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Joe Biden’s Economic Titanic

Posted on August 26 2010 4:00 pm
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Poor Joe Biden. While President Obama is vacationing amongst the elite on Martha’s Vineyard, the Vice President is still out there singing ‘recovery summertime’ for an economy that is in fact headed for disaster.

Here is Biden’s latest songbook for how he fantasizes the current state of our economy to be:

We’re turning this great ship of state around that was wandering out to sea and it’s headed back to port…There isn’t any doubt that we’re moving in the right direction

How exactly does Biden define “the right direction?” Toward the iceberg that brought down the “unsinkable” Titanic?

Let’s look at some real current data  measuring the state of our economy.

  • Unemployment – The official unemployment rate is stuck at 9.6 percent, not the 8 percent maximum that the Obama administration promised us last year if its stimulus package were passed .
  • Housing – Sales of new homes fell 12.4 percent in July from the previous month to a seasonally adjusted rate of 276,000 units, way below expectations and the lowest level in July since at least 1963. Sales of existing homes in July fell to the lowest level in more than a decade.
  • Durable goods orders –  The U.S. Commerce Department said July durable goods orders rose only 0.3 percent, significantly below the 3 percent increase predicted by analysts. Orders actually dropped 3.8 percent when the volatile transportation sector is not included. Orders for machinery dropped 15 percent. Orders for capital goods dropped 8 percent.

Watch the Obama administration pull at straws, such as its made-up “saved jobs” and “lives touched” figures. I expect it to claim that this week’s report of a drop in new claims for jobless aid by 31,000 to a seasonally adjusted 473,000 is solid proof that recovery is taking hold, ignoring the last three weeks where new claims soared to the highest levels in nine months.

Democrats are also trumpeting the most recent Congressional Budget Office report saying that the stimulus package created or saved up to 3.3 million jobs. The problem, aside from including “saved jobs” which cannot be reliabily attributed to the stimulus, is that the CBO is using a garbage-in, garbage-out computer model.  As Douglas Holtz-Eakin, former CBO director, told Fox News:

This is repackaging previous analysis at the request of Democrats in Congress. This is based on a computer model, and with computer models you get out what you put in, and the kinds of models that the CBO uses is one where the stimulus can’t fail to work

In fact, the CBO admitted in its report that its numbers are based on

evidence from similar policies enacted in the past and on the results of various economic models

In the real world, businesses are not hiring because they do not have confidence that they will be doing business in a stable, investment-friendly environment. People are not spending as much as they would like because they are afraid of losing their jobs, if they haven’t already, and they are seeing the value of their assets go down.

In short, most Americans are not basking in the “summer of recovery.” And the economic indicators that would spell real recovery are going down, not up.  The next thing that the Obama administration will try to claim is that rising deficits and the ballooning federal debt are sure signs that good times are immediately ahead.

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