[Op/Ed] Is the Stimulus Accountable?

[Surlethe]

Greg Mankiw

When the Obama stimulus plan was proposed, the president's economic team put out a report in January 2009 that purported to show what would happen with and without the fiscal stimulus. The chart above is from page four that report, together with the actual results over the past couple months. As you can see, the actual outcome is significantly worse than the projection with the stimulus plan and is, in fact, on track with what was projected without the stimulus.

What does this mean? One interpretation is that the fiscal stimulus has failed to achieve what Team Obama thought it would. Another interpretation is that the baseline was worse than they believed at the time. I am confident the report authors would adopt the second interpretation. If so, that fact is consistent with what I said in a previous post: In light of the shifting baseline, it is impossible to hold the administration accountable for whether its policies are achieving their intended effects.

To be clear, this lack of accountability is not a feature on this particular administration but is, instead, a reflection of the inherent uncertainties associated with macroeconomics. The administration, however, has not been particularly forthright in admitting to this lack of accountability. Indeed, the act of releasing quarterly reports on how many jobs have been "created or saved" gives the illusion of accountability without the reality.

I tend to think that the administration's baseline economic projections are too optimistic and that the stimulus plan hasn't kicked into effect yet, but on the whole the case presented here regarding lack of accountability seems strong to me. Mind, this is about economic growth, not mitigating human suffering - but the administration's goal is to get growth back on track, not mitigate suffering, so I think it's a fair criticism.

[J]

I can think of around 9 trillion reasons on why the stimulus plan isn't accountable...

Then there's a video link which I've lost at the moment where officials admit to losing track of how much money remains in the TARP program. It was one of the Senate or House commissions on finance & banking where FRB and Treasury officials were grilled following the AIG bonus scandal, it was shown on C-Span but I can't find the link.

[Jalinth]

It was the Inspector General of the Fed who stated he didn't know where the money went. I'm extremely unimpressed with the stonewalling the US Government is doing with the ballout. They are using shell games to dodge FOIA requests by having the New York Federal Reserve technically run a major part of the bailout rather than either Treasury or the Fed itself.

[Beowulf]

Just wait. The next thing they'll use to dodge the FOIA requests is to classify everything, so that they can claim it endangers national security to release the information. They've already done it with ACTA.