Obama's False Economic Consensus


As Tim Cavanaugh noted over the weekend, the Obama administration's economic heavies are pulling out the "everybody agrees" card to declare that the recession is over thanks to their benign ministrations. Last night on 60 Minutes, the president himself took the false consensus a step further:

Now, what we had to do was he had to make sure that there was some buoy, some stabilizer in the economy so that it didn't go into a Great Depression. And that's why we passed the Recovery Act. And for all the criticism that it received from the other side -- and we got no help from any Republicans, other than a couple, in passing it -- what we now know and every economist who's looked at it will acknowledge this, is that it helped us [stem] the panic and get the economy growing again. And it probably saved somewhere between a million and a million and a half jobs.

Italics mine. The president is, once again, lying. Greg Mankiw, to cite one of scores of possible examples, is an "economist who's looked at it," and he had an op-ed in The New York Times just yesterday that cited several other economists who have looked at stimulus packages throughout the ages. His conclusion?

Successful stimulus relies almost entirely on cuts in business and income taxes. Failed stimulus relies mostly on increases in government spending. […]

A growing body of evidence suggests that traditional Keynesian nostrums might not be the best medicine.

Obama is a political master at drawing boundaries around the "respectable" debate and marginalizing a swath of his critics as being beyond the pale. Will he succeed at doing it with economics, too? We only know that he will try.

NEXT: Reason Morning Links: A Rare Reason to Like Joe Lieberman, a Novel Approach to Assaulting a Politician, and Another $447 Billion in Public Spending

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  1. The other claim Obama made was that the entire mess "was caused by the Wall Street fat cats." It's unbelievable that politicians, specifically Obama, don't acknowledge any roll the government played in the economic fiasco. Fannie and Freddie who? Of course, Fannie and Freddie have been boosted back up on steroids, with a little taxpayer capital of course.

    1. Unbelievable? How old are you, anyway? Clearly, your cynicism needs more time to fester.

      1. No matter how cynical you become, it's never enough to keep up.--Lily Tomlin

        1. Thanks. I'm snagging that for my .sig.

      2. I guess what is more distressing and "unbelievable" is how often they are let off the hook by an interviewer and/or the interviewer doesn't broach the issue(s).

        Unbelievable was inaccurate. It's perfectly believable. Disgusting perhaps.

        I was only kidding. No need to be cynical: the recession's over, cash for clunkers grew the economy, we'll have a fine-tuned Afghan army to protect its democracy soon, and 5 million green jobs to replenish the workforce this spring. If that isn't wonderful enough, then add a little RE-form in health care and fixing the global warming catastrophe to boot. Now, it could take one more term for Obama, but he inherited this mess. People act as if sought the presidency and was a United States Senator. Ole W was a little more clever than people give him credit for being able to orchestrate this mess without Congress or the Fed. Thankfully, Obama was right there with his mop.

    2. Rolling out the "fat cat" epithet was a real scumbag move. It's a phrase with purely emotional content, intended to poke the pleasure centers of the proles, commonly used by soi-disant revolutionaries for that reason, and I'm disgusted and naively surprised to hear it drop so easily from the lips of Our Benevolent Overlord.

      1. Yeah, and it's marvelously hypocritical too. Most (if not all) of the big wheels in the Democratic Party are in the millionaire's club. Any that aren't aspire to join, and they'll freely trade taxpayer money for an invite.

        1. Uh, their grandparents were in the millionaire's club. Today's Democrat big wheels wouldn't be caught dead in the millionaire's club. They're in the centimillionaire's club.

      2. It's also remarkably unoriginal and tired.

      3. Al Gore is a "fat cat". Making lots of cash off a phony science. And he won't even take questions.

    3. Yes Hank-boosted up with tax dollars at the behest of Frank & Dodd with ACORN assisitance

  2. Will he succeed at doing it with economics, too?

    He's already done it in economics. That's how we got the stimulus bill. Remember his FDR comments?

