Sometimes people are just wrong. . . and they suffer as a result. This is effectively what happened with Obama early in his presidency in dealing with the economy and the stimulus bill. The stimulus bill was far too small and the public sales job on it was awful, but these are sub-problems that arose from the original sin of the Obama administration. President Obama and his economic advisers were very wrong about one important thing early on: they badly underestimated the severity of the economic downturn. Most of their subsequent actions were based on this false premise, and as a result, their actions have been misguided and ineffective. They also have missed opportunities, and even taken actions that were self-defeating. Being wrong about the downturn has done serious political damage to Obama and to the Democratic party.

We know the Obama administration was terribly wrong about the poor condition of the economy. Looking at the economic projection they put forward, we can see that they predicted that unemployment would have gone to about 9.2% without the stimulus and should have stayed below 8% with it. Given that official unemployment is currently around 9.6% with the stimulus, we can only conclude that the Obama administration was dramatically wrong about the scale of the economic crisis.

This false belief about the state of the economy created a domino effect of bad decisions. To begin with, Obama didn’t push for a larger stimulus bill, which he should have done if his projections had been correct. Even if he couldn’t have gotten a larger stimulus bill through the Senate, he could have pushed for it to be better directed, for example by leaving out the AMT patch. Then he also could have quickly enacted a number of additional, but much smaller, jobs measures. At the very least, he could have told the American people the stimulus was too small because the Republicans blocked it. This would have set the stage to request a larger stimulus.

I fully agree with Barney Frank’s observation that Obama promising the stimulus would keep unemployment below 8% was very dumb. It was bad messaging, and it ensured popular belief that the stimulus bill was a failure because it did not live up to Obama’s own metrics. I’m sure it also did some minor damage to Democrats. On the other hand, if Obama had promised that the stimulus would keep unemployment below 10%, would Democrats be in much better shape? A huge number of people still have no jobs and there are too many underwater mortgages. The truly dumb thing about the whole ordeal was underestimating the downturn.

The problem is not that Democrats couldn’t have done more to improve the economy, it is that they foolishly thought they didn’t need to.

If the administration had properly estimated how bad the economy would become, they could have done more to boost it. Then they would not be facing a midterm election with horrible unemployment. Even if they could not have gotten a big stimulus through the Senate, by pushing harder they could have pushed a serious number of much smaller jobs bills soon after. They could have worked quickly to get Fed nominees confirmed that would have supported easing monetary strictures. If they had known the system needed more stimulus, they could have, for example, front-loaded a hundred billion dollars in benefits into the health care bill as a way to inject money into the economy.

Obama’s problem–the Democrats’ problem–has not been not bad messaging, poor salesmanship of their new legislation, or a misguided campaign strategy. Their problem is that they were very wrong about something very important: the state of the economy. Because of their huge initial mistake, for over a year they have missed a series of opportunities and taken many false steps.

On the most important issue in the country right now, they were wrong. It is not necessary to look any further for why Democrats will suffer terribly this November. They promised 8% unemployment and it is now 9.6%. Getting things like that right the first time matters. It matters to the people who make up that 9.6%–and the many other jobless no longer counted in that number—and it matters to the Administration and the party that got it wrong. All these groups are now being punished for that initial mistake.