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Obama Guru Defends Rosy Jobs Promise

From CNBC, via YouTube:

Here is our friend Jake Tapper of ABC News asking Mr. Bernstein some similar questions:

Today’s Qs for O’s WH – 6/8/2009

June 08, 2009

Jared Bernstein, the top economic adviser to Vice President Biden, joined White House press secretary Robert Gibbs at the briefing.

TAPPER:  Yes, in January, you and Dr. Romer issued a — your recommendation for the stimulus that turned out to be rather optimistic, I think it’s fair to say.  You said, without the stimulus, the unemployment rate would be just over 8 percent. Obviously, it’s 9.4 percent. How do you explain that?  And have you factored in whatever overly optimistic view you had then when you talk about (creating) 600,000 (in the next 100 days) jobs now?

BERNSTEIN:  The answer to the second part of the question is yes. And I’ll elaborate on that in a second.  On the first part of the question, when we made our initial estimates, that was before we had fourth-quarter results on GDP, which we later found out was contracting at an annual rate of 6 percent, far worse than we expected at that time.

To elaborate a bit on the second part of your question, the important thing to realize is that our estimate, whether it’s 600,000 jobs over the second 100 days or 3.5 million jobs over the life of the plan, that’s the difference between what we believe have occurred from the job market in the absence of this plan, and what we actually observe in the job market. In the absence of the — were this plan not to be implemented as I’ve described and as Dr. Romer and I articulated back then, in the absence of the plan, job losses would have been deeper.

From whatever level they started, job losses would have been deeper. The unemployment rate would have been, by — our estimate is by the end of next year — would have been between 1.5 and 2 points higher than it otherwise will be. So those estimates that we are touting today and the estimates that you hear us talk about, that’s the difference between what would have happened to the job market, the unemployment rate, were this plan not in effect, and the actual outcomes of jobs. And that gap, that difference between actual and the — the expectation, absent the plan, that’s where the estimates come from.

According to Mr. Bernstein’s own chart (see below), Mr. Obama’s policies have made the economy even worse – not better:

(Click to enlarge)

Just to put this in context, the following is a repost of an article we posted back on January 10, 2009:

As a public service we present the introductory remarks from the latest tablets handed down by the President Select (a pdf file):

The Job Impact Of The American Recovery And Reinvestment Plan

Christina Romer, Chair – Nominee – Designate, Council Of Economic Advisers

Jared Bernstein, Office of the Vice President-Elect

January 9, 2009

A key goal enunciated by the President-Elect concerning the American Recovery and Reinvestment Plan is that it should save or create at least 3 million jobs by the end of 2010. For this reason, we have undertaken a preliminary analysis of the jobs effects of some of the prototypical recovery packages being discussed. Our analysis will surely evolve as we and other economists work further on this topic. The results will also change as the actual package parameters are determined in cooperation with the Congress. Nevertheless, this report suggests a methodology for ensuring that the package contains enough stimulus that we can have confidence that it will create sufficient jobs to meet the President-Elect’s goals.

This report also presents some discussion of the trade-offs involved in choosing different elements of the package. For example, how do tax cuts, fiscal relief to the states, and increases in infrastructure spending compare in terms of jobs created? Similarly, how do the different types of spending differ in terms of the timing of the jobs they will create? The report also discusses the types of jobs that will be created and the possible demographic composition of the workers who will find jobs as a result of the stimulus.

We reach several key preliminary findings:

A package in the range that the President-Elect has discussed is expected to create between three and four million jobs by the end of 2010.

Tax cuts, especially temporary ones, and fiscal relief to the states are likely to create fewer jobs than direct increases in government purchases. However, because there is a limit on how much government investment can be carried out efficiently in a short time frame, and because tax cuts and state relief can be implemented quickly, they are crucial elements of any package aimed at easing economic distress quickly.

Certain industries, such as construction and manufacturing, are likely to experience particularly strong job growth under a recovery package that includes an emphasis on infrastructure, energy, and school repair. But, the more general stimulative measures, such as a middle class tax cut and fiscal relief to the states, as well as the feedback effects of greater employment in key industries, mean that jobs are likely to be created in all sectors of the economy.

More than 90 percent of the jobs created are likely to be in the private sector. Many of the government jobs are likely to be professionals whose jobs are saved from state and local budget cuts by state fiscal relief.

A package is likely to create jobs paying a range of wages. It is also likely to move many workers from part-time to full-time work.

