Monday, July 6, 2009

The subjunctive present

Amid attacks by Republicans claiming that the 9.5% unemployment figure proves the stimulus' failure, the Obama administration says it would have been worse.

In January, the incoming administration predicted in a white paper study that without a huge stimulus package, unemployment would reach just over 8%, and would be contained at under 8% with a stimulus package.

(When asked about this discrepancy, one of the authors of the study – Jared Bernstein, the top economic adviser to Vice President Biden – recently said that “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.” The bottom line, Bernstein said, is that without the stimulus the unemployment rate “would have been between 1.5 and 2 points higher than it otherwise will be.”) (link)

Anyone can say anything but we should be skeptical. In concocting versions of what today would be like we can create many colorful stories. Had I not went to college I would have won the lottery and would be living in Hawaii right now. Right! Mr. Bernstein has no idea what would have happened had they not passed the stimulus package. Had he known, he would not have made the incorrect prediction in the first place.


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