Paul Krugman's column today is about how the stimulus was too small. I agree entirely. What I find puzzling is his apparent belief that the Obama administration is the primary culprit for this shortcoming. Here's Krugman:
But while health care won’t be Mr. Obama’s Waterloo, economic policy is starting to look like his Anzio. ...
President Obama came into office with a strong mandate and proclaimed the need to take bold action on the economy. His actual actions, however, were cautious rather than bold. ...
The president, then, having failed to exploit his early opportunities, is pinned down in his too-small beachhead.
If the Democrats lose badly in the midterms, the talking heads will say that Mr. Obama tried to do too much, this is a center-right nation, and so on. But the truth is that Mr. Obama put his agenda at risk by doing too little.
Emphasis mine. Krugman does make a nod toward the reality that getting a larger stimulus through the Senate might have been tough:
Administration officials would presumably argue that they were constrained by political realities, that a bolder policy couldn’t have passed Congress. But they never tested that assumption, and they also never gave any public indication that they were doing less than they wanted. The official line was that policy was just right, making it hard to explain now why more is needed.
Krugman's case that the administration didn't test the upper limits of what Congress would enact isn't exactly true--the Senate took his stimulus plan and whittled it down. It's possible that if Obama had submitted an even larger proposal to Congress, he would have gotten a larger plan in the end. On the other hand, it's also possible his plan would have collapsed entirely, or taken much longer to be enacted.
And yes, there's a case that the administration should have complained after the fact that the final product was too small. But there's also a counter-case, that the general atmosphere of liberal dissatisfaction with the stimulus, against the backdrop of conservative hysteria, made the whole enterprise more unpopular than necessary. If only there was more cheerleading, this argument goes, the stimulus would have been more popular, and the atmosphere for adding to it more receptive.
I don't have extremely strong opinions either way about the political calculus. Senate wrangling is tricky. What I find odd is that Krugman takes as a given that the White House blundered--this is the premise for most of his commentary on the stimulus. Meanwhile, the incontrovertible fact is that you can't spend one more dollar than Ben Nelson wants to spend, and there's no evidence that Nelson even understands the economic theory underpinning fiscal stimulus, let alone has any willingness to expend political capital on its behalf.
So everything that Krugman writes about what Obama should have done really meanss "what Obama should have done to persuade Ben Nelson to act differently." And Obama does have some influence over Nelson, but ultimately Nelson makes his own decisions.
Krugman's column employs a pretty good World War II analogy. Let me use another: imagine a scathing column about the 1938 Munich accord that devotes most of its energy to castigating Czechoslovakian President Edvard Benes for his ineffectual efforts to gain the support of Britain and France, rather than putting Britain and France at the center of the story.
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COMMENTS (5)
When an entire political party disbelieves Keynes' theory (Nixon, it turns out, was wrong when he said "we are all Keynesians now"), many if not most members of the other political party don't understand the theory, the Democratic leadership let the legislative process regarding the stimulus legislation devolve into an excuse for public funding of the members' favorite pet projects, the public either has never heard of Keynes or believes the General Theory has something to do with evolution, and a tepid president focuses his attention and by extension the attention of the public on give aways to big banks and car companies, is it any wonder there was/is little enthusiasm for more public spen ... view full comment
When an entire political party disbelieves Keynes' theory (Nixon, it turns out, was wrong when he said "we are all Keynesians now"), many if not most members of the other political party don't understand the theory, the Democratic leadership let the legislative process regarding the stimulus legislation devolve into an excuse for public funding of the members' favorite pet projects, the public either has never heard of Keynes or believes the General Theory has something to do with evolution, and a tepid president focuses his attention and by extension the attention of the public on give aways to big banks and car companies, is it any wonder there was/is little enthusiasm for more public spending as a way to avoid a high unemployment, low output equilibrium, especially, early in the year, when unemployment wasn't particularly high, Krugman's crystal ball notwithstanding.
raylward's fine comment is a great deal more informative than Chait's article. I claim no expertise on what would make Ben Nelson think differently, but I think having an emergency bill drafted by Christina Romer and Peter Orzag rather than David Obey and Nancy Pelosi might have been a good start.
raylward's fine comment is a great deal more informative than Chait's article. I claim no expertise on what would make Ben Nelson think differently, but I think having an emergency bill drafted by Christina Romer and Peter Orzag rather than David Obey and Nancy Pelosi might have been a good start.
President Obama should have been bolder in demanding a larger stimulus. The Wall Street bailouts probably totaled over 1 trillion dollars. Why couldn't you have the stimulus, which was for "Main Street," be larger than that? Seems like an easy enough argument to make. Would Ben Nelson really want to be the guy that gave more money to Goldman Sachs than he did to Nebraska? But the administration never made that comparison.
Raylward is right on, the President and his team showed their priorities by how much time they spent on the banks, and how little effort they put into selling the stimulus for the real economy. And it shows, the banks have record profits, and unemployment just keeps go ... view full comment
President Obama should have been bolder in demanding a larger stimulus. The Wall Street bailouts probably totaled over 1 trillion dollars. Why couldn't you have the stimulus, which was for "Main Street," be larger than that? Seems like an easy enough argument to make. Would Ben Nelson really want to be the guy that gave more money to Goldman Sachs than he did to Nebraska? But the administration never made that comparison.
Raylward is right on, the President and his team showed their priorities by how much time they spent on the banks, and how little effort they put into selling the stimulus for the real economy. And it shows, the banks have record profits, and unemployment just keeps going up.
"Krugman's column employs a pretty good World War II analogy. Let me use another: imagine a scathing column about the 1938 Munich accord that devotes most of its energy to castigating Czechoslovakian President Edvard Benes for his ineffectual efforts to gain the support of Britain and France, rather than putting Britain and France at the center of the story."
Menes (and Churchill) protested loudly, Chamberlain gave all appearances and verbiage of wanting to compromise with those who wanted no compromise. There is little evidence in the stimulus package, health care, banking regulation that Obama and his team are really pushing for good policies -- rather than placing compromise and bipa ... view full comment
"Krugman's column employs a pretty good World War II analogy. Let me use another: imagine a scathing column about the 1938 Munich accord that devotes most of its energy to castigating Czechoslovakian President Edvard Benes for his ineffectual efforts to gain the support of Britain and France, rather than putting Britain and France at the center of the story."
Menes (and Churchill) protested loudly, Chamberlain gave all appearances and verbiage of wanting to compromise with those who wanted no compromise. There is little evidence in the stimulus package, health care, banking regulation that Obama and his team are really pushing for good policies -- rather than placing compromise and bipartisanship as their highest priorities. Many progressives are becoming more and more concerned that Obama is the Chamberlain of our times.
O.K, I get it. Circle the wagons and deflect all blame from Obama on everything at all times. That's the ticket!
Blaming Bush has worked for almost a year, not that Bush didn't deserve it, but that gig is starting to wear a bit thin, so now let's shift the blame to Ben Nelson. When that plays itself out, we'll find another sucker.
Obama came into Office with an opportunity that hasn't been seen in generations and may not be seen again (at least in my lifetime.) He is very close to snatching defeat from the jaws of victory.
O.K, I get it. Circle the wagons and deflect all blame from Obama on everything at all times. That's the ticket!
Blaming Bush has worked for almost a year, not that Bush didn't deserve it, but that gig is starting to wear a bit thin, so now let's shift the blame to Ben Nelson. When that plays itself out, we'll find another sucker.
Obama came into Office with an opportunity that hasn't been seen in generations and may not be seen again (at least in my lifetime.) He is very close to snatching defeat from the jaws of victory.