Editore"s Note
Tilting at Windmills

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September 3, 2010

CREDIBILITY COUNTS.... Extending on an item he blogged about this week, Paul Krugman notes in his column today that the stimulus had two groups of critics: one that said it was too big, and one that said it was too small. With the elections coming up, and the fragile recovery looking shaky, it matters who was right -- and who wasn't.

The Nobel laureate reminds us, for example, that the Wall Street Journal's far-right opinion page, like conservatives throughout the political establishment, warned that the Recovery Act would lead to higher interest rates and higher inflation. The right was wrong. More progressive critics, including Krugman, said the severity of the recession needed a more ambitious response. The left was right.

The actual lessons of 2009-2010, then, are that scare stories about stimulus are wrong, and that stimulus works when it is applied. But it wasn't applied on a sufficient scale. And we need another round.

I know that getting that round is unlikely: Republicans and conservative Democrats won't stand for it. And if, as expected, the G.O.P. wins big in November, this will be widely regarded as a vindication of the anti-stimulus position. Mr. Obama, we'll be told, moved too far to the left, and his Keynesian economic doctrine was proved wrong.

But politics determines who has the power, not who has the truth. The economic theory behind the Obama stimulus has passed the test of recent events with flying colors; unfortunately, Mr. Obama, for whatever reason -- yes, I'm aware that there were political constraints -- initially offered a plan that was much too cautious given the scale of the economy's problems.

I have to admit, as disconcerting as it is to see the political winds blowing in the wrong direction, arguably the most frustrating thing about Republican impending successes in the midterms is the perverse rewards for those who were the most wrong.

At a moment of crisis, conservatives made a series of predictions, assessments, and guarantees -- all of which turned out to be hopelessly backwards. Rewarding the confused only encourages more confusion, while punishing those who were right only encourages worse policymaking.

Steve Benen 10:10 AM Permalink | Trackbacks | Comments (25)

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The house is on fire!

Progressives say apply massive amounts of water. Now!

Stupid, regressive plutocrats say let it burn to the ground. Then we will lend you the money to rebuild. Or not.

Posted by: DAY on September 3, 2010 at 10:19 AM | PERMALINK

Yeah, hmm, you would think that in a moment of crisis you would turn to the people in your party who had been right time after time. But instead we're supposed to support the Blue Dogs, and clap louder.

Posted by: Tom Allen on September 3, 2010 at 10:24 AM | PERMALINK

The art of politics is not that different from poker. You have to play the hand that's dealt to you. If your object is not to lose, then you'll play very cautiously. That's the Democrats. If your object is to win, you'll play like Republicans.

I'm not going to go the Full Kipling here and suggest what happens to those who shrink in the face of adversity. Still, it's worth remembering that ultra-rational behavior can be a mask for deep-seated fears. The Democrats and liberalism in general are going to face years in the desert over risks not taken. It's not that we lost. It's that we didn't even bother to really play.

Posted by: walt on September 3, 2010 at 10:27 AM | PERMALINK

Gee, another article saying how bad things are. I wonder why so many people have negative attitudes. Why not any mention that many economists say we are in a recovery though a slow one, but we want miracles from Obama, not steady progress on countless fronts during an incredibly difficult time. Bloggers = Whiners.

Posted by: tiredofgreed on September 3, 2010 at 10:27 AM | PERMALINK

Krugman keeps saying that he's aware of the political constraints on Obama, and then turns around and writes as though they don't exist. How, exactly, was a bigger stimulus going to pass the Senate?
It's gotten tiresome.

Posted by: t case on September 3, 2010 at 10:32 AM | PERMALINK

That the Republicans have dominated the media agenda says something important about the Democrats in general and Obama in particular. Basically, they have botched the message.

(So, how about getting some new messengers????)

Posted by: sjw on September 3, 2010 at 10:33 AM | PERMALINK

Krugman is too easy on Obama... NOT too tough. If Obama had REALLY understood and believed that Keynesian economics is the only economic theory supported by currently available data and had done the math --he would have known (as did many others) that he needed a stimulus of $1.2-1.5T (not $0.8-0.9T) and that $ should be targeted to those expenditures that produce the quickest effect with the highest multiplier. Lots of high-multiplier items to choose from, about half of which ended up in his package. The other half of his package had little stimulus effect, as predicted by Krugman and other economists who understand and have extended Keynesian economic theory. Even todasy, word is that BHO will propose business tx breaks as most of the recommended stimulus package. I'm a CEO and will pocket the $, but it's a national tragedy.

