The Stimulus Debate Gets Stupid
You’d think there wouldn’t be a debate on stimulus any more. The contraction of the economy has slowed to 1% entirely due to the stimulus bill. Cash for Clunkers is working so well that it’s critics are reduced to spouting utter nonsense. You’d think the stimulus critics would be struck dumb by this torrent of good news. But on Sunday morning before a nationwide audience on Meet the Press host David Gregory grilled Larry Summers and spouted the line that the stimulus had failed and should be rolled back. Gregory’s evidence? The climbing employment numbers.
MR. GREGORY: The criticism of this administration is that it has misread the impact of the stimulus on the economy, and here are the raw numbers when it comes to the unemployment rate. As of February 17th of 2009, the day that the stimulus plan was signed, unemployment was at 7.6 percent, it’s now at 9.5 percent. Experts like yourself believe it’s going to go up over 10 percent. Roughly two million jobs have been lost since the stimulus came on line, after this administration said in a report that if you pass a stimulus plan, we’ll hold unemployment steady at 8 percent. What went wrong?
Larry Summers tried to get across the point that the employment numbers would have been a lot worse without the stimulus to no avail.
DR. SUMMERS: David, I, I think that’s really very, with great respect, I think that’s really a very misleading way of putting it. The administration’s report was very clear that the stimulus would build over time, that less than 10 percent of the job creation would take place during 2009, that the largest impacts would be felt as the program took effect, as all of those projects got started. So we forecast that there would be a meaningful impact felt right away, but that that effect would increase very substantially. …and that’s what’s happened. Now, it’s true that unemployment is higher. It’s higher than almost anyone forecast at the beginning of the year; and it’s higher because, frankly, what we inherited was much worse. Most of the surprise increase had already taken place by March, and you can hardly hold the administration accountable for that. It turned out that businesses were even more scared than we realized; and, therefore, relative to past recessions, as demand for their products declined, they were much quicker to lay people off than they, than they have been. And so there was a surprise in the employment statistics, but that didn’t have to do with the impact of the stimulus. That had to do with the baseline that we were dealing with. You saw that. You see evidence for that also, David, in this last economic report. In addition to giving us the data for the second quarter, which is what everybody’s talked about, the negative 1 percent, it also gave us data on revisions of the whole history of GDP. And what those revisions showed us is that last winter the economy was much weaker than we thought it was at the time. …
But it was like talking to the walls.
Incredibly some actually thought Gregory had a point as this comment from The New Republic’s website shows.
My read of this blog is that Gregory actually called Summers out. Gregory should be commended for doing this, particularly given that he was forced to take on an individual with greater expertise than himself. Gregory’s approach is a stark contrast to that of his sycophantic predecessor.
Here’s a newsflash, Gregory didn’t "call out" Larry Summers, all he did was flunk basic algebra. If you add a negative and a positive number together, the result can be positive or negative depending which one was greater. If the result is negative it’s still a smaller negative than it would have been otherwise. In other words, without stimulus we’d have even more jobs lost, more economic contraction, and no increased car sales. The only thing Larry Summers is guilty of is not smacking Gregory down hard enough.