Campaign Promises

Unequivocal campaign promises are useful in an election campaign, but usually nuisances once elected. In 1988 President George H. B. Bush clearly announced, “Read my lips. No new taxes.” After being pressured by a Democratic Congress while trying to garner support for the first Gulf War, Bush acquiesced on taxes. Never mind that Democrats wanted to increase taxes, they were able to effectively bludgeon Bush with his inability to keep a clear promise. It is rhetorically difficult to go back on a campaign promise.

President Barack Obama was not particularly consistent, but seems to have promised to “save or create” 3.5 million new jobs by 2011. Let’s engage in a little sentence parsing. We can assume that he is speaking about jobs created by the entire economy whole not just by the government, so he can claim jobs created in the private sector towards fulfilling the promise. Let us further assume that he is promising 3.5 million “net” jobs saved or created. If 3.5 million jobs are create, but 4 million lost, it would hardly be a boast that  Obama would be proud of.

Unfortunately, the economy has been hemorrhaging net jobs, and its is getting less and less probable that 3.5 million net jobs will be created by 2011. However, he apparently hopes to use creative accounting to at least claim some job creation. Unfortunately, the web site where these jobs are documented as proved to be an inflated embarrassment. Sometimes, cost of living increases are counted as jobs created and in some other instances jobs were created in non-existent Congressional districts. Moreover, created jobs are counted but there is no opposite side of the ledger where jobs lost to government policies are counted.

At the beginning of the year, the Obama Administration promised that if the stimulus package were quickly passed, the unemployment rate would never rise above 8%. At last count, it was 10.2% and still on the increase. Given the ability to calculate and predict economic statistics, people are entitled to be very skeptical of the administrations computation of  650,000 jobs saved.

The figure below shows the total employment since last year in blue. Employment is clearly dropping systematically. The red line is what the administration claims the job level would have been without the stimulus package. The stimulus seem rather ineffectual in the face of falling employment thus far, even if taken at face value. At best, if you believe the Administration’s numbers and if you believe that, without evidence, that the 650,000 represents net jobs not one half of the ledger, the stimulus is only a 0.4% effect on total employment. This seems like a modest benefit for which we raised the deficit to GDP ratio to the highest it has been since the World War II era.

It is understandable that Obama wishes not to be saddled with an unkept campaign promise. But it is preferable and perhaps even better political strategy to not be ridiculed for ludicrous claims or dishonesty than to face problems square on. The electorate can deal more effectively with honest efforts that have failed than dishonesty and denial.

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