CBO Report Was Pre-Ordained to Show the Stimulus Succeeded...

[Perchoutofwater]

Do you mind explaining how this question is relevant to your earlier (incorrect) statements that the government workforce has expanded.

 

Yes, private sector employment has decreased by more than public sector employment, so the ratio of public to private jobs has increased. But this has nothing to do with your earlier claim that government employment increased.

 

I'd also speculate, though I haven't looked it up, that private sector employment is typically more counter-cyclical than public sector employment--both in downturns and in expansions. Hence, having this ratio change the way that it did is not the least bit surprising.

 

(Edit to add: Why can't you just admit that you were wrong rather than trying to change your argument?)

 

I may have been wrong about them expanding, but the point is still valid about the percentage of government to private jobs rising, as is the point that they are either temporary or going to be an additional long term tax burden.

[Perchoutofwater]

Because that would result in civil and intelligent discourse.

 

You know a lot about that don't youl

[tonorator]

wouldn't it be correct to say that the stimulus did indeed expand the number of government jobs and many are not long term and all of the spending to create them just puts us with a bigger mess to deal with later? yes, the overall number of government jobs has decreased, but it would have decreased more without the stimulus. with it, we've just created a bigger mess that still needs to be cleaned up ...

 

wouldn't a stimulus bill that focused on expanding and growing the private sector be a better approach for the long term?

[bushwacked]

wouldn't a stimulus bill that focused on expanding and growing the private sector be a better approach for the long term?

 

probably, but one focus of the stimulus was to stop things from going into the crapper ASAP and create jobs in a relatively short time period.

[Perchoutofwater]

probably, but one focus of the stimulus was to stop things from going into the crapper ASAP and create jobs in a relatively short time period.

 

I thought it was to cap unemployment at 8%. That is what Obama said.

[bushwacked]

I thought it was to cap unemployment at 8%. That is what Obama said.

 

Do you ever get tired of repeating the same talking points that are more BS than truth?

[driveby]

Do you ever get tired of repeating the same talking points that are more BS than truth?

 

Here's the weasel language disclaimer.

 

What we saw from the administration in January was a projection, not a promise. And it was a projection that came with heavy disclaimers.

[Azazello1313]

I suppose it would be useless to mention that perhaps the reason that the CBO's report was pre-ordained to show that the stimulus would work, is because the stimulus would indeed work.

 

well standing by those models is a fine position to take, as long as you don't go around presenting them as evidence the stimulus is working. because that's not what the CBO report in question represents. it's just a reiteration of the same model they used before the stimulus was passed.

 

As to the argument that the CBO's model failed by not predicting how bad the economy was going to get in the wake of the financial crisis, I think that is a valid criticism. But I think I know why it happened. Most macro models (of all types) ignore the financial sector and just assume that it is going to work well (i.e. they assume that the financial system is not going to fall apart). Hence, these models missed how severe the downturn in the economy would be.

 

meh, that seems a little unconvincing, because the weakness of the financial sector was pretty exposed WELL before the stimulus was passed in march 2009. I mean, there was still some underlying weakness in that sector, but at that point the weakness was laid bare for all to see, it certainly shouldn't have been catching anyone by surprise in march of 2009 and beyond, when the worst of the financial sector vapor lock was probably already past (credit given to TARP, I suppose).

 

lastly, wiegie, what would your response be to this:

 

The conditions under which statistical techniques are scientifically valid are not satisfied with macroeconomic data. There is no reason to take model results as reflecting anything other than the opinion of the modeler.

 

What if the models performed well in out-of-sample forecasts? If that were the case, then I would have to concede that there might be some scientific validity to the models. However, that has never been the case. When I was a model jockey, the models were forever being tweaked with what were called "add factors" or "constant adjustments" in order to keep them on track with the most recent data. Formal studies of out-of-sample forecasts, by Stephen McNees of the Boston Fed and others, showed dismal performance. Even today, the models that are telling us how many jobs the stimulus saved are the same models that predicted that unemployment today would be close to 7 percent with the stimulus, when in reality it is 9.7 percent. So out-of-sample performance fails to boost one's confidence in the scientific status of these models.

 

Macroeconometric models satisfy a deep need to create the illusion that government can exercise precise control over output and employment. As long as people are determined to believe that such control is possible, the models will have a constituency. For better or worse.

[Perchoutofwater]

Do you ever get tired of repeating the same talking points that are more BS than truth?

 

Do you need to take as shower after handling something that greasy?

[bushwacked]

(Edit to add: Why can't you just admit that you were wrong rather than trying to change your argument?)

 

And twice in one hour.

[bushwacked]

 

Here's the weasel language disclaimer.

 

And it was based on what was regarded as sound economic info at the time; info that underestimated exactly how how bad the economy was. It's the long and short of it, no matter how you guys attempt to spin it.

[Azazello1313]

according to the BLS, both private employment AND government employment decreased over the last year

 

if government employment decreased, I'm sure it's a result of state and local budget crunches. the federal workforce has increased. but I agree with you, that's not really a very relevant statistic, government jobs are countercyclical by their very nature.

[bpwallace49]

 

Here's the weasel language disclaimer.

 

Or maybe it was never a "promise" but the Republicans need to spin SOMETHING right now? Seriously, there is enought legitimate complains about the current party in power without making up blatent falsehoods . . .

[bushwacked]

well standing by those models is a fine position to take, as long as you don't go around presenting them as evidence the stimulus is working. because that's not what the CBO report in question represents.

 

Everyone knows that, or at least everyone should. But the CBO model is the best info we have at this point for evaluating the complete effect for the last quarter of 2009.

