The Obama Administration’s Convenient Counterfactuals

The latest report on the effects of the $800 billion dollar stimulus from the Obama administration’s Council of Economic Advisers notes that “evaluating the impact of countercyclical macroeconomic policy is inherently difficult because we do not observe what would have happened to the economy in the absence of policy.” Another thing that makes it difficult? Neither of the two primary methods the administration uses to evaluate the stimulus’s effects truly observe the policy that was put in place.

Instead, the administration’s reports, like the reports put out by the Congressional Budget Office, rely on computer models and comparisons to statistical forecasting of what might have been. In the case of forecasting, the administration compares current GDP and jobs numbers to a non-stimulus baseline—what the administration calls a “sensible statistical forecast” of what would have happened had the stimulus not passed. The report’s authors themselves decline to rely too heavily on the comparison, noting that “the estimates from a forecast approach have considerable margins of error.” Can you know how far off you are from an alternate-history counterfactual that you can never prove?

The models are just as unhelpful. The mathematical simulations used to prove that the stimulus worked—creating between 2.4 million jobs and boosting GDP by somewhere between 2.3 percent and 3.2 percent—are functionally the same models used before the stimulus to predict that it would work. So it’s not much of a surprise to find that rerunning the same model that predicted the stimulus would create jobs and expand the economy results in a report that, yes, the stimulus created jobs and expanded the economy.

The report explicitly compares the administration’s approach to the one used by the Congressional Budget Office in its stimulus reporting. But the CBO’s mandatory reports aren’t much of a guide to the effects of the stimulus either. The only difference is that the CBO has been perfectly willing to admit this.

At a Q&A in March of 2010, CBO director Douglas Elmendorf described the CBO’s approach "repeating the same exercises we did [prior to the stimulus’s passage] rather than an independent check on it." At the same event, he was asked, "If the stimulus bill did not do what it was originally forecast to do, then that would not have been detected by the subsequent analysis, right?" Elmendorf responded: "That's right. That's right."

The CEA report declares that its existence is due to “the unprecedented accountability and transparency provisions” included the stimulus bill. But far from a transparent accounting of what we do and don’t know about about the stimulus and its economic effects, the administration is content to gin up a convenient story about what might have happened in the absence of the stimulus and then claim that, thanks to its passage, we’re better off.

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  • Citizen Nothing||

    It would have been worse! IT WOULD HAVE BEEN WORSE!!!

  • Mainer||

    dogs and cats living together..total chaos.

  • Old Mexican||

    ... mass hysteria!

  • Tony||

    Yes, it WOULD have been worse.

  • ||

    These Christ-fags don't understand things the way WE do, Tony.

    Would you help me shave my coin purse later?

  • Paulie Krugnuts||

    Yes, my children! Let the hate flow through you!

  • Old Mexican||

    Re: Tony,

    Yes, it WOULD have been worse.


    "Rrrroarrr!"
    "It's WORSE."
    "There's something alive down here!"
    "It's only your imagination."
    "Something went past my leg!"

  • Zeb||

    Welcome alternate universe Tony. I hope you are less of a twat than the regular Tony. What else is different in the universe you come from?

  • Aqua Buddha||

    The science is settled by our models. Never heard that before.

  • ||

    If only science were settled by models. Swimsuit models. That would totally rule.

  • ||

    “...evaluating the impact of countercyclical macroeconomic policy is inherently difficult because we do not observe what would have happened to the economy in the absence of policy.”

    That never stopped you guys before.

  • Max||

    Suderman is the fucking King of Counterfactuals. He's a hard-wrokimng king, though. Constantly making reality fit the dogma must take its toll.

  • Old Mexican||

    Arf! Arf! Arf!

    Sshhhtt! Shut it, Max! Down boy, down!

  • PIRS||

    I notice that you have not been able to actually dispute any of the statements in this article.

  • Max||

    Of course, I believe everything Obama says, because he's a great man who never lies.

  • Old Mexican||

    The latest report on the effects of the $800 billion dollar stimulus from the Obama administration's Council of Economic Advisers notes that "evaluating the impact of countercyclical macroeconomic policy is inherently difficult because we do not observe what would have happened to the economy in the absence of policy."


    So many words just to say: "We were guessing."

  • ||

    They saved a bunch of state and local government jobs. What sort of un-American ingrate could object to that?

  • AlanS||

    Also a bunch of union contractors are still getting paid to stand by a hole in the street, while holding shovels.

  • Appalachian Australian||

    If only. As far as I can tell, most of the "shovel ready" jobs have gone to outside consultants to write 500 page studies.

  • fish||

    Yeah...and once those studies are completed and formally submitted they go into those holes prepared by the shovel ready projects administration for a proper burial. Jeez AA what is so hard to understand about this.

  • ||

    Why do you hate the Moneyhole so much?

  • fish||

    What a terrible way to refer to your ex-wife~!

  • Zeb||

    Hey, someone had to dig the hole. That's a job.

  • Old Mexican||

    The models are just as unhelpful. The mathematical simulations used to prove that the stimulus worked — creating between 2.4 million jobs and boosting GDP by somewhere between 2.3 percent and 3.2 percent — are functionally the same models used before the stimulus to predict that it would work.


