But he surrounded himself with clever people like him but with little business experience. And they were too sure of themselves to take heed of the warnings that we were in a bigger hole than they appreciated. This administration made the mistake of thinking that their crisis would not be as bad as the previous one; hence, the inadequacy of the famous stimulus, a point made by any number of commentators, economists, and historians. This is an administration that did not imagine that the economy would still need major help well beyond 2009. A Financial Times headline in June 2009, for example, decreed the White House "upbeat on economy." According to the New York Times, nine months later the administration said the economy was on the verge of "escape velocity."
But now the Obama team excuses its failure to grasp the severity of the slump by saying that even if they had seen the slow recovery coming, they couldn't have done much about it. When Obama has been asked about his mistakes, he talks not about his policies but about his messaging. But clearly the biggest mistake was his failure to recognize that we are up against an economic decline that requires nothing less than night and day concentration. The president was more cautious than one or two of his advisers wanted. He then left the essence of the $830 billion stimulus to the Democrats in Congress and barely 5 percent of the money was assigned to infrastructure, even as Americans hoped to see drills and bulldozers rebuilding the roads, bridges, and dams. Vice President Joe Biden said the stimulus was working beyond his "wildest dreams" and later vowed that Americans would have "a summer of recovery."
There were just too many false hopes. We were told that the stimulus would keep the unemployment rate under 7 percent and we should be seeing 5.6 percent by now. But we've never gone below 7.8 percent. And we have 7 million fewer full-time workers today than when Obama took office. He promised to create "five million new jobs in solar wind and geothermal energy." The job estimate was off by at least a factor of 10, and today many solar and wind industry firms are fighting bankruptcy. He pledged that he would cut the deficit in half. But the current deficit, estimated to be well above a trillion dollars, is double the 2008 figure.
What took the president's concentration was his own ambition to put the Affordable Care Act on the statute book, achieving what the Clintons had failed to achieve. He said his healthcare reform plan would "cut the cost of a typical family's premium by up to $2,500 a year." But premiums for employer-sponsored family coverage have increased by more than $2,300 in the last three years, according to the Kaiser Family Foundation.
Every president in modern times who has inherited a recession from his predecessor boasts a better track record. In fact, of the past 10 recessions, this has been the weakest recovery ever. And in the second quarter, GDP growth was down to 1.3 percent. And a slew of major hard data since the beginning of September have had to be revised sharply lower. Non-farm payrolls, retail sales, industrial production, and housing starts all received downward bumps, setting a stage for an even more sluggish performance in the third quarter. Durable goods orders in August served up another huge downward slide.
Indeed, the 1.3 reading on the second quarter GDP marks the weakest growth in the 12th quarter after a recession. By this time, at the same stage of a recovery, real GDP is expanding on average at 4.7 percent. That is after four years of $1 trillion plus fiscal deficits. Orders plunged to 13.2 percent sequentially during August, far exceeding the market expectations for a 5 percent decline.