Provoked by the Vice President’s comment on Sunday that the Administration “misread the economy,” the Obama Administration is partway through an unplanned shift in their topline economic message. It is painful to see this transition play out in public as the Obama Administration and its allies try to find their footing on the most basic questions about the U.S. economy and their macroeconomic policy.
Last Thursday the President spoke in the Rose Garden after meeting with some alternative energy CEOs. His statement included only a placeholder about the jobs report:
And obviously, this is a timely discussion, on a day of sobering news. The job figures released this morning show that we lost 467,000 jobs last month. And while the average loss of about 400,000 jobs per month this quarter is less devastating than the 700,000 per month that we lost in the previous quarter, and while there are continuing signs that the recession is slowing, obviously this is little comfort to all those Americans who’ve lost their jobs.
There’s no real substance there, so last Thursday the Administration’s basic economic message appeared unchanged by the new jobs data.
Then on Sunday, when asked about why unemployment is now higher than the Administration predicted it would be, the Vice President said:
The truth is, we and everyone misread the economy. The figures we worked off of in January were the consensus figures and most of the blue chip indexes out there.
… And so the truth is, there was a misreading of just how bad an economy we inherited.
In Moscow yesterday, the President tried to correct the Vice President:
THE PRESIDENT (to NBC): No, no, no, no, no. Rather than say “misread,” we had incomplete information.
THE PRESIDENT (to ABC): There’s nothing that we would have done differently.
THE PRESIDENT (to Fox News): I think it’s important to understand that we’ve got a short-term challenge which, no matter how big our stimulus was, was going to be a challenge … partly because we’ve got fiscal constraints. … You just can’t push that out that quickly, partly, not just because the federal government has to process applications, but also because states and local governments have to gear up to get these projects going. … I don’t take anything off the table when unemployment is close to 10 percent and a lot of Americans are hurting out there.
NEC Director Dr. Larry Summers said Tuesday:
It is clear from the data that there needs to be more fiscal stimulus in the second half of the year than there was in the first half of the year. Fortunately, the stimulus program designed by the president and passed by Congress provides exactly that.
The Vice President’s economic advisor, Dr. Jared Bernstein, said:
It’s working, it’s demonstrably working. … There is no conceivable stimulus package on the face of this earth that would fully offset the deepest recession since the Great Depression.
White House Press Secretary Robert Gibbs said today in a press gaggle on Air Force One en route to Rome:
Q I know I might get crosswise with you on this, but is the White House considering a second stimulus?
MR. GIBBS: Well, I would say — I’ll repeat what I’ve said and I think the President and Vice President have said, and I think the President said this yesterday, he’s not ruling anything out, but at the same time he’s not ruling anything in. Obviously we passed a hefty recovery plan that implements over the course of about a two-year period of time, and we’re on track with that implementation.
The Gibbs statement was reinforced by an emailed statement from one of his deputies, Jen Psaki:
We remain focused on putting thousands of Americans back to work through the implementation of the recovery act and any discussion of a second stimulus is premature at this point.
These comments lead me to conclude that the Administration’s policy is unchanged: their answer on a second stimulus is “No for now,” while reserving the right to change their minds later as new data comes in.
This answer is, however, being lost on some of their friends and allies:
Dr. Laura Tyson, characterized as “an outside adviser to President Barack Obama” said:
The stimulus is performing close to expectations but not in timing. … The stimulus was a bit too small. (Source: Bloomberg)
We should be planning on a contingency basis for a second round of stimulus. (Source: NBC)
Here’s House Majority Leader Steny Hoyer:
We need to be open to whether or not we need additional action.
And here is Senate Majority Leader Harry Reid:
As far as I’m concerned, there’s no showing to me that another stimulus is needed. Things are … things, as Bernanke said, the crops have been planted, the shoots are now appearing above the ground. And that certainly is evident based on the fact that slightly over 10 percent of the dollars are out among the people.
It’s hard to reconcile a “stay the course” strategy with (a) new bad data, (b) “we misread the economy” and (c) “we had incomplete information.”
Last week’s jobs report provoked this chaos. For the first five months, the Administration’s macroeconomic message was simple and internally consistent: