Arnold laid out one of the two ways the CEA estimated the effects of Obama’s “stimulus” package. Greg Mankiw has a particularly nice statement about the other way. Mankiw writes:

That is, the CEA took a conventional Keynesian-style macroeconomic model and used those set[s] of equations to estimate the effect the stimulus should have had. Essentially, the model offers an estimate of the policy’s effect, conditional on the model being a correct description of the world. But notice that this exercise is not really a measurement based on what actually occurred. Rather, the exercise is premised on the belief that the model is true, so no matter how bad the economy got, the inference is that it would have been even worse without the stimulus. Why? Because that is what the model says. The validity of the model itself is never questioned. (italics added)

Greg was a little too easy on them, though. He went on to write:

In the end, I do not find this CEA document very persuasive. At the same time, I feel the CEA’s pain. The stimulus act instructed them to do the (nearly) impossible.

Sure it did, but it didn’t instruct the CEA not to point out some qualifiers. And it didn’t instruct them not to mention that they had way overestimated the effect of the stimulus package 18 months earlier.