A not so frightening double dip. (photo: QuitanaRoo on Flickr)

The Obama White House spent much of last winter pretending that what they had done on economic stimulus in early 2009 was sufficient to induce an economic recovery and reduce unemployment. For more than a year, prominent economists said they were wrong, but the White House economic advisers assured us they knew better.

Even as late as this summer, when it was no longer disputable the stimulus had been way too small, the Administration insisted all was fine and we were about to have a “recovery summer,” albeit one in which jobs growth would be slower than they preferred. That was then.

Now, according the ABC’s Jake Tapper, Larry Summers is trying to become a scarecrow.

At an off-camera briefing this afternoon, National Economic Council director Larry Summers said that a failure to pass the tax cut compromise President Obama negotiated “would significantly increase the risk” of a double-dip recession.

. . .

“If this process were to break down and a bill were not passed,” Summers said, not only would economic projections recently revised upwards not happen, “downward revisions would commence.”

So, the President’s chief economic adviser now tells us, for the first time, that if we don’t get even the limited and uncertain stimulative effect of this dubious tax cut package, the US economy runs a heightened risk of a double dip recession.

Perhaps Mr. Summers might explain why his team and Mr. Obama especially have not been strongly making that case for the last year, well before the lame duck season, instead of trying to sell us a bogus “recovery summer.”. . .

If, in fact, the economy does face that risk — and if Republicans impose severe austerity next year, it probably does — then we need a Presidential statement alerting the public. It should describe what he and his advisers recommend as the most cost effective ways to boost the economy and minimize this risk and an assessment of how well the current proposed tax cut package measures up . . . and hence why the package should be substantially improved.

It would then become clear that if the threat is real, several of the measures in the package — most notably the unconscionable giveaways to the rich — should be discarded as a complete waste of money and replaced with far more effective measures — directing funds towards those states and individuals (e.g., the “99ers”) most in need and most likely to spend it. Then get assurances from the GOP that they won’t offset the stimulus via austerity or other conditions for raising the debt limit. That would ensure that whatever hit this makes on the long-run debt does eventually become a trillion dollar waste of money in bailing out the rich at everyone else’s expense.

Of course this would require that the Administration include within the renegotiations some responsible adults actually willing to make those arguments, rather than confining the discussion to those who misled us for a year and those whose proposals would surely make matters worse.

Because the last thing you’d do is bet the economy and your boss’s reelection on an uncertain stimulus package even weaker and more likely to be undermined than the one that wasn’t good enough before. Otherwise, we’re just living in Oz.

David Dayen has more. For estimate of the stimulative effects of various measures, see here.

John Chandley

The Obama White House spent much of last winter pretending that what they had done on economic stimulus in early 2009 was sufficient to induce an economic recovery and reduce unemployment. For more than a year, prominent economists said they were wrong, but the White House economic advisers assured us they knew better.

Even as late as this summer, when it was no longer disputable the stimulus had been way too small, the Administration insisted all was fine and we were about to have a “recovery summer,” albeit one in which jobs growth would be slower than they preferred. That was then.

Now, according the ABC’s Jake Tapper, Larry Summers is trying to become a scarecrow.

At an off-camera briefing this afternoon, National Economic Council director Larry Summers said that a failure to pass the tax cut compromise President Obama negotiated “would significantly increase the risk” of a double-dip recession.

. . .

“If this process were to break down and a bill were not passed,” Summers said, not only would economic projections recently revised upwards not happen, “downward revisions would commence.”

So, the President’s chief economic adviser now tells us, for the first time, that if we don’t get even the limited and uncertain stimulative effect of this dubious tax cut package, the US economy runs a heightened risk of a double dip recession.

Perhaps Mr. Summers might explain why his team and Mr. Obama especially have not been strongly making that case for the last year, well before the lame duck season, instead of trying to sell us a bogus “recovery summer.”

If, in fact, the economy does face that risk — and if Republicans impose severe austerity next year, it probably does — then we need a Presidential statement alerting the public. It should describe what he and his advisers recommend as the most cost effective ways to boost the economy and minimize this risk and an assessment of how well the current proposed tax cut package measures up . . . and hence why the package should be substantially improved.

It would then become clear that if the threat is real, several of the measures in the package — most notably the unconscionable giveaways to the rich — should be discarded as a complete waste of money and replaced with far more effective measures — directing funds towards those states and individuals (e.g., the “99ers”) most in need and most likely to spend it. Then get assurances from the GOP that they won’t offset the stimulus via austerity or other conditions for raising the debt limit. That would ensure the stimulus does what it’s supposed to do and whatever hit this makes on the long-run debt does not eventually become a trillion dollar waste of money that just further enriches the rich at everyone else’s expense.

Of course this would require that the Administration include within the renegotiations some responsible adults actually willing to make those arguments, rather than confining the discussion to those who misled us for a year and those whose proposals would surely make matters worse.

Because the last thing you’d do is bet the economy and your boss’s reelection on an uncertain stimulus package even weaker and more likely to be undermined than the one that wasn’t good enough before. Otherwise, we’re just living in Oz.

David Dayen has more. For estimates of the stimulative effects of various measures, see here.

John Chandley

Scarecrow

Scarecrow

John has been writing for Firedoglake since 2006 or so, on whatever interests him. He has a law degree, worked as legal counsel and energy policy adviser for a state energy agency for 20 years and then as a consultant on electricity systems and markets. He's now retired, living in Massachusetts.

You can follow John on twitter: @JohnChandley