    That can be explained by the fact that there's reality failure, so we need more government intervention.

    That's how it works in the mathematically-constructed world of Neo-classical economics (or, Keynesianism-in-drag.)

  • ||

    I swear I saw an article (losts in the twisty mists of the intertubes, alas), that the newest report claimed fewer jobs "saved or created" than the one a quarter or two ago.

    Leading to the conclusion that the stimulus is actually now costing us jobs.

  • Tman||

    "Saved or Created" has to rank in the top five WORST economic expressions in history.

    You either created jobs or you didn't. Saved doesn't count. The fact that we still hear this phrase at all is the most cringe-inducing reminder of what absolute lying deceitful degenerates we currently have occupying the White House.

    Just once I want to see some journalists call the Administration out on this terms once and for all.

  • Zeb||

    That there is anyone whose bullshit detector did not explode when they heard "created or saved" for the first time is pretty sad.

  • ||

    So if you fire someone and rehire them a second later, that job should count, but not firing them at all shouldn't?

    Saving a job is just as good as creating one, but the problem lies in how one objectively determines whether a job was actually in jeopardy without the stimulus.

  • ||

    Creating a job adds a new job. 'Saving' an pre-existing job adds nothing, it maintains the status quo.

    So, saving a job is not a good as creating one. We good?

  • ||

    No, we're not. Saving a job results in one more job than there would have been otherwise. So does creating a job. They're roughly the same effect.

  • Apogee||

    They're roughly the same effect.

    Math much?

    Keeping 1000.00 in your account is not the same as adding 1000.00 to your existing account of 1000.00.

    In one instance, you have 1000.00 after your 'stimulus', as opposed to 2000.00. The final sum is important if you are attempting to gauge the financial state of the economy.

    Add to that the fact that the 'saved' jobs are, in most cases, government positions that will again need 'saving' as they do not actually 'produce' anything and you'll see that 'saving' such jobs is, in the long term, much more of a negative.

  • OO||

    so the payroll tax cuts, as part of the stimulus, should be recinded?

  • Old Mexican||

    Re: OO,

    so the payroll tax cuts, as part of the stimulus, should be recinded?


    Only for you, OO. You're paying too little.

  • OO||

    bet grover norquist wouldnt agree

  • Old Mexican||

    Please, nobody needs to know about your love interest, OO.

  • Zeb||

    Is it really impossible for you to understand that some people might agree with some parts of the stimulus bill, but still, on the whole, think it was a terrible idea and a waste of money?

  • ||

    Why don't they just hire fortune tellers or buy a Tarot pack?

    It would be just as meaningful.

  • Brett L||

    I prefer chimps with darts. The possibilities for pure violent mayhem are much higher.

  • fish||

    You know who else preferred "chimps with darts"?

  • ||

    Dr. Zaius?

  • OO||

    ahh, the iranian space program

  • ||

    I read that Philip K. Dick cast the I Ching wands in order to plot "The Man in the High Castle." Maybe Fearless Leader is doing the same thing in DC?

  • ||

    Headless chickens are colorful.

  • Joe M||

    The latest report on the effects of the $800 billion dollar stimulus from the Obama administration’s Council of Economic Advisers notes that “evaluating the impact of countercyclical macroeconomic policy is inherently difficult because we do not observe what would have happened to the economy in the absence of policy.”

    Of course, this doesn't prevent us from knowing it would've been worse without said policy. We just don't know precisely how much worse.

  • Gilbert Martin||

    On the contrary, the so-called "stimulus" supporters aren't the least bit capable of proving that the probabily that it was a net positive for the economy is one iota greater than the probability that it was a net negative.

  • ||

    If the stimulas hadn't been instituted we would have had the longest period in history of unemplyment exceeding 9%, the lowest GDP growth, the lowest increase in incomes, etc. since the great depression...
    Oh yeah....

  • Dick Fitzwell||

    2+2=5

    Don't believe me? I'll prove it:

    5-2=2

    See? I told you so!

  • ||

    I seed a great future for you working for a Congressional Appropriations Committee.

  • ||

    I happen to know that, but for the stimulus, Earth would've been destroyed by invaders from space.

  • Phlogistan||

    Too bad they found Volenteer's eager and ready to work to those ends.

  • Aliens ||

    We decided not to come when we saw that Simon left American idol

  • Marvin from Mars||

    My lludium Q-36 Explosive Space Modulator is "Shovel Ready"

  • ||

    Someone has to clean up the debris to avoid views of Venus being obstructed.

  • Southerner||

    The report explicitly compares the administration’s approach to the one used by the Congressional Budget Office in its stimulus reporting. But the CBO’s mandatory reports aren’t much of a guide to the effects of the stimulus either. The only difference is that the CBO has been perfectly willing to admit this.

    The CBO guarantee: you won't ask for your money back, because we're telling you right now you can't have it!

  • ||

    If you are not completely satisfied, let them know and they will return the unused portion of your money.

  • ||

    Economics means never having to say you're sorry (unless it's in the form of 'you're (a) sorry dumbass for thinking your theory was going to work').

  • christian louboutins||

    (unless it's in the form of 'you're (a) sorry dumbass for thinking your theory was going to work').

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