he is referring to the chart we were presented with above, such a claim is absurd. What the president is doing is ignoring the fact that his predictions in the past were horribly inaccurate and simply moving ahead with new predictions. The big difference is that his new predictions can’t be judged against any set of objective reality. He is pitting the actual universe in which the stimulus bill passed against the imaginary universe in which it did not pass. Not surprisingly, the imaginary universe is worse that the real universe and the result is that the President is a hero for saving us from that imaginary universe.
I am not a very anti-Obama person. Predicting the future is tricky business and I think his team should get some leeway on this.
Their predictions were not just kinda wrong. They were horrifically, disasterously wrong. If President Obama is going to use statistics and charts to push nearly $800 billion in spending, I think we should be able to expect his numbers to at least kinda match the reality that comes out of his policies.
At the very least, I’d like to know how his team got those numbers. More importantly, I’d like to know how they have changed their method of prediction. President Obama is fond of saying that we tried tax cuts and they didn’t work, so we should try something else. In that same vein, his team tried predicting the effect of the stimulus and that didn’t work. So I would like to know if they are using the same failed methods they used before or if they are doing something different.