    If I had a nickel for every time President Obama used to the phrase "there is no debate" or a similar line, the taxman would be getting a lot more pennies from me in April.

  3. Thank god those hard-hitting truth-seekers at Sixty Minutes had all the facts at their fingertips, and made him back up his assertions.



    srsly, they did, didn't they?

    Why are you snickering?

    1. That's was darn funny!!!

      1. Very funny. I was snickering, before I got to "Why are you snickering?", which made me laugh out loud. Thanks for that one

  4. I gave up arguing this point at holiday parties when someone actually said, "I'm pretty sure the economy is recovering. Obama has as much consensus on the economy recovering as we have on global warming." My wife's "keep the husband out of jail instinct" kicked in and she damn near dragged me off before I committed homicide for the sake of the gene pool.

    1. I just gave up, period. I've resigned myself to the idea that hopefully I'll be long gone when the shit finally and truly hits the fan.

      The majority of the electorate in this country really does seem to think that all they have to do is vote themselves ponies and rainbows and the promised land will soon appear. It's not like there aren't thousands of data sources freely available on the Interwebs that argue to the contrary. GO TEAM! has greater value than economic realities.

      Hopefully, I'll have taught my kids the value of property in Montana and hoarding dried foods and ammo before then.

      1. The term of art is not "ponies and rainbows", but "bread and circuses".

    2. What are you, some sort of Reality Deviant?

    3. At the last party while having a conversation I had with an aging baby boomer liberal associate over some drinks, he was yapping about some health report he read about in WaPo, and he thought a good idea to put in practice the conclusions profferred when he noticed my sneer. He stopped, I let him have it.

      "What the fuck happened to you, man. All of you. You use to be rebels to be feared, bringing the revolution HOME. But look at you. Now, the worse thing you'll do is make me wear a Goddamned turtleneck outside when it is below forty for my own Goddamned good, or risk a beatdown from the cops. That, and you want more money from my wallet, like a bunch of Ozzie and Harriets who have become bums."

      Good liquor at that party. It was inspirational.

      1. At the last party I attended a week ago . . ..

        Without that clause it sounds like just two guys partying together. Maybe even like a gigolo getting mouthy with the old guy paying for bareback. I can assure you it was nothing like that. Honest!

        1. I, uh, hadn't really gotten that impression, but thanks for clearing that up, I guess.

    4. I root for the passage of co2 taxes, national healthcare, more wiretapping and torture, escalation of the Af/Pak war and the coming commercial real estate bailouts, state pension baliouts etc. Bring it down while I'm young and have the possibility of seeing the new regime emerge.

    5. It's called a "big lie" and if repeated
      often enough becomes truth.

  5. People are beginning to see that Obama's entire existence is beyond the pale.

    The Joker image was the perfect image to capture this madman.

    1. RACIST!

      1. Oh, please. An African American cannot be a dolt? Or are you suggesting that if he is a dolt we should look the other way for the sake of being PC? It is time for honest words. You cannot say Obama is the worst president in history yet, but he might earn that title.

        1. We say RACIST because your chastising this man for trying to fix the mess Bush left behind. People really need to open there eyes and see that Obama is really trying to help this country. I really feel if he was of a different color we would not be having this discussion. It would be really stupid to believe that Obama is taking these actions for his personal game. So yes, to associate our president as a joker is RACIST.

          1. Lol @ Duv. Yeah I couldn't imagine a politician doing something for personal gain...

  6. I'm sure the 17+% still unemployed and underemployed will be relieved that the Repression/Decession is over and they can get back to their usual food stamp existence.

