Misreading the Economy: Fact Or Fiction?

by The Rationalist

Thursday, July 09, 2009 at 06:44 PM EDT

The first post from our newest Contributor, The Rationalist.

Politico posed this question to its readers in yesterday’s Arena:

“With unemployment rising, is the stimulus a failure? Is the answer more stimulus? Was there, as Biden says, ‘a misreading of just how bad an economy we inherited?’”

The last part of that question is disturbing on several levels.

Is it still possible for a rational citizen, knowing that his or her tax dollars are going to be sucked into the mountain of stimulus induced debt, to put their faith in the government to solve this economic recession? After all, if the might of the Obama administration cannot reasonably ascertain the current economic environment, can any entity? Are we just wasting our money?

More disturbingly, considering the repetitious doom and gloom press conferences that paved the way for the stimulus bill, how can Biden and the Obama administration justify saying that they misread the scope and severity of the economic crisis? For those who have forgotten, here are a few revealing quotes from several months ago:

On the campaign trail, then Senator Barack Obama called the current recession “the most serious financial crisis since the Great Depression”.

While pushing for the stimulus bill, President Obama stated that the failure to pass the stimulus bill would “turn a crisis into a catastrophe”. In the same speech, he stated that “this is not your ordinary, run-of-the-mill recession” and that it could result in the “lost decade” that Japan suffered after their recession in the 90’s.

In fact, there was so much “doom and gloom” during the period leading up to the stimulus bill that many of his most ardent supporters were wondering if their president was, in fact, the same person who embodied the “Yes, we can!” mentality that inspired the fervor of millions in 2008.

Indeed, the administration’s statements on the economy are almost impossible to reconcile with the Vice President’s recent statements on their “misread”.

Perhaps the real question is whether the Obama administration truly believed their own words in the lead up to the stimulus bill. They spent hours in press conferences and other high profile public events, addressing the American people, and telling us that without this bill economic recovery might not be possible.

On its face, this seems like acknowledgment of the worst kind of recession – a terminal one. If they are now claiming that they took the situation too lightly, they must not have truly believed what they espoused so vehemently this winter. Furthermore, if that’s the case, their repeated doom and gloom message was calculated towards a desired effect – passing a pork-filled stimulus – not saving the economy.

If the Obama administration deserves credit for anything, it is effectively understanding and impressing upon the American people the impending economic Armageddon. There is no reason to doubt their words from early 2009 – the economy is still in crisis, unemployment is skyrocketing, and the threat of inflation looms.

If there is anything to doubt, it is undoubtedly the effectiveness of a stimulus bill rushed through Congress, with little to no public vetting, weak bi-partisan support, and self-admitted pork. The Obama administration’s attempt to accept the blame is actually very clever; if they didn’t divert people from the true cause of our failed stimulus – poor design and implementation – people would be far more weary of allowing the government to “stimulate” the economy with their tax dollars any further.