How would BHO get it passed? Make breaking the filibuster job #1. It was obvious by 3/09 that unless the filibuster was broken, really effective legislation was NOT going to pass-- on any topic. Once effective legislation was blocked by 41 senate votes, the blood /is in the water--- as it was in retrospect even with the sxtimulus package, and certainly with health care. It's even a debatable issue if BHO would ever even advocate effective legislation if it meant/means accepting no "no bipartisan compromise". A very cogent argument can be made that Obama primarily sees his role as "Compromiser-in-Chief". In different times, that might do nicely.

Posted by: gdb on September 3, 2010 at 10:43 AM | PERMALINK

t case said:
Krugman keeps saying that he's aware of the political constraints on Obama, and then turns around and writes as though they don't exist. How, exactly, was a bigger stimulus going to pass the Senate?

Two reasons why progressives are so frustrated with Obama:

1) From the beginning he's been listen to people like Summers, Geithner and the Blue Dogs, who were wrong about the housing bubble and the recession, while dismissing people like Krugrman who've been right for years.

2) Obama has been telling people that the stimulus was just the right size, when it's obvious that it wasn't. Denying reality works for Republicans, but won't fly with liberals.

And one more:

3) From the beginning, Obama has been helping the conservatives regain their credibility by saying publicly that their ideas have merit instead of saying to them, "Sorry. Been there, done that, got the recession. Come back when you have something new that won't destroy the economy."


Posted by: SteveT on September 3, 2010 at 10:45 AM | PERMALINK

Only democrats can have a president and congress who have accomplished so much and still complain without end at how bad things are. It is their roll in life and they can't wait for the Republicans to take over so they will be able to complain x 10.

Posted by: tiredofgreed on September 3, 2010 at 10:49 AM | PERMALINK

That the Republicans have dominated the media agenda says something important about the Democrats in general and Obama in particular.
It also says a lot about our so called media. It really doesn't matter very much who the messenger is if no ever gets to hear his message

Posted by: grandpajohn on September 3, 2010 at 10:49 AM | PERMALINK

People literally don't care what the opposition party says in offyear elections. They vote solely as a judgment of the party in power. The Democrats have not, for whatever reasons (mostly their own cowardice and conflict of interest in seeking to be the NICE party of the wealthy) revived the economy. So down they will go.
Don't want to judged harshly by voters? Have no power.

Posted by: JMG on September 3, 2010 at 10:51 AM | PERMALINK

The debate over the economy, and more importantly the debate in the election, has devolved to "dueling experts".

The Democrats need to embrace this with both arms. Every time a conservative economist's opinion is presented, whether by the media or in a debate, the Democrats need to fire back:

"But didn't that guy tell us that there wasn't a housing bubble and that there wouldn't be a recession? Why should anyone listen to them now?"

But that would mean that Democrats would have to stand up for progressive ideas instead of "finding a middle ground", so it probably won't happen.


Posted by: SteveT on September 3, 2010 at 10:55 AM | PERMALINK

Huffpost: Wah Wah Wah Wah
Crooks & Liars: Wah Wah Wah Wah
Washington Monthly: Be scared. Great Depression II is coming. Wah Wah Wah Wah
Rachel Maddow: I am pissed. Wah Wah Wah Wah
Susie Madrak: Wah Wah Wah Wah
Paul Krugman: You are running the country the way I want you to. Wah Wah Wah Wah
Commenters on blogs. Wah Wah Wah Wah
Etc. Etc. Etc. I am embarrassed to be an American.

Posted by: tiredofgreed on September 3, 2010 at 10:57 AM | PERMALINK

@ gdb:

How would BHO get it passed? Make breaking the filibuster job #1.

Unfortunately, there's even less support in the Senate for breaking the filibuster than for actual liberal policy. You're asking for Senators to give up their special Senate superpower. They're not going to do that.