    I wonder how many times FDR declared the Great Depression over between 1932 and 1941

    1. That's a really good question.

    2. The Depression he inherited.

    3. Was there any period of three or even two consecutive quarters of economic growth between 1930 and 1945?

      1. Yes, there were. GDP growth was 10.9% in 1934, 8.9% in 1935, 13.0% in 1936, and 5.1% in 1937.

        1. It would appear that the Great Depression ended in 1934.

          1. But, much like V.D., it came back.

            1. Why does it hurt when I watch the news?

    4. only 17% unemployed? we'd kill for a low rate like that in Michigan.

  7. What are those boundaries defining respectable debate? Take this blog post for example? Outside the bounds. There is no room in civilized society for this kind of hate filled, racist bile. Obama is a great great man and a wonderful president. The best. He gave the Conomy what it craves, and it's all better now.

    1. You can't spell Conomy without Con.

    2. Brawndo's got what economies crave!

  8. Yes. Starting in 1933 the Dow reaped a 66.7% gain. From 1933 until 1937, the Dow doubled in value.

    1. The Dow is not "the economy." So, that doesn't really answer Michael's question.

      That said, I seem to remember that starting in 1933 the US was on a growth path. iirc it took until '39 to get back out of the whole and until '44 to get unemployment under control.

      1. Um, if by "getting unemployment under control" you mean "drastically lowering the number of men seeking work by shipping them by the thousands to fight in WWII".

    2. In any case, most indicators of economic growth are useless when you're talking about a period of widespread price and wage controls.

    1. I blame the public schools.

    2. That poll was racist.

    3. Is it telling that blacks have such low expectations of blacks?

  9. every economist who's looked at it will acknowledge this, is that it helped us [stem] the panic and get the economy growing again

    Look: to exercise the power of vision.

    Vision: something seen in a dream, trance, or ecstasy.

    Continuing to study Obamaese ...

  10. Indeed, he should have said

    "most economists who have looked at it will acknowledge that it helped us stem the panic primarily because it was coordinated with a robust international response."

    Or something along those lines.

    Yes, 60 minutes was fairly timid in their questioning and let him get by with some unsupported claims.

  11. Why should they ask tough questions? Do they have a deal with YouTube or something?

    1. Why the heck would real investigative journalists have a deal with the YouTube?

      1. Ummm, I'll just say that it's an "in-house" reference.

  12. every economist

    I'm beginning to worry that the president's staff is keeping him inside a bubble.

    1. Obama is the boy in the bubble, and Biden is the baby with the baboon heart.

    1. Just waiting for those three miracles... Saint Obama can't be far behind.

      The patron saint of left-trolls, hacks and, oddly, piano tuners.

    2. That statue is so dweeby-looking it must have been erected to mock Obama, or "Barry" as he was known then.

  13. Greg Mankiw, to cite one of scores of possible examples, is an "economist who's looked at it,"

    But, Matt; Mankiw worked for Booosh.

    We need the opinion of some reputable economist, who can offer dispassionate analysis. Like Paul Krugman, for example.

    1. Mankiw wrote a very good economics textbook I used in my first year of undergrad.

      It also comes in like 20 different configurations, and he mentions in his own textbook how and why the same book that costs hundreds in America costs $20 in India, which gave me a good chuckle.

    2. You joke? Krugman? Dispassionate?

      1. Your sarcasm detector isn't working well.

    3. Paul Krugman received the Nobel prize for economics. LOL. He's another Al Gore. lol.

  14. Why the heck would real investigative journalists have a deal with the YouTube?

    Has LoneWacko been forgotten that quickly?

    1. 11/29/09 NEVER FORGET

      Or whatever the date was when he got banned. Can someone in power tell us?

  15. Has LoneWacko been forgotten that quickly?

    It's enough to make Baby Jes?s cry.

  16. It's a good thing FDR didn't raise taxes; that might have stopped recovery in its tracks.

    1. The recovery that took 17 years?

  17. It's enough to make Baby Jes?s cry.

    I'm going to miss that fucker's GrandDelusion of being a HardHitting InvestigativeJournalist. Wait, no. I won't.

