Democrats losing on stimulus

Ross Douthat:

Ten months ago, at the beginning of the great stimulus debate, President-elect Barack Obama’s economic advisers produced an unfortunate chart.

The chart plotted out two lines. One projected the unemployment rate through 2014 with a stimulus package; the other projected unemployment across the same period without it.

The first line — the hopeful line, the one that was used to sell $800 billion worth of stimulus — showed the rate of joblessness peaking this fall at 8 percent, and dropping swiftly thereafter. The second line — the no-stimulus scenario — showed unemployment peaking at 9 percent, holding there across 2010, and then declining in 2011 and 2012.

Now reality has produced numbers of its own. In every month since May, the unemployment rate has been roughly a percentage point higher than the chart’s grimmer, stimulus-free scenario. This October, when Obama’s advisers predicted that unemployment would stand at 8 percent with the stimulus and just under 9 percent without it, the actual jobless rate leaped to 10.4 percent.

This dire figure isn’t Barack Obama’s fault. Even in an age of near-trillion-dollar spending sprees, the president of the United States has only limited influence over the unemployment numbers. But the White House spent the winter pretending otherwise. The stimulus bill was framed and sold primarily as a jobs bill, and the Obama administration placed a substantial bet on the promise that the unemployment rate would start dropping before 2010 arrived.

When the stimulus passed with almost no Republican support, Rahm Emanuel, the president’s chief of staff, declared that “the most important number ... is how many jobs it produces, not how many votes it gets.”

He was right. But with unemployment near a 25-year high, that “most important number” isn’t looking very good. The White House is stuck arguing counterfactuals — how much worse the economy would be without the stimulus — and trumpeting obviously inflated estimates of how many jobs have been “created or saved” by federal dollars.

If the midterm elections were held today, the Democrats would probably take an unemployment-driven beating. In Gallup’s generic Congressional ballot, Republicans are up 22 points among independents, and they’ve opened up a rare lead among the voting public as a whole.

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The jobs saved scam is not going to work for Democrats and it is going to make them look even worse than they already do. What is also at stake is a fundamental failure of liberalism. Obama got the tax cuts wrong and the spending wrong because he relied on liberalism rather than the dynamics of the market place and the job creation caused by tax cuts for "the rich." Reagan proved that in the 80s and Bush did it during his administration.

It should also be noted that this recession is a product of Democrat housing policies which Bush did not sufficiently resist. Requiring lenders to make bad loans caused this recession, and it looks like Democrats are still in denial about that so it might happen again.