Ezra Klein Finds More Excuses for Team Obama’s Failure
You can tell that White House defenders now fear Team Obama is about to be pinned with the tail of economic failure by the increasingly unconvincing efforts to make up excuses for it.
Last week, among many others, Ezra Klein wrote on the now favorite metaphor for failure: we’ve run out of ammunition. He listed possible sources for economic recovery and noted all were now doubtful, so we might have to settle in for a longer recovery at best or become accustomed to crisis. Given adamant Republican opposition and obstruction, the President has run out of options that can meaningfully boost the economy and bring down unemployment.
Despite various protests that more could and should be attempted (see, e.g., Joe Gagnon, via DeLong or Economist’s View), the “out of ammunition” excuse is becoming conventional wisdom. And once you doze off with that pod under the bed, all that’s needed to complete the absolution is to argue that those who wanted the President to do more early on are also mistaken, because, gosh, doing more would have been too hard.
To illustrate this point, Klein quotes Obama’s economic team — Summers, Bernstein and Romer — about their worries the federal government just wasn’t set up to spend more stimulus money and still ensure its effectiveness. From Ezra’s interview:
“We had a hard time spending $800 billion quickly, and with that much stimulus, the issue of diminishing returns could be important,” said Romer. “I don’t believe we could have efficiently and effectively put that large a stimulus to good use with requisite accountability,” Bernstein said. “It would not have been possible to move vastly more money into quick trigger infrastructure projects,” Summers said.
So, the Team tells us, a larger stimulus probably wouldn’t have worked, because the US Government just can’t do big stuff any more. Who will tell Rachel?
I suspect FDR historians would think this shows at least a fundamental lack of imagination. And Atrios isn’t buying this excuse either.
Things may have been hard given the constraints they imposed on themselves, but those constraints were…self-imposed. I guarantee my local government and my local transit authority could have easily spent as much money as they shoveled to them. Sure it may not have all been spent wisely, but it would have been spent more wisely than not spending it at all.
I think Atrios is right; the notion that we’d quickly run out of useful things the country needed done is preposterous, and local governments are set up to do them. Just ask the mayors and engineers who keep saying we’ve got $2 trillion or so in needed infrastructure repair and improvements alone.
But I think the excuse is even weaker, because it assumes a quick end to the recession. These highly trained economists — and Romer had seriously studied the Great Depression — would surely have known we were in for a long recovery, at least on the jobs front. Romer’s numbers would have told them that. To be sure, they were blindsided somewhat, because their assumptions were way too optimistic; the economy was more severely damaged by 2008 than they knew in 2009, as the Commerce Department told us a week ago.
But when jobs didn’t immediately rebound fast enough, Team Obama was quick to remind us that “jobs recovery always lags,” and “it takes a long time to return to full employment after a severe recession associated with a financial collapse.” Okay. What did that mean for how to structure the stimulus?
Summers must surely have known, and likely told the President, that a full jobs recovery might take several years. The economy had just lost $6-7 trillion in housing wealth alone. And if the White House knew this, it’s not credible for these folks to tell us now the stimulus was purposely limited because we didn’t know how to spend more than a few hundred billion extra for a couple of years to maintain jobs. They weren’t limited to two years. They needed a plan that might continue for several years, a plan that could extend into this year and next year.
Why did they accept the notion the stimulus could only go to “shovel ready” or “quick trigger” projects? What was the risk of demanding authority — or at least preparing the public — for three or four years of extra spending for unemployment, state Medicaid and other budget support, and infrastructure investments? Why wasn’t there a trigger for continued support if needed, a scenario the economists would surely have regarded as plausible?
Summers reportedly once said he wanted an “insurance policy” against an extended recession or worse, but it’s now clear they didn’t have one. Instead of buying insurance, they placed a bet on quick recovery and lost. Or rather, the country and 14 million unemployed lost that bet. I don’t see how the Administration and Congress have any excuse for having taken that risk.