  18. I would think by now the percentage of professional economists that take Keynesian economics seriously would be about equal to the percentage of neurosurgeons that plan to operate on the id, the ego, or the superego.

  19. Poobilcus, one Mr. Paul Krugman would like to have a word with you. In his rape room.

    1. That's Dr. Paul Krugman Phd to you, unlettered scum!

      1. That's Paul "I prostituted myself for ENRON and have genuflected to a Malaysian anti-Semitic despot" Krugman

    2. FYI, it also doubles as my beard-grooming room.

  20. Matt Welch,

    Thanks for the article. I was telling people before the inauguration that we were in trouble when Obama said he was collecting economists "from across the political spectrum", because that's a hell of a lot different from assembling economists from across the economic spectrum.

    Keynesians from the left and from the right are still all Keynesians.

    Now that we've seen the echo-chamber policy implementation device en flagrante, I'm confident the future looks economically bleak.

  21. You would think those "fat cats" on Wall Street would take a cue from those "lean cats" in Washington. It's time for the private sector to model their behavior like our "public CEO's" and abandon short-term thinking, curtail spending, and limit bonuses. The audacity of financial firms paying their employees high salaries when main street is hurting! It's about time the private sector adapt to a new hope and change economy and start implementing some of the efficiencies mastered by bureaucrats. That Obama using the Mayo and Cleveland clinics as models of success in health care. That's just silly. That must have been some kind of change and hope reverse pyschology.

  22. Well, no True Economist denies that the stimulus saved our bacon.

    1. And no True Scientist can deny that AGW is happening...

  23. Lonewacko was banned?

    1. We haven't got a confirm or deny, but he hasn't been around since the Warty / child molestation thread (which has been deleted totally, by the way) when LW demanded Warty's IP address so that he could file a lawsuit.

      Either scared off or banned. No one knows which.

      But they even had a Koch brother's thread and he didn't show up.

      1. But they even had a Koch brother's thread and he didn't show up.

        Wow. That nuisance bitch really is gone.

        1. :::sheds single, salty tear:::

    2. It just occurred to me a few days ago that I hadn't seen him in a while.

      Then it occurred to me that I have neurons engaged in tracking his presence or absence.

      Then I tried to kill those neurons.

      Obviously, I didn't drink enough.

  24. To be fair, he's sort of telling the truth, but also being very misleading and attacking a strawman.

    Yes, every economist who looks at it will agree that in the very short-run, borrowing a bunch of money and pumping it in the economy will have positive short-term effects, even if she argues that the medium or long term effects are dire. That doesn't mean that the particular stimulus used was anywhere close to an optimal one.

    I don't think Greg Mankiw is saying that government spending stimulus would have no effect and would save no jobs. Just that tax cuts are much, much more effective.

    It's a strawman argument that the President is attacking. Most critics aren't claiming that the huge Porkulus bill had no positive short term effects. They're claiming that it was much inferior to an entire universe of other actions in the short run, and many claim that the short term benefits aren't worth the medium and long term costs.

    1. "borrowing a bunch of money and pumping it in the economy will have positive short-term effects"

      Actually, it's no longer true that every economist will agree with that proposition.

      Barro and Redlick, for example.

      Spellman has a good lecture on the topic.
      Economic Policy at Dead End and Recession Continues

      1. Actually, it's no longer true that every economist will agree with that proposition.

        Barro and Redlick, for example.

        You misread them. They argue for a multiplier less than one, not a negative multiplier. " he available empirical evidence does not support the idea that spending multipliers typically exceed one, and thus spending stimulus programs will likely raise GDP by less than the increase in government spending."

        However, they don't deny that borrowing a bunch of money and spending it will raise GDP in the short-run. It's just incredibly stupid, because it raises GDP by less than the cost of the borrowing. As long as you're willing to push the disaster off until tomorrow, though, sure, it does provide some stimulus today.

        1. It's also incredibly stupid because their evidence suggests that other methods, like tax cuts, provide much better stimulus.