It should be understood that all of the estimates presented in this memo are subject to significant margins of error. There is the obvious uncertainty that comes from modeling a hypothetical package rather than the final legislation passed by the Congress. But, there is the more fundamental uncertainty that comes with any estimate of the effects of a program. Our estimates of economic relationships and rules of thumb are derived from historical experience and so will not apply exactly in any given episode. Furthermore, the uncertainty is surely higher than normal now because the current recession is unusual both in its fundamental causes and its severity.

A. Aggregate Jobs Effects

Estimating the aggregate employment effects of the proposed American Recovery and Reinvestment Plan involves several steps. The first is to specify a prototypical package. We have assumed a package just slightly over the $775 billion currently under discussion. It includes a range of measures, all of which have been discussed publicly. Among the key components are:

Substantial investments in infrastructure, education, health, and energy.

Temporary programs to protect the most vulnerable from the deep recession, including increases in food stamps and expansions of unemployment insurance.

State fiscal relief designed to alleviate cuts in healthcare, education, and prevent increases in state and local taxes.

Business investment incentives.

A middle class tax cut along the lines of the Making Work Pay tax cut that the President-Elect proposed during the campaign.

A second step is to simulate the effects of the prototypical package on GDP. We use multipliers that we feel represent a consensus of a broad range of economists and professional forecasters. Our particular multipliers for an increase in government purchases of 1% of GDP and a decrease in taxes of 1% of GDP are given in Appendix 1. They are broadly similar to those implied by the Federal Reserve’s FRB/US model and the models of leading private forecasters, such as Macroeconomic Advisers.

The final step is to take the effect on GDP and translate it into job creation. Not all of the increased output reflects increased employment: some comes from increases in hours of work among employed workers and some comes from higher productivity. We therefore use the relatively conservative rule of thumb that a 1 percent increase in GDP corresponds to an increase in employment of approximately 1 million jobs, or ab out three-quarters of a percent. This has been the rough correspondence over history and matches the FRB/US model reasonably well. The effect on jobs using the estimates from most private sector forecasting models would be somewhat larger. We look at the effects in 2010Q4, which is the end of the two -year period that is the focus of the recovery plan…

You can read the rest of this highly dubious 14 page report by downloading the pdf.

To our mind it only raises several obvious questions.

First, how will it help the economy to pull even more money out of the capitalist system and give it to the government to dole out in its fashion?

Second, if the current financial problem is that capital (credit) is so tight, how will this be improved by the government sucking up even more of our limited capital?

Lastly, figuring that these 3, 500,000 jobs are currently estimated to cost $775,000K for two years – then each job then will cost about $110, 000 per year.

How many construction, retail or hotel jobs pay $110,000 a year?

Where is the rest of this money going?

This article was posted by Steve on Tuesday, June 9th, 2009. Comments are currently closed.

22 Responses to “Obama Guru Defends Rosy Jobs Promise”

  1. proreason says:

    “From whatever level they started, job losses would have been deeper”

    In other words, “no matter happens, we are correct.”

    Well, with persuasion like that, how can you argue against them.

    • bronzeprofessor says:

      I think getting a PhD should be like getting a JD or MD, and you should have to take an oath to use your academic credibility honestly. Then, when PhDs start going on news programs and knowingly backing up a popular president by camouflaging his obvious fallacies, the US should be able to take the person’s PhD away.

      If you could take away people’s PhDs, first Paul Krugman would be defrocked, then thousands upon thousands of academics who gave a veneer of respectability to Obama during the campaign season and this year.

    • tranquil.night says:

      Haha @Professor – But most liberal PhD’s probably were rewarded their academic success for advancing such looney perspectives in the first place on that path of being taught what to think rather than how to think. That’s a lot of eggheads to tick off!

      EDIT: I saw this and threw up a little in my mouth. Put this guy on the list too.

      from foxnews:

      In a study conducted during the 2008 election, Dr. Ray Friedman of Vanderbilt University found that black students achieved higher scores on standardized tests when they were reminded of Obama’s achievements before the test. Their higher scores narrowed the gap between black and higher-scoring white students, suggesting a tangible effect of Obama’s presidency.


      Friedman has claimed that blacks are far more likely to score below their potential when asked to identify their race on a test — or when they are told an exam will measure innate abilities, like intelligence.

      But when role models from the same social group are present before a test is administered, “it tends to take away stereotype threat losses” — resulting in higher scores, according to Friedman.

    • proreason says:

      good idea Bronze.

      and didn’t the last administration staffed from academia get us into the Vietnam war?

