12-11-2011 Obama's Revisionist History

Obama’s strange, revisionist history on ‘60 Minutes’

By James Pethokoukis

December 12, 2011, 10:06 am 

President Barack Obama, last night on “60 Minutes”:

I didn’t overpromise. And I didn’t underestimate how tough this was gonna be. I always believed that this was a long-term project; this wasn’t a short-term project.

Actually, Obama did overpromise—and underdeliver—on dealing with the U.S. economy. Back in August 2009, the Obama White House put out its updated economic forecast. Now, this was after the $800 billion stimulus had passed and, technically, after the Great Recession had ended. Here is where the White House thought the economy was headed over the next few years:



Talk about overpromising.

According to the 2009 Obama forecast, 2011 was supposed to start a five-year mini-boom where GDP growth averaged 4 percent, taking the unemployment rate down below 6 percent by 2014. But few outside economists are so rosy today. The latest Wall Street Journal survey of economists predicts the unemployment rate will still be above 7 percent through 2014 with GDP growth averaging a subpar 2.5 percent.
The White House explanation is that no one knew back in 2009 how bad the Great Recession really was. Indeed, instead of contracting by 2.8 percent in 2009, as indicated in the above chart, GDP actually contracted by 3.5 percent. Yet even after 2009, the White House continued to be strangely bullish. In 2010, it predicted “Recovery Summer,” expecting a big drop in unemployment. And in its most recent economic forecast, from last summer, the Obama White House was still predicting 3.7 percent average GDP growth from 2012-2016. No wonder Obama has been so blasé about the impact of raising taxes on wealthier Americans and small business. He thinks a powerful recovery can more or less shake off the tax hikes just like it did in the 1990s. Or at least such rosy forecasts help him make that argument for political reasons.
In the end, Obama overestimated the impact of his stimulus plan and underestimated the severity of the Great Recession. Indeed, his economic team was dismissive of the idea that the aftermath of the financial crisis posed any special problems for the recovery, despite much research to the contrary. This allowed Team Obama to shift gears to healthcare and financial reform and ignore key longer-run measures to boost economic growth such as pro-growth tax reform. Maybe Obama is finally realizing it now and will push such policies if he wins a second term