Geithner's Inability to Tell the Truth

I was watching Tim Geithner's testimony before the Senate Budget Committee earlier this week and found his answers to some questions to be simply infuriating. The replay of this hearing is on CSPAN right now and since I have the laptop in my lap, I felt the need to address this. It is not atypical for witnesses to dance around when answering questions. In fact, the ability to say a lot of words without saying anything of substance is apparently one of the skills most admired in Washington. There is one particular exchange which is most illustrative of the phenomenon.

Senator Lindsey Graham (R-SC) is asking the questions. You can view the entire hearing here - this particular exchange begins at 103:17 on the timer. Graham questions Geithner on the assumptions in the FY2010 budget which was recently released by the Obama administration. In particular, he challenges the assumption of the unemployment rate in 2009. Graham references that the budget assumes that unemployment will "peak" at a rate of 8.1% in 2009 and asks Geithner if he still feels that this is a valid assumption. Geithner dances around the question with politi-speak, Graham tries to pin him down... more dancing... and we move on without an answer.

Now, Graham's assertion that the budget calls for the unemployment rate to "peak" at 8.1% could be misleading depending on your interpretation of the peak. According to the budget (see Table S.8), 2009 will have an average unemployment rate of 8.1% which will be the peak year for the average. The CBO and Blue Chip Consensus estimates both have (average) unemployment peaking in 2010 (at 9.0% and 8.7% respectively). But whether you define peak as the highest monthly level or the highest yearly average, we seem to have a problem. The reason that this is a clear evasion on the behalf of Geithner is that unemployment is already at 8.1%. For the budget estimate to hold up, unemployment would clearly need to turnaround this year or stay flat. That seems unlikely and Geithner is unwilling to admit that under oath.