          It's dumb to argue that if you take out a loan you can't afford for something stupid (or depreciating) that you don't get anything in the short run. You do; you just really pay for it when the bill comes due.

  25. Of course, "everybody" also "agrees" that Obama is an idiot. I wonder if the Wh subscribes to that one as well.

  26. I think Obama's poll numbers tell the story. People are seeing through the duplicity, the straw men, and the out right lies.

  27. The big lie is that few economists have said positive things about the stimulus. The tarp and subsequent Fed cash infusion is what is credited by most economists as keeping the economy from cliff diving. Unfortunately for Obama this was a policy that started under Bush and he successfully continued (Not a small thing) But since he wants to have a sole partisan victory, he has pulled together this fraud.

    Just to make it clear: The stimulus clearly underwhelmed, and was designed (Mistakenly) to be a long term fix. Obama does not seem to understand the limits of government intervention. If private markets do not budge, a stimulus can only do so much.

  28. Now it's only a "couple of Republicns"? I thought this was great bipartisanship of the post-partisan president? What changed?

  29. Economic science is a lot like climate science. The scientists who disagree with the statist party line are deniers whose opinions are irrelevant to the statists.

    Didn't Krugman refer to economists of the Austrian school as "being about as worthy of serious study as the phlogiston theory of fire"?

    Why, yes he did.

    Did Cato round up a few hundred academic economists to contest Obama's claim of consensus?

    With all due respect Mr. President, that is not true.

    This refusal to acknowledge the other side of the debate is maddening to a reasonable, open-minded person. But, that is, quite simply, the Obama's objective.

    A document titled "the rules of the game", reportedly included in the ClimateGate files, outlines the rationale for statist discourse.
    "Those who deny climate change science are irritating, but unimportant. The argument is not about if should deal with climate change, but how we should deal with climate change."

    The same rule applies to the Obama economic program. Paraphrasing,
    "Those who deny our understanding of economic science are irritating, but unimportant. The argument is not about if we should massively intrude in the economy, but just where and how massively we should spend, tax, and regulate."


    The game is communicating the statist agenda; these are the rule the statists are using to win it ... in their own words.

    "the rules of the game: the principles of climate change communication"

    It's not just for climate change; it's for the entire statist agenda.

  31. Here is a grand idea. This marxist administration should stop trying to control the private sector in this country and work on buying the U.S. back from China. We need a President that financially responsible.

  32. Not a surprising response from a president who viewed his brief, agonizing stint in the public sector as "being behind enemy lines".

    Next time, we need to elect a capitalist for that office.

  33. If Obama/Dems/Repubs (they're all in this together) had taken the trillion dollars and hired people at $50,000/year to work for the federal government, they could have hired 20,000,000 people. Now that would have stimulated the economy quite a bit better than what we got from the current stimulus....fat cats getting fatter sucking at the Federal coffers! Arizona State University got a $500,000 grant to study the difference between the DNA of queen and worker bees (whoopee!). That saved one job! No new hires, just saved a job.

  34. Girls, hang on to your skirts. Wait until interest rates rocket up and then see who the great one blames. I guess he just pretended to be in the Senate when all the bad stuff was happening. Can you say "one-termer".

  35. People may have possibly elected the most financially illiterate man in the country. Nice job!

  36. I believe it's been known since, oh, Bastiat (c. 1850) that for the government to take funds out of person A's pocket to spend to employ person B is a net zero in terms of employment, because it subtracts the spending that person A would otherwise have done. There may be some tinkering with whose multiplier is better (person A's or the government's) and some tinkering with the saving that person A would have done (which would turn into investment, of course), but by and large government "stimulus" is largely a net zero.

