Commentary Magazine


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Oh, Yes, the Economy

While in Russia, Obama not only had to walk back Joe Biden’s comments on Iran, he also had to try dampening the furor over Biden’s remarks about the stimulus. Dan Balz writes:

Vice President Biden opened the door to questions on Sunday, telling ABC’s George Stephanopoulos, “We and everyone else misread the economy.” But he insisted that the stimulus applied “is the right package given the circumstances we’re in.”

Obama, in Moscow, tried to modulate the impact of the vice president’s words that the administration had somehow miscalculated. “No, no, no, no, no,” he told NBC’s Chuck Todd. “Rather than say misread, we had incomplete information.” To ABC’s Jake Tapper, he said, “There’s nothing that we would have done differently. We needed a stimulus and we needed a substantial stimulus.”

What both Obama and Biden were trying to explain away was the dissonance between their early assurances that the big stimulus package would hold the unemployment rate to around 8 percent with Thursday’s report showing it at 9.5 percent. The jobless rate is expected to rise further in the months to come, with some economists projecting that it will go above 10 percent for the first time since 1982.

It is hard to square an assessment that the administration underestimated the severity of the recession and the assertion that the White House wouldn’t have done anything different had it known how bad things really were.

The real problem for Obama is not his loose-lipped VP. It is the soaring unemployment rate and the sense, even among Democrats, as Balz notes, that “Obama and his team may have taken their eye off the economy, that they are not sufficiently vigilant in making sure that they produce the job growth they have promised since January.”

Well, when in doubt, why not more of the same? Yes, the buzz has started that we need a second stimulus. But the public thinks Congress has wasted quite enough of their money on the first one:

Sixty percent (60%) of U.S. voters now oppose the passage of a second economic stimulus plan this year, a five-point increase in opposition since the issue was first raised in March. A new Rasmussen Reports national telephone survey shows that just 27% of voters favor a new stimulus plan, unchanged from the earlier findings.

Perhaps the economy will rebound on its own, although the legislation for cap-and-trade and a round of new taxes to pay for a government take-over of health care may further spook investors and employers. (Small businesses are already up in arms about cap-and-trade.) The solution to our continued economic woes and their political consequences are not apparent. Having blown a trillion dollars for no discernible benefit, the president and Congress now must tough it out and face an increasingly worried electorate.