Tuesday, September 18, 2012

Did President Obama promise to keep unemployment under 8 percent?


Mitt Romney and many Republican politicians love to say President Obama "promised" unemployment would stay under 8 percent if the stimulus act was passed.

Did Obama promise to keep unemployment below 8 percent? Not exactly.

Politifact weighs in on the question and the facts:

The source for Romney’s statement is a Jan. 9, 2009, report called "The Job Impact of the American Recovery and Reinvestment Plan" from Christina Romer, then chairwoman of the president's Council of Economic Advisers, and Jared Bernstein, the vice president's top economic adviser.
      
Their report projected that the economic stimulus plan would create 3 to 4 million jobs by the end of 2010. The report also included a chart predicting unemployment rates with and without the stimulus. Without the stimulus (the baseline), unemployment was projected to hit about 8.5 percent in 2009 and then continue rising to a peak of about 9 percent in 2010. With the stimulus, they predicted the unemployment rate would peak at just under 8 percent in 2009.
      
The important word here is projection. The economic analysis wasn’t a promise, it was an educated assessment of how events might unfold. And it came with heavy disclaimers.
      
"It should be understood that all of the estimates presented in this memo are subject to significant margins of error," the report states. "There is the more fundamental uncertainty that comes with any estimate of the effects of a program. Our estimates of economic relationships and rules of thumb are derived from historical experience and so will not apply exactly in any given episode. Furthermore, the uncertainty is surely higher than normal now because the current recession is unusual both in its fundamental causes and its severity."
      
There's also a footnote that goes along with the chart stating: "Forecasts of the unemployment rate without the recovery plan vary substantially. Some private forecasters anticipate unemployment rates as high as 11% in the absence of action."

Of course, we now know the unemployment rate did exceed 8 percent. It peaked at just over 10 percent in early 2010 and has decreased very slowly. In August 2012, it was 8.1 percent, according to the Bureau of Labor Statistics.

The verdict?  Romney told donors he could win over wavering voters by reminding them that Obama said "he'd keep unemployment below 8 percent."

Obama didn’t say that. Rather, his Council of Economic Advisers predicted that the stimulus would hold it to that level. Their report included heavy disclaimers that the projections had "significant margins of error" and a high degree of uncertainty due to a recession that is "unusual both in its fundamental causes and its severity."

The sub-8 percent prediction did not hold true, but it’s still incorrect to characterize it as a promise or guarantee.

We rate Romney’s statement Mostly False.

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