Remember the time when the administration was arguing that without the massive stimulus bill, the unemployment rate in the U.S. would reach 9 percent? I wonder how it will manage to spin the announcement that unemployment is now 9.8 percent and that job losses accelerated in September.
I can already hear vice president Biden telling us that, oops, once again, he misread the sad state of the economy. I can hear Paul Krugman telling us that we haven’t spent enough money and that we need one, two, three, or even four more stimuli. I can hear Christina Romer telling us that this new data does mean anything about the effectiveness of the stimulus spending because we don’t know what the unemployment would have been without it. (Well, actually, you do know, Mrs. Romer. That’s because you are the one who wrote the report saying that without the stimulus unemployment would reach 9 percent and that the stimulus would help create 3.5 million jobs.) And I can hear Obama telling us we need “to break the cycle of debt” only once we are done spending money on health care, education, his overnight trip to Copenhagen to ask that the Olympics Committee please bankrupt the city of Chicago forever, green jobs, and all that jazz.
But really, we all know that the theory behind the stimulus effectiveness doesn’t hold water and that stimulus spending has never worked.