Several of the nation’s most trustworthy economists (because they’ve been right when others were wrong, wrong, wrong)– Krugman, Galbraith, Stiglitz, Roubini, DeLong, Baker, etc, etc, are all telling us we need another stimulus, and now, not later, because it will take some time to kick in.
The official word from the Obama administration is that it’s too soon, because the February stimulus bill is only now starting to ramp up. But Brad DeLong explains why the White House arguments and Joe Biden are missing the point:
If the Obama fiscal boost program has its anticipated impact on the economy as its main effects take hold over the next year, it is still half the size of the program it now looks like we need. Only if it magically turns out to be twice as strong as we think–only with simple Keynesian multipliers of 3 rather than 1.5–is it the right size.
And, of course, if the situation deteriorates further we will need an even bigger stimulus, while if the situation improves having too-big a stimulus is not a problem because we can soak up the demand through monetary policy.
So Vice President Joe Biden completely misses the point when he says:
"I think it’s premature to make that judgment [that we need a larger stimulus]. This was set up to spend out over 18 months. There are going to be major programs that are going to take effect in September, $7.5 billion for broadband, new money for high-speed rail, the implementation of the grid — the new electric grid. And so this is just starting, the pace of the ball is now going to increase."
During the stimulus debates, many of us denounced the despicable and duplicitous strategies of Congressional Republicans and their DINO and media followers, not just in opposing any stimulus but in weakening the more effective spending elements, demanding that help to states and the unemployed be drastically curtailed, stopping helpful/needed spending programs in favor of unneeded, useless tax cuts, and then mostly refusing to vote for the stimulus bill. Now they criticize the stimulus for not working fast enough, even though they’re practically tripping over stimulus projects in their home state!
There is no hope for these people, and whatever must be done, on this or any other national issue, must be done without them and over their opposition. Perhaps the Administration has learned that seeking their votes and accepting their compromises hurt the country — hurt millions of people — by not creating enough jobs, by pushing state governments into laying off tens of thousands of people and creating a counter-stimulus effect, while damaging education, health care and other vital services.
But Obama and his failed economic team are also largely to blame for ignoring the best economists’ warnings that his stimulus would be too little and poorly focused. His advisers denied these problems, but they were wrong, again.
So why aren’t we all calling for the resignations of Obama’s top economic advisers, starting with Larry Summers and Tim Geithner? And why shouldn’t the country insist on their replacement by people dedicated to putting Americans back to work, maintaining vital services and relieving the suffering?
Is there any excuse for their performance when they were forewarned by people they should have trusted? For their distorted priorities? For their inability to understand/predict the severity of our problems? To design adequate remedies that actually fix the causes rather than say "we’ll be more careful next time"? Is there some rule that says these people should be immune from any consequences of being wrong, again and again and again? Better think again.
Americans should be angry at Obama, not for the calamity he inherited but about where this economy is still headed. The President is responsible for setting a different direction and helping the victims while we redirect and restructure the economy. But his chief economic advisers pay lip service to that idea and then go back to defending the same structure.
Obama should demand their resignations to save the economy, people’s jobs and a Democratic vision of how the country is supposed to work. Could a policy mandate be any clearer, or the public need any more compelling?
Krugman, That ’30s Show, and who decides that stimulus supporters are "unpersons"?
Galbraith, No Return to Normal
DeLong, Second stimulus arguments from Laura Tyson; also, Brad responds to Bruce Bartlett
Dean Baker, The green shoots are dead; and see this post on Oxdown
Stiglitz, How to fail to recover
Mark Thoma, picks up on why France’ stimulus is working
Stirling Newberry, You Are Here
IMF, World Economic Outlook (is dismal) [h/t Yglesias]
CEPR, Honor roll of economists who support another stimulus
Kelton, State budget crises: why the stimulus isn’t working