April 12, 2015
I hate to get picky on the numbers, but the unemployment rate was 7.8 percent in January of 2009 when President Obama took office. The Labor Department reported that it was 5.5 percent in March. Since 5.5 percent is more than two-thirds of 7.8 percent, the NYT was seriously exaggerating in its article on Hilary Clinton’s announcement of her candidacy when it gave President Obama credit for:
“getting the country out of the worst financial crisis since the Great Depression and cutting the unemployment rate nearly in half.”
Of course the unemployment did continue rising through President Obama’s first year in office, eventually peaking at 10.0 percent in October of 2009. President Obama certainly cannot be blamed for this increase since the direction of the economy was already set at the time he entered the White House. But by the same token, he cannot be given full credit for the subsequent reduction in unemployment, since much of this would have happened regardless of what policies were pursued.
So if we take the statement literally about cutting unemployment nearly in half, it’s wrong. If we try to honestly award credit, based on what President Obama’s policies accomplished, it is also wrong.
Furthermore, it is worth noting that the real problem was the collapse of the housing bubble that was driving the economy, not a financial crisis. There was and is no easy source of demand to fill the gap created by the collapse of the bubble. The underlying gap in demand is in turn attributable to the $500 billion trade deficit (@ 3.0 percent of GDP), which is in turn due to the over-valued dollar. The over-valued dollar has its origins in the high dollar policy and the bailout from the East Asian financial crisis that was engineered by Treasury Secretary Robert Rubin during the Bill Clinton administration.
The piece also errs when it tells readers:
“And she [Secretary Clinton] intends to address stagnant wages and income inequality in new ways; one potential proposal would offer incentives to corporations that allow employees to share in profits.”
The NYT does not know that Clinton really sees incentives for profit sharing as a way to address wage stagnation and inequality. There are much more obvious and direct ways, like a full employment policy by the Fed and a financial transactions tax which would hit many of the top incomes on Wall Street. The NYT just knows that Clinton says she intends to address stagnant wages and income inequality with incentives for profit sharing. It should stick to reporting what it knows, and refrain from presenting its speculation as truth.
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