Grasping Reality on TypePad, by Brad DeLong

Hoisted from the Archives: Note that if 600 billion in fiscal stimulus would have reduced the expected unemployment rate as of the end of 2010 from 9.5% to 8%, 900 billion would still have left the economy with an expected end-of-2010 unemployment rate of 7.25%. And, of course, the memo ought to have highlighted that things had a 50% chance of being worse than expected—even considerably worse, which they were: the end of 2010 unemployment rate was 9.3%. To seek as your economic policy goal a set of policies that would might well have—and did—leave the unemployment rate two years hence above 9% seemed like malpractice on the part of the Obama-Emmanuel-Biden team then. It still seems like it was malpractice now: Obama National Economic Council Presumptive (December 2008): EXECUTIVE SUMMARY OF ECONOMIC POLICY WORK https://delong.typepad.com/20091215-obama-economic-policy-memo.pdf: 'In the absence of fiscal stimulus the economy is projected to lose 3 to 4 million jobs in 2009. Together with the jobs we have already lost and population growth, we will be 7 million jobs short of full employment. The unemployment rate is projected to rise above 9 percent and not projected to start falling until 2011. We believe that $600 billion in stimulus over two years would create 2.5 million jobs relative to what would happen in the absence of stimulus. However, this falls well short of filling the job shortfall and would leave the unemployment rate at 8 percent two years from now. This has convinced the economic team that a considerably larger package is justified.... The memo outlines four alternative plan ranging from $550 billion to $890 billion...