Krugman: Obama's Trap

[Kurt_and_Hunter]

Obama’s trap
Paul Krugman November 6, 2009, 9:50 am

Back in the first few months of the current administration, when I was writing piece after piece urging the new administration to adopt a more aggressive economic policy, what I had very much in my mind — and wrote about on a few occasions — was the possibility of a sort of political economy trap. If unemployment continued to rise, I feared, Congress wouldn’t draw the right conclusion — that we needed more stimulus. Instead, the verdict would be that Obama’s economic policies weren’t working, so we needed to do less. And high unemployment would also lead to Democratic electoral losses, further undermining the ability to act (since the fact is that today’s GOP is the party of economic ignorance). The result would be a persistently depressed economy, and a fading out of Obama’s promise.

I really, really wish I had been wrong about this — and for a while, as banks seemed to regain their footing and stocks went up, it looked as if the administration’s softly, softly policy might work out after all. But on the things that truly matter, above all jobs, reality has played out even worse than I feared. Today the unemployment rate passed 10%, a sort of brutal milestone.

The thing to do, I guess, is to keep making the case for doing more; in particular, we can hope that centrist Democrats will finally realize that timid economic policies are hurting their own electoral prospects. But it’s an uphill fight.

Who’s to blame? The buck stops with the president. But did his economic advisers make it clear to him that the proposed stimulus was way short of what the math suggested we needed, even given what was known in January? Or was Mr. Obama really led to believe that his stimulus proposal was as bold as he claimed it was?

I don’t know. But I’ve got a sick feeling about the whole situation.


http://krugman.blogs.nytimes.com/2009/11/06/obamas-trap/

[Jennicut]

1. The stimulus was too small but what else you gonna get out of the Senate?

We were lucky we got the one we did. The House seemed to have a better stimulus.

[alc]

4. it may have been too small

but I don't think it's all been spent yet. So more with the same parameters wouldn't help. At least for now I think the problem is more with where & how it was spent than how much. If we had run out of stimulus funds by now than I'd agree completely that it was too small.

[Better Believe It]

18. Three Republicans wrote the stimulus. And we didn't need them!

[Kdillard]

2. Sorry I remember the debate to get the stimulus passed the President was not

Going to get out of Congress anything bigger than he did and if he had tried it would have failed imo. I agree with Krugman's economic sensibilities but I don't feel he has any idea how to get anything passed. I also believe that since not all the money has been spent yet it is a bit premature to go into requesting more money from Congress and if it is needed it will not be called stimulus.

[Kurt_and_Hunter]

3. Congress as bad cop doesn't work.

It is fine to speculate as to what congress would have passed in different scenarios but the WH never proposed or supported or cast the least favor whatsoever on a sufficient package.

All evidence is that the WH actually thought the stimulus was sufficient... their nightmare scenario if the package didn't pass was 9.9% unemployment.

Blaming congress for not giving the president things he never supported or asked for is mere rationalization.

I agree that the senate was going to reduce any proposal. Had Obama asked for 2 trillion maybe the senate would have whittled it down to 1.2 trillion. We will never know.

[Kdillard]

8. Obama asking for two trillion dollars would have ensured that he would have

Suffered his first major defeat as President. He simply would not have had the votes.

[Jennicut]

9. Well, people here make the same argument for single payer.

These things will never ever get through Congress. But maybe I am just to much of a pragmatic realist.

[Kurt_and_Hunter]

11. One needs a small enough ego to be willing to fail as part of succeeding

Of course single payer wouldn't have passed congress, but that doesn't mean it shouldn't have been put on the table.

Susan Collins and Arlen Specter wanted the stimulus trimmed. They didn't have any idea what the right number was, they just wanted to give the WH somewhat less than was requested to appear "responsible"

Ask for more and let congress trim it back.

Or ask for less and let congress trim it back.

In both scenarios you don't get what you ask for, but the actual outcomes are quite different.

[Jennicut]

12. Or ask for more and get laughed at.

There are many ways of looking at it. Who is to say that you ask for single payer and a bigger stimulus and it still gets pushed back to what we have now? There is no way to know.
Obama was not going to put single payer on the table if he never campaigned for it either. Some can be disappointed it was never offered and a President and change his mind but I never thought he would put it on the table. I still don't understand why people think he would have done that. Who knows at this point?
I guess there is always the option to vote for someone more progressive in 2012. I don't think Obama is perfect but I was expecting a more moderate Bill Clinton. For those who are unhappy, that is the only answer I really have. That and keep putting pressure on Obama to move further to the left.

[Kurt_and_Hunter]

13. My bad -- clumsy writing

I don't think Obama should have gotten behind single payer as proposed legislation, but should have made a show of considering it seriously and should have proposed things VERY strong short of single-payer that almost certainly would not have passed, just to apply pressure on the debate.

On the other hand, I do think the WH should have asked for 2 trillion in the stimulus package.

I kind of switched from the general to the specific. DU short-hand problem.

I agree with you that the WH would not have gained by actually seeking a vote on single payer.

[Kurt_and_Hunter]

10. The real world is more important than Obama's image

If the economy under-performs that makes Obama look bad... a lot more bad than suffering a legislative defeat.

Had he tried and failed then today he would be in the position of addressing congress and saying, "I told you in February we had this situation and you refused to act. That error must be corrected. Too many millions are suffering because congress lacked the will to act."

Instead he is now completely co-opted as a happy-talk booster of a plan that was never going to accomplish what it was sold on.

He owns a bad situation and cannot ask for more because he made a big show of how what we got was perfect.

That is not victory.

Just because someone disagrees with you doesn't mean they are naive about politics. While the WH played "what makes me look good today?" some of us have always been looking several moves ahead... like chess-players.

[uponit7771]

5. "...keep making the case for doing more..."

[Rosa Luxemburg]

6. but look what the Chinese did

they had a stimulus too

[Beetwasher]

7. There WILL Be More Stimulus, It Won't Be Called Stimulus, But It Will Come

Jobs programs. Energy legislation. Stimulus can and will be built into other programs.

Additionally, the first stimulus is not even nearly spent yet.

[Aramchek]

14. Krugman has never been right about Obama.

and he's too proud to ever admit it.

[Kurt_and_Hunter]

15. Please point out the errors in the piece

[Grinchie]

16. Just a note, but I've seen a lot of signs of the American Recovery and Reinvestment Act lately

You'd think that this would be a good thing, but I see it in the Roadeaters chewing up vast stretches of good roads in preparation of paving them over again.

We are talking tons of material being removed from servicable roads in the Bay Area. What's even more disturbing is the fact that these roads pass by decaying and in many cases, empty retail store fronts and shuttered businesses.

This observation leads me to believe that the majority of funding in the ARRA is misplaced, and could have been spent on something that isn't a throwback to General Motors and the King Car mentality.

We have plenty of roads, and that's the problem. We should be replacing the American Fleet with Electric Cars, instead of resurfacing roads hoping that someday they appear.

[xchrom]

17. kick

[Kurt_and_Hunter]

19. .