Posted by: FlipYrWhig on September 3, 2010 at 11:12 AM | PERMALINK

Rebranding stimulus--call it Xe

Rebuild America (I'm sure I'm stealing most of these phrases--but it's ok, I'm not running for Senate. And these ideas are from other posts and responses here and elsewhere):
Commerce rides on our rails and roads, planes and ships, and we need to bring those into the 21st century... (infrastructure)
Energy is the life blood of manufacturing. We need to be able to produce and transport it cleanly, safely and cheaply. We can't be caught playing second fiddle to the rest of the world--we need to support and unleash our entrepreneurial spirit... (aka green energy funding, tax breaks, venture capital...)
Our breakthroughs is science have helped us and the world in so many ways. From the Green Revolution to wiping smallpox off the face of the earth to tackling pandemics with speed and effectiveness never seen before in the history of mankind. The research has spawned many new companies, jobs and even whole industries. We must renew our commitment to science, research and exploration--we've been to the Moon, explored Mars, mapped the human genome, and we're just getting started... (more money for NSF, DOE, NIH, etc.)
Our society and our business are based on an educated workforce. When the immigrants came to and built this country to the world power it is today, they came here for their children--and they made them go to school. That was their way to a better life. When the G.I.'s came back from WWII, it was the G.I. bill that gave many of them a college education, a first in many of their families, and it provided them and our country with new prosperity. Our education system must be the best, and it must work for everyone....(new education initiatives, expand the ones just starting)

Posted by: golack on September 3, 2010 at 11:16 AM | PERMALINK

tiredofgreed. You're the one doing the most whining-- and proposing no solutions. Best guess is, your handle should really be full-o-greed.


I'm now convinced that Obama’s difficulties are largely due to a strategic error he is probably unable to correct: an inability to shape public opinion with a political message and policies that resonate with voters. This error is compounded by a tactical error: an unwillingness to break the filibuster [It could have/can be eliminated at any time with 50 votes + Biden via the nuclear option.]

The party in power is expected to do what's necessary to pass its agenda. If it can't, it is held responsible for the failure, not those who stopped them from doing it. This is particularly true when you have a near-supermajority: voters think you are a weak leader and the underdog Republicans are simply "playing politics" better and so deserve to "win." Ironically, if they win -- and the day they need to do so-- the Republicans will not hesitate to break the filibuster via the nuclear option. Saving the filibuster "for good use by Dems later on" is fatally naïve. Obama’s strategic error (inability to articulate a political message to change public opinion) and his tactical error (not breaking the Senate filibuster) have consistently interacted to the detriment of Obama and the Dems.

As one example, in large part to avoid a filibuster in March of 09, Obama finally proposed a stimulus between $700 and $800 billion that was widely known as too weak to really stimulate the economy and also included large tax cuts more likely to stimulate saving than consumption-and spending that would be unlikely to produce many jobs until the end of Obama’s first term. To compound this error, in the stimulus’ first year, the administration spent only $17 billion of the $139 billion allocated for infrastructure spending. The failure to get a larger, more effective stimulus has done great damage to the Nation, made it look like Keynesian economics is at fault, and reinforced the weak leader meme. The principal culprit in this failure is the (non) leadership of Barack Obama who as a politician has a Carteresque/Neville Chamberlain-like aversion to confrontational politics and a preference for weak and ineffective bipartisan or postpartisan policies -- rather than strong and effective Progressive policies. Obama and other frightened Senate Democrats think spending is unpopular - but unemployment and an economy moving in the wrong direction is more unpopular. Republicans have these Dems so rattled, they're afraid of the disease and the cure --- and so do next-to-nothing, which is the MOST unpopular solution.

We've seen enough of Obama, Nelson, Lincoln, Baucus, Landrieu, and several other Blue Dogs to know that at best they're confused (whether or not they have IQ's of 180) and are unlikely to change. In most cases (Snowe, Collins may be exceptions), it's MUCH easier to elect better Dems to a given office than change a Rep to a Dem. In fact, probably the only hope for Progressives with Obama as President beyond 2010 is to give him a strong Progressive challenger with a following with whom to exercise his primordial instinct to compromise. [Huey Long did wonders for FDR who was much more Progressive and daring than BHO, and with much less instinct or need to compromise.] That's a rather weak hope. Obama need be replaced ASAP -- and may be if the Repblicans run fewer crazies.

Posted by: gdb on September 3, 2010 at 11:17 AM | PERMALINK

No, credibility doesn't count, because the so-called "liberal media" is so lazy and cowed that it'll present a he-said, she-said narrative uncritically presenting even the most incredible points, offered by a succession of right-wing tools with a long history of being wrong, and then "leave it there."

Posted by: Gregory on September 3, 2010 at 11:32 AM | PERMALINK

Here's proof: Rush Limbaugh tipped the GOP's hand at the beginning of Obama's term when he said he wanted Obama to fail. (The so-called "liberal media," of course, unquestioningly accepted his explanation that he meant he wanted Obama to fail to impose socialism.) That statement was a preview of the Republican Party's unrelenting intransigence and obstructionism.