    In macroeconomic terms, C + I + G + X = C + S + T; that is, all the things people do with money in the economy (consumer spending, investment, government spending, and net exports) must equal where the money comes from (consumer spending, net saving, and taxes). If government spending goes up to employ someone, then taxes must also go up -- and consumer spending or net saving must go down, which has the opposite economic effect. Debt from external sources can temporarily finance some additional spending, but in the end it all has to balance. That's grossly oversimplified, but one would think that someone in the White House would understand some basic economics.

  37. This article is simply a dishonest presentation of Mankiw's op-ed. First of all, nothing in Mankiw's article disputed the notion that the stimulus "helped us [stem] the panic and get the economy growing again." He says that tax cuts work better than government spending, but he doesn't suggest that the stimulus as a whole hadn't stopped the bleeding or that the spending parts don't work at all.

    He even says: "to be sure, there are some positive signs, like reduced credit spreads, gross domestic product growth and diminishing job losses. But the recovery is not yet as robust as the president and his economic team had originally hoped." The op-ed you cited actually affirms Obama's point, that all economists agree the economy is turning around. Mankiw is critical of parts of the stimulus, but he doesn't actually disagree with that argument.

    And neither do any of the three economists he cited, all of whom were talking about the effectiveness of tax cut stimulus versus spending stimulus, and NOT about the 2009 stimulus. By the logic of the three studies Makiw cites, it is perfectly plausible that the stimulus worked to help turn the economy around, since they are all advocating stimulative tax cuts and the stimulus had a lot of those.

    You are misrepresenting data in this piece and you should take it down.

    1. What article did you read? I just read this article because your post caused me to question this piece. You are totally misrepresenting the Mankiw's op ed. Welch's piece posted here is 100% accurate. Mankiw, from Harvard - hardly a conservative think tank - states extremely clearly that the old Keynesian ideas who he and many economists embraced in fact may not be correct. The data is building to support that tax cuts are better. Here is his final sentence of his op ed:

      "A growing body of evidence suggests that traditional Keynesian nostrums might not be the best medicine."

      All the economists he sights 6 in total support his point. Actual analysis of data cited by Mankiw indicated that tax cuts historically generated $3 in GDP vs the .99 reported by the Obama administration. Sir - your post is completely wrong and misleading.

      As for the stimulus having a lot of tax cuts, rebates are not cuts - also pointed out by Mankiw and a key mistake of Bush in 2008 - never the less, the stimulus package does nothing to really reduce tax burden, but since you completely mis-stated the facts of Mankiw's op ed, I don't suppose you mind mis-stating the facts about the failed stimulus.

      Your post is the one that should be removed as mis-representing the facts. Obama is again over reaching and stating things he wants to be true, but in fact are not.

    2. This article is simply a dishonest presentation of Mankiw's op-ed....He says that tax cuts work better than government spending, but he doesn't suggest that the stimulus as a whole hadn't stopped the bleeding or that the spending parts don't work at all.

      If it's dishonest, then President Obama's presentation is equally dishonest. He's the one creating a strawman pretending that critics are saying that borrowing huge sums of money doesn't help the economy at all in the short-run.

      Sure, it does. But it may not be worth it in the long run, and it's incredibly stupid to do a stimulus so poorly designed that it costs more and provides less stimulus than alternatives. The President's stimulus plan was idiotic from the perspective of all the latest economic research, and he refuses to engage that argument, instead mendaciously setting up strawmen.

  38. I love how this administration points fingers that is hilarious! I wonder if it's going to start a trend. Every administration that comes into the W.H. totally acts like little whiny kids and blames problems on everyone else hahahah... Wow. I also LLLLLOOOOOVVVVEEEEE watching Obama/Dem/Lib lovers despise when people criticize Obamama and this admin. but it's ok to criticize bush. Double standards. Seems to be a lot of that in society now a days. What's up with that crap people?

  39. The SOB is on the campaign trail again. This morning at a Home Depot. We need an educated pragmatic President, not a professional liar and campaigner. Wake up people.

  40. Yeah, I am not surprised by this at all!


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