Washington Prowler

Obama’s Funny Numbers

Economic growth that invariably turns out stunted.

By 6.28.10

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Last week, as Congress failed to pass a bill that would have extended unemployment benefits, the Obama White House put out talking points for Democrats on Capitol Hill going home to their districts, as well as to the talking head class, pushing the message that Republicans were "sabotaging" the U.S. economic recovery for political gain.

By Sunday those points were being pushed on the blogosphere and elsewhere, but some Republicans on Capitol Hill are wondering whether the Obama Administration isn't cooking the books itself, pushing out overly optimistic economic data that allows the President and his minions to claim economic successes, knowing that their economic data will almost certainly not hold up under full analysis. They note that over the past year, quarterly GDP reports -- heavily pushed by the White House press office -- have had to be revised downward at least once, sometimes twice per quarter.

"The first report comes with the administration trumpeting growth and that stimulus is working and all that," says a Senate leadership aide. "And then a month later, it's quietly put out that the economic growth numbers had to be revised down. The media reports on the first report, but rarely gives the revised numbers the same level of attention."

Back in April, the Commerce Department reported that the first quarter 2010 gross domestic product, which measures consumer spending, grew at what was termed a "sustainable" rate of 3.2%, and the Obama Administration insisted that this growth indicated that the economy was on an upswing, albeit a fragile one. By last week, the GDP number had been revised down not once, but two times. The final GDP growth number: 2.7 percent.

Similar revisions have taken place over the course of the Obama Administration. Perhaps the most dramatic were the third quarter 2009 numbers, which indicated that the economy grew at a 3.5 percent rate. That number was first revised down to 2.8 percent and finally to 2.2 percent. The last number was crucial, because, as analysts noted, there was little positive growth in the U.S. economy other than that created by the federal "cash for clunkers" program.

"It seems that every time the Administration steps out with numbers that show their plan is working, we find out later that the numbers are off, sometimes badly off," says a Republican House Ways and Means staffer. "You saw it just the past couple of weeks with the unemployment numbers. You had Biden out there claiming we were all going to be happy with the numbers, and then bang, all of the job growth numbers were Census jobs. The numbers are always revised, we just wish the media took the initial reports with a grain of salt and didn't push the Obama message so hard."

A White House staffer thinks, however, that the "cooked books" angle is overblown: "It just happens that we aren't coming close to hitting the advance mark by the time the final is released. Some quarters are worse than others. The final fourth quarter number (5.3 percent) came in very close to the estimate (5.6 percent), no one is pointing a finger there."

It isn't entirely the Obama Administration's fault that its economic numbers keep getting downgraded. The Commerce Department releases GDP reports for each quarter in three stages: an "advance" estimate, followed by a "preliminary" and a "final." Generally the reports are released over a six-week to two-month period. As a rule, if the numbers in the advance and preliminary rounds are considered "positive" by the White House, the press operation pushes the data hard.

"They know they may only get one shot at positive press on the economy, and the GDP numbers may be it," says a former Obama Administration Treasury Department official. "For their purposes, they don't care if those numbers are going to be downgraded two weeks from whenever, all they care about is getting their guy out there to tout what they want the American people to believe is a recovering economy that was the result of their policies. The problem is, a month later it's a different story and it's a crap shoot whether anyone will be paying attention then. They are already looking ahead to the next quarter's report."

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