Obama's invalid assumptions

Karl Rove:

In February, President Barack Obama signed a $787 billion stimulus bill while making lavish promises about the results. He pledged that "a new wave of innovation, activity and construction will be unleashed all across America." He also said the stimulus would "save or create up to four million jobs." Vice President Joe Biden said the massive federal spending plan would "drop-kick" the economy out of the recession.

But the unemployment rate today is 9.5% -- nearly 20% higher than the Obama White House said it would be with the stimulus in place. Keith Hennessey, who worked at the Bush White House on economic policy, has noted that unemployment is now higher than the administration said it would be if nothing was done to revive the economy. There are 2.6 million fewer Americans working than Mr. Obama promised.

The economy takes unexpected turns on every president. But what is striking about this president is how quickly he turns away from his promises. He rushed the stimulus through Congress saying we couldn't afford to wait. Now his administration is waiting to spend the money. Of the $279 billion allocated to federal agencies, only $56 billion has been paid out.

Mr. Biden has admitted that the administration "misread" the economy. But he explained that away on ABC's "This Week with George Stephanopoulos" on Sunday by saying the administration had used "the consensus figures and most of the blue chip indexes out there" to draw up its stimulus plan. That's not true.

The Blue Chip consensus is an average of some four dozen economic forecasts. In January, the consensus estimated that GDP for 2009 would shrink by 1.6% and that unemployment would top out at 8.3%. Team Obama assumed both higher GDP growth (it counted on a contraction of 1.2%) and lower peak unemployment (8.1%) than the consensus.

Instead of relying on the Blue Chip consensus, Mr. Obama outsourced writing the stimulus to House appropriators who stuffed it with every bad spending idea they weren't previously able to push through Congress. Little of it aimed to quickly revive the economy. More stimulus money will be spent in fiscal years 2011 through 2019 than will be spent this fiscal year, which ends in September.

On Sunday, Mr. Biden, backpedaling from his drop-kick comments, said that "no one anticipated, no one expected that the recovery package would in fact be in a position at this point of having to distribute the bulk of the money."

This fits a pattern. The administration consistently pledges unrealistic results that it later distances itself from. It has gotten away with it because the media haven't asked many pointed questions. That may not last as the debate shifts to health care.

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When you consider that the administration had been arguing that the economy was the worst since the Great Depression, it is passing strange that they would say they underestimated how bad it was.

Their real invalid assumptions were that cobbling together Democrat spending programs would stimulate the economy. In fact they were targeted at helping their constituency groups instead of the economy as a whole. They actually cut defense spending and they refused to look at across teh board tax cuts that might make a difference in stimulating jobs. The tax cuts they were willing to do went to people that do not create jobs, but look for jobs.

The administration turned projections into promises and missed their targets. At some point voters are going to lose faith in their projections and just assume the assumptions on which they are based are invalid. Hopefully that will happen with the health care bill and their anti energy bill.