The Left, and People Who Know Arithmetic, Always Said the Stimulus Was Inadequate

Dana Milbank devoted his column to the disenchantment of progressives with the current political situation. At one point he comments that:

While this is no doubt true, it is worth mentioning that just about all progressives said at the time that the stimulus would be inadequate to restore the economy to a healthy growth path. The collapse of the housing bubble destroyed close to $1.2 trillion in annual demand from construction and consumption. At its peak in 2009 and 2010 the stimulus only replaced about $300 billion in annual spending.

It is discouraging to see so many people suffering unnecessarily, but this outcome is exactly what our analysis predicted at the time. Unfortunately, having a track record of being right is not generally a factor in determining which views carry weight in Washington policy debates.

So Obama Was Only Off by $900 Billion?
written by Paul, June 19, 2012 7:16

Since most of his "stimulus" was just tax cuts that were hoarded or used to pay down debt, there was basically NO stimulus at all. Cash-for-Clunkers was the only real Keynesian thing he did except for the "shovel-ready" infrastructure projects that he admitted were anything but shovel-ready.

So no real stimulus at all. No wonder it failed.

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written by Eric377, June 19, 2012 7:32

Perhaps Americans are struggling with what it means to restore the economy to a healthy growth path. Effective and humane public leadership ought to see to it that people don't suffer, but it doesn't automatically mean that restoring a calcuable gap to some level of activity in 2007 - to pick a year - was in the best national interest. Perhaps the mark was missed by not attempting a more ambitious change with the past rather than specifically a too small stimulus.

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written by Sherryc, June 19, 2012 7:32

Had the Republicans supported the Presidents initiatives at the state level the economy would be in much better shape. Did you predict that the President would be obstructed in every way possible by the right? If not, I would have to say you can only take so much credit for the correctness of any predictions made.

-1

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written by kharris, June 19, 2012 8:23

Paul apparently thinks "most" (as in "most of his 'stimulus'") is the opposite of "no" (as in "no real stimulus at all"). My understanding is that "most" represents less than an absolute, while "no" is an absolute. I guess I could be wrong.

Even ignoring Paul's cock-eyed use of English, his aim is off. Dean is saying that the stimulus policy that we had was not adequate. That leaves plenty of room for changes in details as well as magnitude. We could have spent more heavily and offered fewer tax cuts and I suspect in a Dean-designed stimulus package, we would have. Still, in Dean's world, anything left unsaid is fair game, so Paul probably gets points for the tax thingie, but only here on Dean's blog.

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written by Mark Jamison, June 19, 2012 8:47

The problem is that Mr. Obama's most influential advisors were from the Clinton/Rubin school. I'm not sure Mr. Obama ever accepted the narrative that progressive economists like Mr. Baker and Mr. Krugman were pushing.
Growth by bubble is not a successful strategy. Neither is a false, mis- timed austerity. It seems we are destined to play out the current regressive policies until the general populace is desperate enough to consider following proven Keynsian solutions.

Sherry, you're re-writing 2009
written by fairleft, June 19, 2012 9:13

The Prez got essentially what he wanted, a stimulus half the size Baker, Krugman, Galbraith and so on said would be needed. Even so, he did bend over backwards, for no good reason, to accomodate the minority Republicans, and decided to reduce the stimulus roughly $100 billion and to make even more of it tax cuts. Aid to states was always far from enough to forestall the massive cuts that were then needed at that level.

Dean says,
written by diesel, June 19, 2012 9:32

"having a track record of being right is not generally a factor in determining which views carry weight in Washington policy debates."

This can be taken in different ways. It may be that:

(1) policy makers have a different take on our problems than those who have a track record of being right while yet acknowledging that they are sincere.

(2) policy makers have a different take on the solutions to the same recognized set of problems.

(3) policy makers are just plain obtuse.

(4) policy makers enjoy creating chaos and indirectly benefit from implementing perverse counter-productive strategies.

(5) policy makers jealously guard their prerogative and reject any advise (worthy or not) as infringing on their territory, and to H**L with the consequences for the Nation.

There may be a bit of all of these involved.

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written by Bart, June 19, 2012 10:10

About 300 billion of the 800 billion stimulus package were tax cuts, and Bush had already shown that tax cuts for job creators did not create enough jobs.

That left 500 billion of spending stimulus. Christy Romer's one trillion plus recommendation was low balled by Summers and Geithner. Some thought her numbers would not get past the likes of Snowe, Collins, etc.

diminishing returns
written by pete, June 19, 2012 10:57

Seems like the first dollars of stimulus ought to be the most stimulative, i.e., highest multiple, and then they would decline after that. Serious folks put the long term multiplier at .5 or less, so that an increase in government by $1 gives us a 50 cent boost in output. Problem is that our monster government is simply inefficient. Additional problem with stimulus when G is already huge is that there is little upward room. If G was much smaller, as in the 30s, then for sure a couple of bucks matter. But with G (state and local) like 1/3 of the economy, hard to get marginal effects out of small increases, really compounded by the inherent inefficiencies.

-2

anyway it was not Obamas stimulus
written by pete, June 19, 2012 11:04

His statement at the time was that it was "in the works" and since there was a democratic filibuster proof majority pass it quick. Here is where he actually gave up his leadership to the special interests and Washington elite. He had no plan. Pelosi handed him the pen and said sign this pork laden, bloated package, and he could not argue, saying that congress had been working on this already by the time he was inaugurated. And that defeat to the special interests was the beginning of his slide, culminating in his "bluff" to veto the Bush/Obama tax cut extension. His bluff was called, and he folded. Zip on the leadership. He allowed for a health care mandate though he ran against it, and now that will sink the whole plan. Another disgusting election coming, between two clueless folks.

People Suffering Unnecessarily!
written by James, June 19, 2012 1:07

In the self declared rightous, moral party, POOR average people suffering is a necessity for the economy to improve.

In that world, the peopl we cannot hurt or even affect is the RICH 1%. Any fairness in policy or stimulus spending is considered killing the so called "job-creators."

They need all the breaks they need so they could train and send horses to compete in Olympics and buy "chocolate goodies!"

to fairleft
written by Sherryc, June 19, 2012 9:21

Thanks for the explanation. You are no doubt right.

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written by zinc, June 20, 2012 6:07

The problem is that Dana Milbank and the other neo-republican mouthpieces refuse to admit that the US has bet the farm on a massive "stimulus" program that absolutely, by all measures, doesn't work.

The Reagan/Bush Tax Cuts.

While at the same time eschewing the variety of Keynsian stimuli that do work.

-1

In Trouble
written by louisrr, June 22, 2012 1:15

The so-called "stimulus" should have, and must, in the future, focus on human capital. Without that, any stimulus is limited to short-term.
The countries in Asia, the leaders, Indonesia, China, Singapore, Korea, etc., are INVESTING in people.
In the US, the exact opposite is taking place.
Schools are increasingly more expensive and harder to get in to, more and more younger people are highly misinformed and uneducated, the GOP attacks publica school teachers at every opportunity, there is NO investment in after-school programs, increasing funding for adjuncts to formal training,language stuides and formal sciences are on a downward trend, while "business" majors continue to increase.

Looks like a recipe for disaster. The US would be wise to consult with other nations who "get it."

The Left, and People Who Know Arithmetic, Always Said the Stimulus Was Inadequate

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