Barack Obama has made several mistakes in his Presidency, but the biggest one is arguably this:
He didn’t manage the country’s expectations well enough on the economy, especially with respect to unemployment.
On the contrary: When it comes to jobs, Obama overpromised and underdelivered.
Mitt Romney has every right to call him on that.
And we have the perfect chart with which to do that.
The chart below shows three lines:
- The incoming Obama Administration’s projections for what the unemployment rate would be if no stimulus was enacted in the depths of the financial crisis (red).
- The Obama Administration’s projections for what the unemployment rate would be with the President’s stimulus plan (blue).
- The actual unemployment rate (green).
The actual unemployment rate ind the chart, you will note, is much higher than the “nightmare scenario” initially envisioned by the Obama Administration (with no stimulus). In either case–stimulus or no stimulus–the unemployment rate was supposed to be down to 5.5% by now. And it’s actually still 8.3%.
As the chart makes instantly clear, the Obama administration drastically underestimated how bad the economy was and drastically overestimated its ability to do something about it.
As a result of this, President Obama over-promised and under-delivered on the single most important challenge of his Presidency: Jobs.
Also as a result, President Obama gave the Republicans ammunition to argue that his stimulus “failed,” when, in fact, it helped matters considerably (just not enough to fix everything).
Could the Obama Administration have fixed the economy in four years had they had done something different?
In my opinion, no.
As a quick glance at debt-to-GDP charts show, this recession was not a run-of-the-mill cyclical recession. It was a debt-fuelled balance sheet recession. And if there’s one thing history shows about those, they take a long time to fix. (See Japan and the Great Depression).
But Obama could have given himself a better chance to get re-elected despite the horrible economy. If Obama had recognised how bad things were, asked for a much bigger stimulus than he ended up asking for, and, importantly, set the appropriate expectations, he’d probably have been able to pin the blame for the mess where it belongs: On the three decades of decisions that facilitated the debt build-up that eventually culminated in the financial crisis–decisions that, importantly, were made by both Democrats and Republicans.
Instead, however, Obama over-promised and under-delivered. And the Republicans should be all over that.
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