I bet many journalists didn’t think math was part of their job description. But math and economics have a lot to do with this presidential election, which says that in between the ya’ll’s and the accusations of murder, some hefty issues are being debated. Actually, Mitt Romney and Rep. Paul Ryan (R-Wis.) are debating them, and the press and outside groups are trying to respond. From the president, we haven’t heard much engagement on the facts. Maybe math isn’t his thing.
There has been much criticism that Ryan’s budget does “work” or that you need tax hikes to close the deficit (you don’t, but liberals would like to). We’re told (incorrectly) that Romney’s tax plan doesn’t add up. But what about President Obama’s?
Glenn Hubbard, a Romney economic adviser, and American Enterprise Institute’s Kevin Hassett are the latest economic gurus to remind us that Obama has continually overpromised on the recovery. “The budget that Obama proposed shortly after taking office included projections of growth in gross domestic product climbing to 4.6 percent this year. Even after these early estimates proved incorrect, the administration continued to forecast high growth, always predicting rapid recovery around the corner. Even today, Obama is implicitly declaring that we are doomed to a slow recovery for five more years — the administration’s estimates call for GDP growth climbing to 4.1 percent in 2015.” Those lower growth rates call into question his insistence on letting the Bush tax cuts expire and suggest that the deficit (due to lagging revenue) is going to be worse than expected. In short, his own team keeps assessing the situation incorrectly, and Obama sticks with his tax hike proposals.
Just how badly are we doing? The Council on Foreign Relations (which has decided that most domestic topics are “foreign relations” in some sense) is out with a new report (h/t Jim Pethokoukis). Some interesting items are enumerated:
Real GDP is growing, but less rapidly than in any other postwar recovery.
Thirty-six months after the start of the economic recovery, GDP is only 6.7 percent higher than it was when the recovery officially began.
As of the second quarter of this year, real GDP is 1.7 percent above its pre-crisis peak, having first surpassed this peak in the fourth quarter of 2011. . . .
The relative weakness of this recovery is obvious in the labor market.
Job losses continued throughout the first eight months of the recovery.
Payrolls have increased for the past twenty-two consecutive months, but there are still five million fewer Americans on nonfarm payrolls than there were at the start of 2008.
Because of the depth of the recent recession, one might expect stronger-than-average improvement in industrial production.
Despite the predicted snapback, the increase in industrial production during this recovery has been fairly typical of postwar recoveries. . . .
The federal deficit was much larger at the start of this recovery than it was in any other postwar recovery.
Although the deficit as a percent of GDP has shrunk slightly, its level creates significant challenges for policymakers and the economy.
To sum up, Obama has some very big math problems. He promised a robust economy; we’ve gotten the weakest one. He is insisting, without recognizing the continued economic troubles, that we follow the same policies that haven’t worked for more than three years years to jump-start growth and job creation. To the extent that Obama can claim that he “stabilized” the economy, this was the continuation of the George W. Bush bailout plans and extreme measures taken by the Federal Reserve. But stopping the bleeding doesn’t mean the patient has rebounded. In fact, we seem to be relapsing into recession.
So it’s time, I think, if Obama ever gets hard questions (maybe People magazine could slip one in), to start answering some basics: 1) Why are his growth and job estimates so far off, so consistently? 2) If we grow at 1 to 2 percent, as most economists think, what happens to the deficit and what impact will his tax hikes have on the “recovery”? 3) Why didn’t the $1.2 trillion (interest included) stimulus deliver the uptick he promised? Why would another, smaller variation of that work?
Romney has his whiteboard to explain Medicare. Ryan has his charts and PowerPoint slides. They really can explain their plans and do the math. In this reality-based company, the president (who thinks ATMs cause unemployment) is out of his element. Hence, the resort to increasingly nasty language. If he had good answers for these questions, he might not be descending into the political sewer. Unfortunately for him, there isn’t a chart that can explain how higher taxes are going to make our economic outlook rosier. The math just doesn’t work.