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2009 address to a joint session of Congress, plus the Republican Response: Feb. 24, 2009
Pres. Obama used this speech -- aired nationally in primetime -- to finalize his economic plan. That plan, plus the economic stimulus package passed and signed the week before this speech, will comprise the next two years of economic policy.
Obama's detractors complain that the economic stimulus package contains too much spending that is not specifically targeted to job creation. However, economists point out that government spending of ANY kind creates an economic stimulus. If some of the spending gets converted into infrastructure or other capital improvements, then it's a double bonus.
There is no doubt that Obama and the Congressional Democrats used the economic stimulus package as "social engineering" to advance the causes they support -- Obama was explicit about his focus on health, education, and energy. Obama even got in some social engineering in the programs he CUT -- such as Cold War weaponry cuts.
The Republican response, by Gov. Bobby Jindal (a frontrunner in the early betting on the 2012 presidential race), laid out the GOP case. That case is heavily echoed in Congress by the unanimous disapproval of the Democratic stimulus package (with only three Republican Senators concurring with the Democratic majority, and no House members). The GOP is betting the 2010 election on their case that the Democratic stimulus package will fail.
These charts encapsulate Obama's State of the Economy speech and the GOP response. (OnTheIssues.org made them, not Obama nor Jindal!)
Both sides say the economy will do terribly for the next year. Maybe a little less terribly over time, but still getting worse.
Obama's program might turn around the economy by Nov. 2010 -- where "turn around" means that there might be some indicators that things are starting to improve, but we'll still be a lot worse off than we are now. If Obama is right, the Dems will win big in the Congressional elections of 2010.
The GOP response rejected Obama's proposal entirely, preferring a laissez-faire approach -- hands-off, let the market correct itself. That's a big bet against the federal bailout, because the bailout is already $3 trillion and likely to go higher, says Obama. The GOP's bet is that, by Nov. 2010, the economy still will not have turned around, and the public will be tired of spending trillions for nothing. If that bet pays off, the 2010 elections will be overwhelmingly pro-GOP, regaining the Senate and maybe even regaining the House. If that bet fails (i.e., if the economy shows signs of having bottomed out) then the Demcorats will gain even more seats in the House and Senate in 2010.
You can be sure that by Nov. 2010, the exact shape of the end of the curve won't be known very exactly, and hence will be the source of most of the debate in that election. The Dems will point to indicators that we've turned around, finally, and things are looking up (from the bottom of a very deep hole, but at least looking up!). The GOP will point to indicators that we still have not bottomed out, and spending trillions didn't work and it's time for a new approach.
(Pundits like me look for the inflection point -- when how-much-more-terrible-each-month stops increasing. You can determine that point by looking at job cuts each month, for example -- when the previous month was WORSE than this month, we've passed the inflection point, and the bottom is in sight. Not the END of the recession, but the bottom. As of Feb. 2009, we have not reached the inflection point yet -- every month is still worse than the month before -- but I drew the charts as if the inflection point starts right now).
-- Jesse Gordon, [email protected], Feb. 26, 2009
Post-election FactCheck: The Democrats lost 6 seats in the Senate but retained majority control 53-47. The Democrats lost 63 seats in the House, increasing the Repulican majority to 242-193. In other words, the Democrats lost badly, but not the wrost possible (which would have meant losing the Senate).
Did our prediction about the bottom of the Great Recessions hold true?
To make our prediction accurately reflect the political outcome, the economic situation would have been that the recession had ended, but too recently to help Obama
(in terms of our charts above, the bottom of the recession occured just prior to Nov. 2010, to make our prediction accurate).
When was the actual bottom? The chart below shows the unemployment rate, which we consider the most important political indicator of recession.
This same unemployment chart drove our prediction of the 2012 presidential election: we predicted that if unemployment were above 8% prior to the Nov. 2012 election, Obama would lose badly, and if unemployment were below 7% prior to the Nov. 2012 election, Obama would win easily. In fact, unemployment was just below 8% but well above 7%, and Obama won (but not too easily).
Page last edited: Feb 09, 2014