Sue Owen over PolitiFact has a deeply ignorant post up about a statement Congressman Doggett made regarding the stimulative effects of extending unemployment benefits. She rated the statement ‘mostly false’. We rate her rating ‘altogether stupid and ignorant of macroeconomic theory’.
She presents several arguments:
1) That Rep. Doggett got the number wrong, claiming that $1 in unemployment benefits increases GDP by $1.61. Actually, this one kind of hard to judge true or false since it varies given the economic environment (it has less of and impact when the economy is doing well). A reasonable person would have given him a pass on this, but PF is far from reasonable. It’s also worth mentioning that the multiplier Doggett is citing came from Mark Zandi at Moody’s Analytics, a third party unaffiliated with the government (Zandi has been an economic adviser to Republicans, including Sen. John McCain).
2) There are some people who disagree that it has any economic benefit (never mentioning that they’ve been largely discredited). They even cited the work of Robert Barro (in an op/ed from the Murdoch Machine that is the Wall St. Journal)…
Harvard economist Robert Barro is prominent among them, writing Aug. 24, 2011 in the Wall Street Journal that “this idea — that one can magically get back more than one puts in — conflicts with what I will call ‘regular economics.’”
As with many things, Barro goes on to contradict himself and offer, essentially, no evidence of his position which is par for the course with him and others on the PF ‘against’ side of things. His entire argument is, essentially, that government spending is bad and doesn’t increase GDP which makes him probably the only economist I know of who wouldn’t count defense spending as part of GDP. None of the conservative economists can offer a cohesive, real world argument for why GDP doesn’t increase. They just disagree and that is, apparently, enough for PF… some of them even think that the unemployed, while receiving income at essentially a subsistence level, will not spend that money. Which is empirically false and all you need to verify that is a trip to Wal Mart within a few days of food aid and unemployment insurance money being sent out. Seriously, go see it for yourself. That piece alone pretty much eliminates the arguments of those saying it doesn’t increase GDP. Why? Because, if people spend it effects GDP. Simple, right?
PolitiFact doesn’t mention that which should surprise no one. They simply focus on the fact that ‘these people disagree which throws cold water on the whole thing regardless of whether or not they’re actually right’. These are the same folks who would disagree with Doggett if he said the sun rose in the east. PolitiFact would rate his comment ‘mostly false’ because ‘some disagree with Doggett’.
It’s worth noting that the arguments ‘against’ stimulus spending of any kind are often misleading to people without any real analytic skill (like Sue). For example, Barro is fond of comparing the current economic environment to that of World War 2. Brad DeLong eviscerated that argument long ago (as did Paul Krugman who, you might remember, won a Nobel Prize for this economics stuff). Barro is also one of the people who were predicting inflation would be out of control right about now. Which, of course, it isn’t. So much for the quality of Harvard’s economists.
3) The CBO doesn’t really know where the number lies. They are looking at a number anywhere from $0.70 – $1.90 in GDP increase per $1.00 in spending. So, Doggett’s on the high side.
This is, in and of itself, VERY stupid since it’s repetitive. That CBO estimate is based on a range of economists. The low side ($0.70) people are the conservatives (from #2) who think the sun rises in the west and steadfastly deny any data that doesn’t match their ideological preconceptions. The entire basis of their argument, again, is that the poor don’t spend almost every dime they bring in.
Finally, it’s clear PF has an axe to grind with Doggett and with stimulus and they reveal themselves to be partisan warriors, not journalists. Doggett’s original statement was
“Fact: One economist estimates that for every $1 we spent on unemployment insurance benefits, we get $1.61 in economic activity back.”
This is true. Mark Zandi said that in July, 2010. THAT was Doggett’s statement and it’s 100% true. Why PF felt the need to publish the equivalent of economic diarrhea and then call Doggett a liar is the real mystery. They did, graciously, admit at the end that Doggett was right. And then still called his statement ‘mostly false’ because the data it was based on hadn’t been updated. Not that it would have mattered since PF doesn’t believe that anything is stimulative because, well, some economists who are ideologically driven disagree.
I don’t often read PolitiFact Texas mostly because they seem unable to actually determine what is and is not a fact. They prefer instead to focus on the he said / she said pablum that passes for journalism these days. This was, however, worse than that. It was horrifically ignorant and they owe Congressman Doggett and their readers an apology.