Wednesday, September 08, 2010

8% unemployment was not promised - it was predicted

We can debate the virtues of the stimulus package as to how effective it was, however it's a bit intellectually dishonest to state that there was a promise that unemployment would be 8% if the stimulus package was passed. There was a prediction and it was one that was couched with the reality of the uncertainty of our current economy.

The Job Impact of the American Recovery and Reinvestment Plan is where the chart is that is creating the controversy. Yet if one were to actually read the 14 pages you'd have a different view -- one part:

It should be understood that all of the estimates presented in this memo are subject to significant margins of error. There is the obvious uncertainty that comes from modeling a hypothetical package rather than the final legislation passed by the Congress. But, there is the more fundamental uncertainty that comes with any estimate of the effects of a program. Our estimates of economic relationships and rules of thumb are derived from historical experience and so will not apply exactly in any given episode. Furthermore, the uncertainty is surely higher than normal now because the current recession is unusual both in its fundamental causes and its severity.

That's not a promise, it's predictions...

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