      I think that when your professional life is based on hatching theories and reinterpretation of past events, there is a sore temptation to try those theories out if you somethow come into power. The Moron is the classic example. Here we have a guy who has never done a lick of real work in his life, and who is totally brainwashed by the capitalism-hating greenies, running car companies and banks.

      Of course, he doesn’t have any problem finding educated fools like this Bernstein goon to reinterpret the failures when they become so obvious that even us hicks can see them.

    • bronzeprofessor says:

      @proreason, Yes, you are right to bring up Vietnam. In the current book I’m working on, I am trying to figure out why the professoriate became so hostile to ideological diversity in the last 3rd of the 20th century. The intelligentsia in most countries leans to the Left, and in the US the Republican Party and its industrial-bourgeois base alienated intellectuals by the late 1800s, never to win them back, ever again! BUT in the late 20th century, the Vietnam War exerted a specific influence on the professoriate. It was in the 1960s and 1970s that many new Humanities interdisciplinary fields were founded, and the number of PhDs being awarded started creeping upward. Unfortunately, it was during that same time that many people in PhD programs were trying to get out of the Vietnam War. So by the late 1970s, the professoriate was almost wholly defined as the antithesis of the armed forces. The anti-Vietnam generation then controlled who in later generations could get into PhD programs, and later who could get an academic post, get published, or be tenured.

      I am feeling rather hostile to conservative critics like David Horowitz, though, because I think the only way to take back the world of PhDs is to foster young conservative scholars. Bashing the idea of a PhD because most PhDs are liberal, which is what Horowitz does, won’t help us. I like the fact that Laura Ingraham and Ann Coulter and Larry Elder have all been heard, lately, encouraging young bright intellectuals to become professors.

      For my part — just so you know someone is trying — I am mentoring about a dozen bright conservative students; we meet to talk about books and I am trying to help them strategize a way into the academy. But unfortunately I have to do all this, off the books, as part of a personal investment in them without being paid to mentor them. I don’t mind though. :)

    • proreason says:

      bronze, good to know there are some level heads in academia. I’m not against the intelligensia per se, but it sure doesn’t seem like there are many who see things other than the party line. It’s really great to have one posting on S&L now. And good that you are tring to be a johny appleseed of conservatism.

      As for your research about why academia has become so hostile to diversity of thought, it is probably not something you could write about and retain your position, but I have become convinced since Obama siezed power that it results from a deliberate strategy of the communists in the 40’s and 50’s era to takeover academia and the media and through them, the country. You may have read some other posts where I state that. A new S&L poster named badcrow has recently arrived here with similar ideas. Vietnam was probably the flash point that turned the tide on the effort, but I know that academic thinking by the mid-60’s was already very liberal and that they were indoctinating students at least by that time.

      I don’t have any specific research to support my contention (despite regular posting here, I have other responsibilities), the reasons I think so are:

      – the very rigid lock-step ideology that you see in the left today.
      – the amazing congruence of current academic and media thinking and communist philosophy.
      – the occasional Bill Ayers who pokes his head out of his foxhole.
      – the influence of Saul Alinsky on the Moron’s cabal
      – the fact that the Moron’s agenda could easily have come from a communist text book of 40 years ago
      – the known influence of Communists in the 30’s thru 50’s, particularly in England, but also here, even through the recent revelation of the Cuban spies in the State Department
      – the Left’s strange love affair with Castro, Chavez and virtually every other socialist autocrat

    • JohnMG says:

      …..”The anti-Vietnam generation then controlled who in later generations could get into PhD programs…..”

      With no intent of malice, professor, this is what has always ticked me off about someone sporting that coveted PhD behind their name. It is so much like an academy award where the group gets together and confers an honor on one of their own. To me, PhD, standing alone, impresses me not. What I see by way of “walking the walk” earns my respect. In fact, it has almost come to be, for me anyway, that I’m suspicious of the title until that person has shown something of the character traits I would expect from someone so honored. Until then, they pull their pants on one leg at a time, just as do I, and I consider them nothing special. That doctorate means nothing to me. In fact, I may even hold that person somewhat in contempt. I began feeling this way due to my life’s experience. And I ain’t no spring chicken—but I am a VietNam vet.

    • MinnesotaRush says:

      Ditto, John!

      PhD – Pile it Higher & Deeper .. when I encounter so much of this stuff, I’m reminded of the fable where the little kid points out to the king that he’s naked!

      .. and certainly, bronzeprofessor, no insult intended towards you. It’s been a treat to review your postings/thoughts; and I’m looking forward to getting to know you more.

