Wrong, Jonathan Chait: Not “Everybody” Thought the Stimulus Was “Mind-Bogglingly Large”
I naively thought Obama’s offering to cut Social Security, Medicare and Medicaid would put an end to the “liberals are being unfair to Obama” genre, but Jonathan Chait (heh-indeeded by John Cole) published another one in the New York Times magazine today.
It’s full of problems, but I want to focus on this one — because it’s so obviously wrong.
At the time, Obama’s $800 billion stimulus was seen by Congress, pundits and business leaders — that is to say, just about everybody who mattered — as mind-bogglingly large. News reports invariably described it as “huge,” “massive” or other terms suggesting it was unrealistically large, even kind of pornographic. The favored cliché used to describe the reaction in Congress was “sticker shock.”
Aside from the fact that it wasn’t $800B, it was $787B — that’s just wrong. Unless you think Paul Krugman didn’t matter.
To close a gap of more than $2 trillion — possibly a lot more, if the budget office projections turn out to be too optimistic — Mr. Obama offers a $775 billion plan. And that’s not enough.
Or Dean Baker.
“You’re talking about a gap on the order of twelve-hundred-fifty billion dollars, and we’re trying to plug that with four-hundred-something, so we’ve got a long way to go,” Baker says.
Or Brad DeLong.
Nevertheless, I agree [with Krugman] that there [sic] best is almost surely not enough. […] So at the moment my preliminary judgment of the Obama fiscal boost is that it is a good first bid, but that the administration ought to be doing a lot more.
Or Eileen Applebaum.
It needs to be bigger, if you just take a look at the amount of household spending that is lost because of the decline in homes, equity and 401(K)s.
Or James Galbraith.
Galbraith, too, says that demonstrating that the stimulus is too small is a matter of basic math. The $400 billion it will inject into the economy each of the next two years is equal to about two to three percent of GDP, he noted. But the economy is falling at a much faster rate, projected at eight percent a year by the CBO – and that projection, again, doesn’t account for the financial collapse.
Or Mark Zandi.
Indeed, my most significant criticism of the current stimulus plan is that it is too small.
Good grief, even Kaplan Test Prep reported what all these nobodies were saying.
Liberal Democrats recognize the package’s scale and accomplishment, and they have defended it against Republican attacks. But they also wonder whether Obama could have used the opportunity of a large congressional majority and a moment of economic emergency to pass a bigger package, with a better chance of boosting the economy and with more of his priorities intact.
And as big as it is, the final bill is smaller than what initially passed in the House and Senate, and it falls well short of filling the $2 trillion gap in demand that many economists foresee. With a third of the bill’s cost devoted to tax cuts, the spending is $507 billion.
Now it’s one thing to argue, as Obama has, that a much larger package was politically impossible. But to assert that “everyone who mattered” thought the stimulus was not just big — but “mindbogglingly” big — is quite another. It’s simply to rewrite history.
And with Obama apologists, unfortunately, you tend to get a lot of revisionism.