The Republican Party is deliberately standing in the way of economic recovery, furthering the suffering of Americans because they see a lousy economy as their ticket back to power. Yet not only does the so-called "liberal media" not permit this point to be noted in our national discourse, but it hands out unearned credibility to the objectively wrong economic faiths of the Republicans.

Posted by: Gregory on September 3, 2010 at 11:37 AM | PERMALINK

t case writes:

Krugman keeps saying that he's aware of the political constraints on Obama, and then turns around and writes as though they don't exist. How, exactly, was a bigger stimulus going to pass the Senate? It's gotten tiresome.

Yes, imagine a President actually influencing Congress. What a fantasy. Imagine if George W Bush had actually pushed through what he wanted rather than just caving to the Democrats over and over the way he did.

I think actually the Obama worshippers who constantly defend every mistaken move are as much to blame as the other conservative Democrats and Republicans. It just extends this climate of fear in which every Republican talking point is validated, and wins the day.

Krugman writes that he understands political reality now, and to some degree, at the start of the crisis, that it was stacked against doing what would have worked. That isn't the same thing as claiming that night is day and that the smaller stimulus was the right move, first of all. It's also not the same as saying that political reality is carved in stone and utterly divorced from what the President of the United States decides to push. Continuing to claim that he's utterly powerless does nothing but extend a fantasy and an excuse to cave.

Posted by: Timelagged on September 3, 2010 at 11:37 AM | PERMALINK

timelagged. you are right on. Had BHO made breaking the filibuster job#1 in 3/09, he would almost certainly had got it passed with 50 votes + Biden. And then all other Progressive bills, if that's what he really wanted, would have passed--- like REAL health care reform. Could he get 50 votes now that his status as a weak leader is known by all at home and abroad (including the Dear Leader of Korea)?? That's much more problematical-- and his fault.

Posted by: gdb on September 3, 2010 at 11:46 AM | PERMALINK

conservatives made a series of predictions...all of which turned out to be hopelessly backwards.

Steve, "conservatives" didn't make Obama nominate and listen to Geithner (a republican) and Summers.

"conservatives" didn't make Obama refuse to listen to, entertain or actively consult Krugman.

"conservatives" didn't make Obama throw out staff a recommendation of a $1.5B stimulus and then say "we'll start [negotiations] at the low end" at $700B.

"conservatives" didn't make Obama say "without a stimulus unemployment will rise to 10%", subsequently watch unemployment spike very quickly to 10% within 6 months of said prediction even WITH a stimulus, and then do nothing about it.

"conservatives" also didn't make Obama create HAMP and knowingly scam homeowners into thinking their mortgages would be renegotiated, when in fact it was only going to delay foreclosure for 18 to 24 months.

and, finally, "conservatives" didn't make Obama hire a Blue Dog who, in the middle of the worst job climate in 70 years, then goes on to say "F@ck the unions".

Posted by: Observer on September 3, 2010 at 11:59 AM | PERMALINK

Who the hell is this "tiredofgreed" person? We've got an election coming up, and liberals are making arguments in favor of the policies and candidates they support. And pointing our, correctly, that the Republican agenda is, has been, and will be, bad for America.

I don't know, I guess some people might think it's fearmongering not to want mean-spirited lunatics like Rand Paul and Sharron Angle in the Senate. Seems like common sense to me.

Posted by: Stephen Stralka on September 3, 2010 at 12:09 PM | PERMALINK

The primary issue all along is when the inevitable war of ideas will take place between these two factions.

Obama thought he could avoid the war because he naively thought that republicans were interested in working together for the public good. So he compromised before submitting his first proposed stimulus package. That's called negotiating against yourself and IT'S NEVER A GOOD THING.

The truth is there is going to be a war one way or another and he should have declared war on Day 1 and pushed hard while he had all the cards. Yes, the stakes were high then, but that's a part of playing poker as well and the added pressure would have worked against the repubs.

Posted by: bdop4 on September 3, 2010 at 12:10 PM | PERMALINK

I am someone who sees Obama doing a decent job under incredibly difficult circumstances with no support from an irrational base. It ain't that bad right now but by reading these blogs and comments you would think we did end up in the second great depression with 20 percent unemployment. The only thing worse than a right wing nut job is a far left wing self-righteous nut job.

Posted by: tiredofgreed on September 3, 2010 at 5:41 PM | PERMALINK

gdb says that Obama should've made the Senate get rid of the filibuster first, so it could then pass a larger stimulus. I admit that hadn't occurred to me.

Posted by: t case on September 3, 2010 at 8:19 PM | PERMALINK
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