HoodaThunk?

Rebuttal to the Obama economics idiot who says the higher unemployment rate is a sign of an improving economy

If you’ve made any rounds of the political blogosphere at all in the last 24 hours you’ve no doubt seen the reports about Dr. Austan Goolsbee, economic advisor to the Obama White House, and his appearance on the Sunday talk show circuit. To say that Dr. Goolsbee’s commentary represents some of the worst spin attempts to come out of this administration thus far is an understatement. To Dr. Goolsbee’s view the unemployment rate is a sign of an improving economy, the deficit is all Bush’s fault (shocker), and the auto industry cluster is, too. There’s been a couple of responses to that, here and here, but I wanted to point to the response of Keith Hennessey, former senior economic advisor to the Bush White House. Mr. Hennessey steps to “focus on some incorrect and inflammatory statements by Do. Goolsbee” in his Sunday appearance.

The post by Hennessey is simply too large and too important to exerpt properly so I urge you to go have a read. The summary is this:

1. The Obama team declined to respond to the Bush team’s offer to work together to create a joint process that would have resulted in a resolution by March 1st or April 1st, rather than by June 1st for Chrysler and maybe September 1st for GM.
2. We then worked with the Democratic majority to enact legislation that would have limited funds to be available only to firms that would become viable.
3. After Congress left town for the holidays without having addressed the issue, President Bush was faced with a choice between providing loans and allowing these firms to liquidate in early January, which would have further exacerbated the economic situation for the incoming President.  President Bush chose to provide the loans.
4. We provided GM and Chrysler with sufficient funds to get to March 31st, not January 20th, and in those loans we gave the incoming Administration the ability to extend them for 30 more days.
5. The loans were conditioned on restructuring to become viable, with a precise definition of viability, specific restructuring goals, and quantitative targets.
6. The Obama Administration followed the restructuring process laid out in the Bush-era loans.  They are now measuring that deal against the targets established in the Bush-era loans.  The only changes the Obama team made were that they extended GM for 60 days rather than 30, and the Obama Administration directly inserted themselves into the negotiations as the pre-packager.

Spin like Goolsbee’s is what’s gotten us further into this mess than we needed to be (recall the post I did on the unemployment numbers and how it’s worse that it was estimated it’d be had we done nothing) and it’s not helping us to listen to people who clearly think we’re all too stupid to notice. Read Hennessey’s report.

June 8th, 2009 Posted by ricjames | Economy, Politics, The Media | no comments