Article published Wednesday, November 2, 2011 at National Review Online.

Goolsbee’s Gaffes

By John R. Lott, Jr.

The Obama administration is having a difficult time explaining the unemployment rate, which has been above 9 percent for 27 consecutive months and is today 1.3 percentage points higher than it was when Obama took office. The October numbers, due to be released on Friday, are unlikely to look any better. So, his administration goes to great lengths to spin its own unique set of facts.

Just look at Austan Goolsbee’s Friday interview on Sean Hannity’s radio show. Despite having stepped down as Obama’s chief economic adviser in August, Goolsbee continues to do media shows supporting Obama’s economic policies. Goolsbee declared: “I deal only in facts, Sean.” Here is a simple fact check of Mr. Goolsbee’s claims.

Hannity: We heard that unemployment wasn’t going to go above 8 percent.

Goolsbee: When they made that 8 percent prediction, that was the same prediction being made by everyone. But you forget the other half of the thing, which is if you did nothing, the rate would go to 8.9 percent, and it was already above that before the first part of the stimulus even went out.

Mr. Goolsbee is just plain wrong. When the Obama administration got into office, they made optimistic promises about their stimulus program, claiming that during 2009, unemployment would stop rising and then fall. The unemployment rate in January was 7.8 percent. In late February, the administration claimed that it would average just 8.1 percent for the year if the Stimulus was enacted.

The White House’s predictions were consistently much more optimistic than most economic forecasters surveyed by the Wall Street Journal. On Jan. 10, 2009, Obama’s team predicted unemployment would drop to 7.8 percent in December 2009. The Wall Street Journal’s survey of economic forecasters at that same time had December’s unemployment rate at 8.6 percent. At the very end of February 2009, after the stimulus was passed, the Obama released a new forecast saying that unemployment would average 8.1 percent for all of 2009. The next forecast by private forecasters for the Journal, about a week later, predicted unemployment in June at 8.7 percent and for December at 9.3 percent.

But Mr. Goolsbee’s second claim, that unemployment had already been above 8.9 percent “before the first part of the stimulus even went out,” is even more outrageous. Obviously, he is trying to make it look like President Obama simply inherited a worsening economic mess, a mess that threw off his experts’ predictions before the stimulus even had a chance to work. Again, that is just plain wrong. For February, unemployment stood at 8.2 percent; in March it was at 8.6 percent. And in March, President Obama was already claiming that the stimulus had a noticeable impact:

We’re beginning to see signs of progress. . . . This [stimulus] plan’s already saved the jobs of teachers and police officers. It’s creating construction jobs to rebuild roads and bridges. And yesterday, I met with a man whose company is reopening a factory outside of Pittsburgh that’s rehiring workers to build some of the most energy-efficient windows in the world. . . . We’ve already seen a jump in refinancing of some mortgages, as homeowners take advantage of lower rates.

Democrats within and outside the administration, from Larry Summers to Paul Krugman, were making similar boasts about the stimulus working fast.

Here’s another excerpt from Goolsbee’s interview:

HANNITY: [Obama] said that what Bush did by accumulating $4 trillion in debt over eight years was [“unpatriotic”]; did you know that? He said it on July 3, 2008, just before the election. And here he is, in just two and a half years he accumulates $4 trillion in new Obama debt. . . .

GOOLSBEE: My only point on that is, that was before the financial crisis began. And so there is a big difference between running deficits when times are going okay and running deficits when times are in the dumps. Because . . . Look, I am surprised that you aren’t giving the president credit for having the lowest tax rates in 65 years.

There is a big problem with Goolsbee’s claim: Obama didn’t attack Bush over the deficits only in July 2008. Obama kept attacking Bush’s deficits — and promising to do better himself — long after we entered the “worst financial crisis since the Great Depression,” as Obama himself called it. Just read the transcript of the third presidential debate on Oct. 15, 2008, in which Obama promised to cut the size of government to reduce the deficit and attacked Bush’s deficits for causing the economic problems that we were facing. As to “the lowest tax rates in 65 years,” Goolsbee is misleading listeners by mixing up tax rates and tax revenues. Sure, tax revenue is low, but the sizable drop is really because the economy has been in such bad shape.

HANNITY: He blamed kiosks, ATM machines, the Arab Spring, the Japanese tsunami, the Japanese earthquake, it is worse than what we thought, the Republicans won’t support me. It is their fault. They did this. GOOLSBEE: It is not excuses that he is giving for across the board. The question was: Why did we slow down in 2011 when we were growing and adding millions of jobs in 2010? It wasn’t making any excuse. It is true that 2010 was moderate growth.

Wrong again. From December 2009 to December 2010, fewer than a million jobs were added, not “millions.” As far as the list of excuses goes, the slowdown hit hard in the first quarter of 2011 when GDP grew at just 0.1 percent, but the Arab Spring, the Japanese tsunami, the and Japanese earthquake didn’t hit until the end of the quarter. Besides, how does Goolsbee explain the fact that the unemployment rate fell in Japan as well as in most other countries this year? Was the Japanese earthquake and tsunami less bad for the Japanese economy than it was for the U.S. economy? That would be preposterous.

HANNITY: We didn’t create a single job under this president. He has the worst jobs record of any president in modern times.

GOOLSBEE: Sean, you need to date the job creation from when the freefall ends. You can’t date it from the middle of the freefall, which is what you are doing. The job losses that you are describing were 5 million jobs lost of the 8 million lost in the recession. He comes in at the middle of the freefall. Since the end of the recession, we have added about 3 million jobs.

There is a difference between going down eight and back up three, [and] just going down five, and you are describing that as going down five.

It is like you took your TV up to the roof, dropped it off the roof, and say that when I last saw it, it looked fine. But you shouldn’t date it from the middle of the TV falling, you should date it from when it hit the ground, not from where he takes over.

No matter how you cut it, 3 million jobs have not been added since the recession ended. The recession officially ended in June 2009, and at that time 130.49 million people held jobs according to the Bureau of Labor Statistics’ Establishment Survey. The latest numbers for September 2011 show 131.33 million, an addition of just 840,000 jobs. But with the working-age population having grown by 4.6 million people in the same period, that should be viewed as a miserable failure. Furthermore, out of the 840,000 additional jobs, the vast majority — 540,000 — are merely “temporary help service” jobs.

Goolsbee doesn’t want to count anything until the TV has hit the ground. Fair enough. But 27 months after the recession officially ended, the TV is still in pieces. Why has our economy fared so much worse than all but one of the other nine economies that the Bureau of Labor Statistics tracks unemployment numbers for?

The Obama administration is desperate to explain away its failed stimulus policies. But instead of making vaguely misleading statements, they now making up their own facts.

John R. Lott Jr. is a contributor. He is an economist and the author of "More Guns, Less Crime (University of Chicago Press, 2010), the third edition of which was published in May.".

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