How Obama Ruined the Stimulus

Happy birthday, Stimulus!

As you've surely heard—assuming, of course, that you're the sort of maniac who refreshes Politico 80 times a day and/or chooses to live in Washington, D.C.—it was exactly one year ago today that President Barack Obama and his merry band of Congressional Democrats (plus Susan Collins and Olympia Snowe) passed the $787 billion American Recovery and Reinvestment Act of 2009--a.k.a. the stimulus bill.

Unfortunately, the public is in no mood to celebrate. At first, the stimulus was pretty popular. A year ago, 67 percent of Americans said they supported Obama's plan, according to Gallup. But now three fourths of the country believes that the Recovery Act was mostly a waste—even though the vast majority of economists agree that it successfully staved off a second Great Depression.

So on this, the first anniversary of the advent of the stimulus, we here at Gaggle headquarters have to ask: how could something so right—or, at least, so necessary—feel so wrong?

I blame the White House—or, to be more specific, the White House's approach to the thorny issue of jobs. This isn't because unemployment topped 10 percent after the administration predicted that it would stall out under 8 percent; voters are aware, I think, that recessions this messy tend not to conform to tidy macroeconomic projections, and they're willing to cut policymakers some slack when things don't go precisely as planned.

Instead, the problem has been the counterfactual way that Obama & Co. chose to describe the job-boosting effects of the stimulus—that is, by comparing them to what the job numbers would have been without any stimulus at all. Initially, Obama pledged that the plan would "save or create about 3.5 million jobs," and he continued to use the phrase "save or create" for months after signing the stimulus bill into law. But very few casual observers understood that this meant "3.5 millions more jobs than there would've been in some alternate universe where the stimulus never happened" and not "3.5 million more jobs than existed the day before the stimulus passed." As unemployment continued to rise, and as reporters began to note that even the White House wasn't sure how to measure (or distinguish between) the number of jobs "saved" or "created" by the Recovery Act, the public began to sense that they weren't getting something they'd been promised—namely, millions of new jobs.

Of course, Obama never promised millions of new jobs. He promised that a world with the stimulus would include millions more jobs than a world without it. But in his rush to gin up political momentum for the Recovery Act, he buried that distinction in the fine print. (The DNC still refers to the stimulus "resulting in" or being "responsible for" up to 2.4 million jobs.) By the time the White House quietly decided in December to abandon the "saved or created" formulation in favor of something much simpler—counting jobs funded by the stimulus—the damage had been done, and Obama's credibility on jobs was pretty much shot. 

To get a sense of how avoidable this PR catastrophe was, imagine if the president had established a different set of expectations for how the stimulus would affect employment. Instead of claiming that the bill would "create or save" millions of jobs, he could've asked the American people to compare how many jobs were lost each month before the stimulus passed to how many were lost each month after it went into effect. The big picture would've looked something like this:

 

Yes, unemployment remains horrifically high. Yes, people are still in pain. But as this chart by the Economic Policy Institute illustrates, the worst job losses are clearly behind us. Things are improving. If voters had been conditioned to expect stabilization at the one-year mark—as opposed to millions of new jobs—they'd probably be a little less enraged right about now.

Earlier this week, a reporter asked Obama spokesman Robert Gibbs why only 6 percent of Americans believe that the Recovery Act created jobs. In response, he argued that the stat was "a symptom of how poor the economy has been." But Gibbs and his team deserve some of the blame as well. By creating unrealistic, unmeasurable expectations for employment, they set the stage for exactly the sort of backlash that's now brewing in the electorate.

So much for happy birthdays. 

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