    • neocon mom says:

      Reminds me of an “expert witness”–ya gotta have ’em in any high stakes trial these days. They are “credibility for hire” which cheapens their credibility. You can find one to say anything for a certain fee (including M.D.s, bronzeprof, and it’s all orchestrated by J.D.s, surprise, surprise!)

      Walter Williams recently wrote about the extraordinarily low achievement of most college graduates when asked some basic questions (mostly humanities, no tough science stuff either). It is an environment so hostile to conservatives, so focused on fluff that most opt for professions, business or some other road to entrepreneurship.

      I agree somewhat with Breitbart–it seems counterintuitive, but don’t start with the eggheads, start with the popular culture. I know many intellectuals tire of the culture war, but I think that’s mostly due to the company they keep. In any Ph.D. program, a conservative will be very lonely.

  2. tranquil.night says:

    There it all is; lock, stock, and barrel. There’s no way to overstate how obvious this all is now even if one can’t see through the state media’s curtain, and there’s no way to overstate how dangerous it is that the white house is down to depending on the emotionally blind, completely uninformed, or just downright apathetic, to carrying the rest of his agenda to fruition.

    Great work Steve.

  3. Liberals Demise says:

    As you can plainly see ……. Obamas Employment Nazis are all in lock step with their Jackboots on!!

  4. Confucius says:

    This is the second time I’ve seen this graph, and I still don’t get it.

    The graph shows that by 2013, the unemployment rate will be THE SAME with or without the “Recovery Plan.”

    So why bother? Especially given the cost!

    Can anyone explain how this graph justifies the “Recovery Plan”?

    • Liberals Demise says:

      It justifies the theft of taxpayers money under the disguise of a flimflam artist / president.

    • proreason says:

      Confucius, I think the idea of the graph was to show that millions of jobs could be saved through 2014 with the Depression Stimulus. The gap between the upper and lower lines are the “saved” jobs.

      In the real world, something liberals don’t acknowledge, unemployment is now 9.4%, or more than 1% above the worst case. 1% seems small…..but it’s 1.5 million jobs.

      But the graph is just made up bullshit. The only thought that was put into it was probably to make sure that the income from the “saved” jobs would be a little bit more than the cost of the Stimulus package. I did some quick math, and that seems to be the case.

    • Confucius says:

      Thanks proreason. I see the problem.

      Wouldn’t it be more instructive if the graph was (absolute) number of unemployed vs. time? Better yet, (absolute) number of full-time jobs vs. time?

    • proreason says:

      “Wouldn’t it be more instructive if the graph was (absolute) number of unemployed vs. time? Better yet, (absolute) number of full-time jobs vs. time?”

      They would never do that.

      Mobs with pitchforks would come after them.

      Since OSoros tanked the market to steal the election last September, the official count of new unemployed people is about 6 million. The actual count is certainly over 10 million.

    • MinnesotaRush says:

      I’m pretty sure they used crayons when they made this little study group graph.

    • proreason says:

      “they used crayons ”

      I was thinking something similar. I figured that when they had their study group, the Jared buffoon or another buffoon in the room drew this on a white-board and it caught The Moron’s eye and he told them to include it in the propaganda for the hoax.

      and they just played with it until they got a shape they liked, then focus-grouped it a couple of time, and presto, national policy.

      National Policy that our great great grandkids will struggle to pay off.

    • Confucius says:

      ” . . . the official count of new unemployed people is about 6 million. The actual count is certainly over 10 million.”

      Interesting proreason. You do realize that 10 million was approximately Obama’s lead over McCain in November.

      I’m sure there is some kind of irony here.

  5. MinnesotaRush says:

    “Jared Bernstein, the top economic adviser to Vice President Biden …”

    As far as I’m concerned, anything that comes after this comment is irrelevant and likely (MOST likely) .. bullshit!!!

    No need to go any further.

    • U NO HOO says:

      “Jared Bernstein, the top economic adviser to Vice President Biden …”

      What is wrong with the economic advisor to the president?

      We need two?

      Oh, yeah, we need to create jobs, next, an Economic Advisor Tsar.

  6. BigOil says:

    How is it possible a bunch of right wing radicals here at S&L immediately knew the economic fiction analysis of a liberal PhD economist was a steaming pile?

    Could it be we know wealth is not created from the government confiscation and redistribution of wealth?
    Could it be we understand Socialism has failed every time it is tried?
    Could it be our understanding that a free individual acting in their own self interest always makes better decisions than a bureaucrat?

    If an idea comes out of the mouth of liberal – expect the opposite to be the best course of action.

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