Selling A Pig In A Poke

Joe Puente is obviously no fan of Jason Chaffetz as his latest screed in City Weeky shows(for my MN readers City Weekly is Utah's City Pages).

Well, Jason’s at it again. He has sent out a letter in which he criticizes the stimulus package for being both too big and ineffective. He also claims that “The President projected that his stimulus package would prevent the unemployment rate from exceeding 8%.” (emphasis added)

Oh, did he? Actually, no, he didn’t. At least I haven’t been able to find a direct quote from the President or anyone on his staff to that effect. Just third party hearsay from the blogosphere (by the way, blogs are not usually credible sources of information as they are largely used to express opinion that may or may not be based on actual facts). If any readers can find me a direct quote from a credible and verifiable source, I’d really appreciate it. Now, what did the President say?

I have a copy of the letter in question. It is a letter that Rep. Chaffetz sent out to all constituents on his mailing list. It also included a link to a graph very similar to the one below.


Mr. Puente is being more than a little disingenuous when he claims that the President "never said that" other than third party hearsay in the blogosphere when this report is out there for the Googling. The report was created for and approved BY the then President-elect of the United States in order to garner support for his very ambitious Stimulus package! He then went on the radio two weeks before his inaguaration to tout THIS VERY REPORT and he echoed it's claims of massive numbers of jobs it would create or save and thus keeping unemployment low!!!!!

If there is a real discussion to be had on the effects of the stimulus, we have to get beyond Mr. Puente's hyperbolic partisanship ("Ya know, one of these days all of his lying and political bullshit is going to come back and bite Chaffetz right in his Republican ass and I plan on being there when it happens.") and look at some economic realities (HT to my favorite economic professor King Banaian)

Everyone wants to know when the U.S. economy will start growing. I will focus on a related question: when will the stimulus law begin to have a significant positive effect on U.S. economic growth? And could it have come sooner if the Administration had done something different?

I believe the Administration made an enormous mistake in its legislative implementation of the stimulus. As a result, the boost to GDP will come six to nine months later than it needed to (maybe more). Given the President’s desire to do a large fiscal stimulus, and given his policy preferences, he could have had a different bill that would have been producing significant GDP growth beginning now, rather than in the middle of next year. That’s a huge mistake with real consequences for the U.S. and global economies.

One thing that I told many friends (during the campaign and during the stimulus debate) was that the economy is not something that can be turned on a dime. It is not like a sports car - if fact it is more like a super-tanker! It is just too big for any single piece of legislation to impact in anything less than 24 months, so to expect (or to give the expectation as the Obama graph did) that it can "cap" unemployment within 6 months of this bill being enacted is naive at best. Conversely to declare the stimulus to be a success or a failure at this stage is equally naive. Oh to be sure we can take a look at individual benchmarks - such as the creation of so-called "shovel ready" jobs and get a foreshadowing of the overall success of the plan (these so-called "shovel ready" jobs were jobs that were supposedly immediately available and yet we have not seen any of these jobs to date). Even the Chairman of the Federal Reserve - an early supporter of the President's Stimulus plan - is starting to see the early indications that the plan was not all it was cracked up to be.

To be honest, I can see where Representative Chaffetz is coming from. If you go strictly based on how the stimulus package was "sold" to us (both by the incoming Obama Administration and the media) then you could say that the stimulus packaged did not live up to it's billing. However, it IS too early to tell how much harm or good will be done to the economy as a result of this economic package. We will most likely start seeing that more clearly next summer - just in time for the 2010 mid-term elections. If it is as bad as many economists think it will be, will Mr. Puente renounce his words? Somehow I doubt it.