First of all, it's easy to criticize Joe Biden. His mouth is always running so fast, and he says so many dumb things, that it's easy to forget that the dumb things that he says fall into very different categories, as in things he says that are dumb because they're wrong (Such as? Well, here's one from just today: Telling Israel that we'll look the other way if they bomb. bomb, bomb Iran.) and things he says that are dumb because they're right but they're phrased so clumsily. The other thing that Biden said today seems to fall into that second category:
Big admission from Vice President Joe Biden today.
"The truth is, we and everyone else misread the economy," Biden told me during our exclusive "This Week" interview in Iraq.
Biden acknowledged administration officials were too optimistic earlier this year when they predicted the unemployment rate would peak at 8 percent as part of their effort to sell the stimulus package. The national unemployment rate has ballooned to 9.5 percent in June -- the worst in 26 years.
A look of conservatives eager to see any kind of stumble from Team Obama pounced on Biden's remark. But why? Because clearly what Biden is say is that we didn't listen to the liberals. That means the people like Paul Krugman and Nouriel Roubini who were telling the incoming administration that its stimulus and bank bailout -- the thing that thousands of conservatives were out there protesting this weekend -- were not nearly big enough, that even more dollars should be spent and banks should be nationalized.
What's the rationale for that?
We now have fewer jobs than in May 2000 when the recovery began, though the economy now has 12.5 million more workers. And there is less than one job opening for every five people seeking jobs. Hidden unemployment is also setting records - people with part time work who want full time work, as well as people whose hours have been involuntarily cut.
Until strong economic growth returns, companies will not resume hiring. And as long as layoffs continue, that means fewer customers and the downward spiral continues.
As EPI observes, President Obama's economic stimulus simply wasn't designed for a recession this deep. And I would add that stimulus funds are getting out too slowly.
Kuttner argues that the feds should be doing more to bail out burned-out state governments, tackle mortgage foreclosure more aggressively, and get serious about the zombie banks that are still in business but aren't making lonas. He's probably right in the broader sense, but politically I don't think the stomach for that approach is there, and I also think we have to acknowledge that Bush's remarkably foolish policies -- cutting taxes for the rich even as he wasted hundreds of billions on his unjustified war in Iraq -- have limited the ability of Obama to use traditional tools to try break the recession. Interestingly, George H.W. Bush had a similar dilemma because of the unprecedented debts racked up by Ronald Reagan, and that situation -- which caused him to break his "no new taxes" pledge -- cost him his presidency.
Will Obama meet the same fate? Maybe, but not necessarily. Unemployment rose steadily for another 14 months after Reagan's landmark 1981 tax cut that he claimed would fix everything, but when the economy finally whipsawed back (for reasons, as I argue in "Tear Down This Myth," largely unconnected to the tax cut) it was just in time for the 1984 campaign, fueling his overwhelming re-election. I do think the stimulus plan will help but it takes time; ironically, if the program had moved faster, then the people now screaming about the stimulus not working would instead be screaming about corruption and poorly chosen projects.
Meanwhile, it's small consulation but it's funny watching conservatives chide the Obama administration -- for apparently not being liberal enough.