It's hard to believe that progressive bloggers didn't get together to pay Newsweek to run Niall Ferguson's piece on Obama. The thing is so shot full of easily identifiable errors no serious publication would ever allow it into print. It already has been picked to pieces by Paul Krugman, Ezra Klein and Mark Thoma, among others.

My personal favorite was this little item picked up by Josh Holland. It seems that Ferguson can't even get straight who he supported in 2008. In the latest piece he was a McCain backer who hoped for the best from the Obama administration. But back in 2008 he was an Obama supporter who had become disenchanted with McCain's lack of understanding of economics. At that time Ferguson was ecstatic over the prospect of the first African American president in the White House.

Okay, but enough of the cheap fun, there is an issue here for which Ferguson needs a serious whacking. On page 2 Ferguson has a figure that shows the predicted and actual levels of unemployment for 2009 and 2012. (He has predicted unemployment for 2013, but I guess the fact checker pulled the bar showing "actual.") Not surprisingly, the predicted unemployment rates are well below the actual. Therefore Ferguson seems convinced that he has done his job, Obama failed to deliver.

But Ferguson got the nature of the failure wrong. Obama and his economic team, like the rest of the economics profession, badly underestimated the severity of the downturn. Being world class economists it was too difficult for them to recognize something as simple as an $8 trillion housing bubble and to understand the damage that would be done by its deflation. They certainly deserve to be harangued for that, but unfortunately all of Ferguson's friends would be equally guilty on this count.

Obama's team was not wrong on the impact of their stimulus. They projected that the original package would generate 3-4 million jobs. (That's in black and white as of January 2009, you can read it.) After it was whittled down by Ferguson's deficit minded friends in Congress, the predicted effect was on the order of 2-3 million jobs. This is roughly the number that most independent analysts have estimated as well.

In short, we got a stimulus designed to create 2-3 million jobs in a context where we needed 10-12 million. We can and should blame the Obama team for a faulty economic forecast, but their policy did almost exactly what was expected. In short Obama did come through with what he promised, unfortunately when it came to jobs, he didn't promise very much.

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