 

Again, you've trumpeted CBO projections multiple times. If the recent report painted the stimulus in a negative light, you would have been the first one to post the numbers and the last one to attempt to diminish the accuracy of the projections.

Edited February 26, 2010 by bushwacked

[Azazello1313]

And it was based on what was regarded as sound economic info at the time; info that underestimated exactly how how bad the economy was.

 

it either underestimated how bad the economy was, or perhaps overestimated how effective the stimulus would be. most likely, some of both.

[wiegie]

meh, that seems a little unconvincing, because the weakness of the financial sector was pretty exposed WELL before the stimulus was passed in march 2009. I mean, there was still some underlying weakness in that sector, but at that point the weakness was laid bare for all to see, it certainly shouldn't have been catching anyone by surprise in march of 2009 and beyond, when the worst of the financial sector vapor lock was probably already past (credit given to TARP, I suppose).

Just because the financial system weaknesses had been exposed does not mean the models had been adjusted to suddenly incorporate the financial sector.

 

lastly, wiegie, what would your response be to this:

Macroeconometric models satisfy a deep need to create the illusion that government can exercise precise control over output and employment.

 

my response twofold: (1) NOBODY suggests that the government can exercise precise control over the economy--that is a strawman statement and (2) more importantly, private sector forecasts are also showing that the stimulus had an effect--and these models are not created to satisfy anything other than the purchasers of these forecasts who are paying for the best possible economic forecasts, not illusions. If all these models are intended to do is create illusions, then the forecasting companies are going to go out of business very very soon.

[driveby]

Or maybe it was never a "promise" but the Republicans need to spin SOMETHING right now? Seriously, there is enought legitimate complains about the current party in power without making up blatent falsehoods . . .

the 8% was the explicit threat used to sell the need for the stimulus; "pass this or it's going to get really bad".......well they passed it and it got really bad anyways.

 

So you can "depends on the meaning of is" all you want, but the intent of the "promise" is clear.

[bushwacked]

it either underestimated how bad the economy was, or perhaps overestimated how effective the stimulus would be. most likely, some of both.

 

I can buy that, the point being is none of it was intentionally misleading or fully evaluates the effectiveness of the ARRA like Perch, Driveby and the rest of the ditto-heads are trying to insinuate.

Edited February 26, 2010 by bushwacked

[Azazello1313]

Everyone knows that, or at least everyone should.

 

they should, but they don't. because every time the CBO re-runs their same pre-stimulus calculations, the stimulus apologists run around trumpeting it, saying "see, the stimulus is working exactly as planned!"

 

edit to add: see, wiegie still does it every time. he says, "private sector forecasts are also showing that the stimulus had an effect". the "forecast" part is correct, the "showing it had an effect" part is not. repeating a forecast does not show that anything is having an effect. it just shows that the forecaster hasn't yet come up with a reason to change his forecast.

Edited February 26, 2010 by Azazello1313

[wiegie]

it either underestimated how bad the economy was, or perhaps overestimated how effective the stimulus would be. most likely, some of both.

I've given the basic reason why these models would have underestimated how bad the economy was a year ago, but you have given no explanation for why the models might be overestimating the effect of the stimulus now.

[wiegie]

they should, but they don't. because every time the CBO re-runs their same pre-stimulus calculations, the stimulus apologists run around trumpeting it, saying "see, the stimulus is working exactly as planned!"

Again, it's not just the CBO, it is the other private forecasting firms who are also saying that the stimulus worked. You are then faced with two possibilities: 1) the stimulus is working or (2) very sophisticated private firms are paying for a bad forecasting product. You seem to be suggesting the latter.

[Azazello1313]

I've given the basic reason why these models would have underestimated how bad the economy was a year ago, but you have given no explanation for why the models might be overestimating the effect of the stimulus now.

 

the basic reason why it would overstate the effect of the stimulus is pretty obvious....the multipliers employed in their macro models are whack, and the negative effects (crowding out, long-term deficit fears, etc.) are underrepresented. I've posted plenty on this from some of the best economic minds out there. see here and here, to start.

[wiegie]

the basic reason why it would overstate the effect of the stimulus is pretty obvious....the multipliers employed in their macro models are whack, and the negative effects (crowding out, long-term deficit fears, etc.) are underrepresented. I've posted plenty on this from some of the best economic minds out there. see here and here, to start.

I have to go to a museum with my kids right now, but I will leave it as an exercise for the interested reader to do a search on those pieces to find criticisms of them. (The Fama piece in particular is just plain bad economics.)

[Azazello1313]

Again, it's not just the CBO, it is the other private forecasting firms who are also saying that the stimulus worked. You are then faced with two possibilities: 1) the stimulus is working or (2) very sophisticated private firms are paying for a bad forecasting product. You seem to be suggesting the latter.

 

I would prefer to frame the alternative as: 1) the forecasting models were correct, or 2) the models were incorrect.

 

so how could you test this? well, as best I can tell, the only truly falsifiable prediction in those models was what would happen to the unemployment rate. and, well.....whoops.

 

your reply seems to be, well the models left out some important variables. but everything else, all the stuff we can't actually test, well all of that was right on the money!

 

I mean look, I don't think the CBO projections were biased, nor do I think the private forecasts based on essentially similar models were somehow contrived to paint a favorable picture. the forecasts just don't appear to have been very accurate. and there have been plenty of well-regarded people both before and after saying as much.

 

you're leaning a lot on the forecasts of these private firms coinciding with the CBO models. which is a fine argument to make and everything, it bolsters the credibility of the forecasts I suppose if lots of people were saying the same thing. but it makes me wonder, how much stock are investors putting in those models now? are there competing models? those are more interesting questions to me than just pointing out that the models are still out there.

Edited February 26, 2010 by Azazello1313