Editore"s Note
Tilting at Windmills

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January 10, 2009

REVIEWS COME IN.... OK, so the Obama team released a new report (pdf) this morning, outlining the expected effects of its economic rescue package. What are some of the various experts thinking, now that they have a document to chew on? The plan still isn't ambitious enough.

Paul Krugman, after praising Obama's team for actually producing "comprehensible, honest" reports like these, instead of "case studies in how to lie with statistics" -- Bush gang, I think he's talking to you -- nevertheless concludes that the nation needs a bolder approach.

[E]ven if I use the Romer-Bernstein estimates instead of my own -- there really isn't much difference -- this plan looks too weak.

James Galbraith is thinking along the same lines, but seems considerably more pessimistic.

Jonathan Cohn adds, "To sum up, the big question here isn't really about what the stimulus package will do. As best as I can tell -- and I'm sure I'll hear quickly if I'm wrong -- the Obama team, Krugman, and Galbraith all think it will have roughly the same effects. The question is whether the package is sufficient to address the present crisis. Krugman and Galbraith clearly think it isn't."

The response to the report from lawmakers will also be of particular interest. Tim Fernholz mentioned this morning that he expects "Democratic members of Congress to look at" the modest expectations from the Obama transition team, "consider their reelection prospects, and wonder if maybe they ought to make the bill just a bit bigger so that unemployment line will drop just a bit lower as voters head to the polls; nothing like seeing self-interest and good public policy go hand-in-hand."

Right. If Obama is effectively telling lawmakers what kind of performance they can buy for $775 billion, they'll naturally consider even better performance for a higher price tag.

And as Matt Yglesias noted, that will probably be fine with the new president: "Nothing I've heard on the record or off the record from the Transition indicates that they have some kind of dogmatic opposition to a larger stimulus. What they have is a proposal. A proposal made up of a number of component sub-ideas. And they've said -- repeatedly -- that they're open to additional ideas for more things to do from congress or from outside."

Steve Benen 4:30 PM Permalink | Trackbacks | Comments (10)

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Perhaps he's decided that he's not up for re-election in two years, but that members of the legislature who are might be interested in spending their political capital to pass a larger plan, while he saves his own for other future initiatives.

Posted by: Antonius on January 10, 2009 at 4:40 PM | PERMALINK

I think people are used to a certain kind of political negotiating strategy and are concerned that Obama's plan is the usual anticipatory compromise. That may be true, and my stomach is not feeling that well over it, but check out Nate Silver's take on what he calls the "Price-Is-Right Negotiating Strategy": http://www.fivethirtyeight.com/2009/01/obamas-price-is-right-negotiating.html

I don't know if he's right, but it makes my stomach feel better to think so....

Posted by: The Answer Is Green on January 10, 2009 at 4:55 PM | PERMALINK

The Answer is Green: Thanks for the link! I think that Silver's conclusions are correct. I just wonder if Congress is up to collaborating after eight years of being given orders.

Posted by: Reverend Dennis on January 10, 2009 at 5:25 PM | PERMALINK

Paul Krugman [...] concludes that the nation needs a bolder approach. -- Steve Benen

Obama may have presented A Modest Proposal but, at least, he's not suggesting that poor people ought to start eating their babies to keep themselves from starving :)

Posted by: exlibra on January 10, 2009 at 5:45 PM | PERMALINK

As I suggested earlier, I think Obama was just setting the stage with the starting point, and was expecting lawmakers to make it bigger. And in that regard, what he did was great. It's better to have something that was too moderate and that Congress would fall over themselves insisting that it was too small than a scary one that was too big, making Congress want to prove a point by shrinking it. And in any case, even if he had nailed the exact proposal we needed for the best economic stimulus, there would still have been complaints.

So it was best for Obama to look moderate, while negotiating with Dems to make it bigger than looking liberal and negotiating with Repubs to make it smaller. And as I said earlier, presidents don't write taxcodes or pass spending legislation. And unless he's threatening a veto of Congress's more ambitious proposal, I fail to see what the problem is. So often, I'd wish liberals would get out of their victim crouch and try to understand that the political landscape is different than it's ever been in their lifetime.

So far, it looks like Obama is putting himself in a position that will make Congressional Dems lean to the left, and I definitely think that's a good thing. He's allowing them to have the backbone that we always wanted them to have.

Posted by: Doctor Biobrain on January 10, 2009 at 6:51 PM | PERMALINK

I look at the lukewarm scope of the recovery proposal and I wonder...

There is an anecdote where FDR (I think - maybe LBJ but no...) said: I want to do it. Now make me do it.

Could it be that this is what we are seeing from Obama? With the impressive campaign acumen I never got the impression that he was also a politic ju-jitsu master. Could it be that he is that too?

Is he positioning himself into being forced into doing the BOLD THING?

Pass the tin foil...

Posted by: paulo on January 10, 2009 at 8:29 PM | PERMALINK

Well I can think of at least two reasons it may not be bigger:

1. Since every dollar used in the program will have to be borrowed, perhaps our current financiers (China, Japan, the Gulf States) simply have indicated they won't buy our Treasuries if we don't show a little fiscal restraint.

2. Or, realizing it is very difficult to quickly create a bureaucracy to effectively invest large sums money (witness our Iraqi reconstruction efforts or the current Treasury efforts), the Obama team may be asking for what they feel they can handle (along with the hundreds of other clean-up efforts Bush has left to him).

Posted by: chrisbo on January 10, 2009 at 10:09 PM | PERMALINK

Nate Silver of fivethiryeight.com thinks that Obama is implementing a "Price is Right" negotiating strategy.

It deserves comment:

Doctor Biobrain in particular might appreciate the argument.

Posted by: Measure for Measure on January 10, 2009 at 10:15 PM | PERMALINK

obama's plan is for 9 of 10 jobs created to be private sector opportunities. you have to hand it to him for not taking the easy way out like that socialist Reagan by simply creating jobs by putting people on the federal payroll

Posted by: st on January 10, 2009 at 11:21 PM | PERMALINK

From the NYT:

The day after Mr. Obama’s speech, the Labor Department released the employment report for December, showing that employers had shed more jobs in 2008 than in any year since 1945. Worse, the pace of job loss is accelerating. In the third quarter of 2008, the economy shed an average of 199,000 jobs a month; in the fourth quarter, 510,000 jobs were lost on average each month.

Uh oh.

Posted by: It's a nail-biter on January 10, 2009 at 11:33 PM | PERMALINK



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