As soon as the Obama administration-in-waiting announced its stimulus plan — this was before Inauguration Day — some of us worried that the plan would prove inadequate. And we also worried that it might be hard, as a political matter, to come back for another round. Unfortunately, those worries have proved justified. The bad employment report for June made it clear that the stimulus was, indeed, too small. But it also damaged the credibility of the administration’s economic stewardship. There’s now a real risk that President Obama will find himself caught in a political-economic trap…
As I said, I was afraid this would happen. But that’s water under the bridge. The question is what the president and his economic team should do now. It’s perfectly O.K. for the administration to defend what it’s done so far. It’s fine to have Vice President Joseph Biden touring the country, highlighting the many good things the stimulus money is doing. It’s also reasonable for administration economists to call for patience, and point out, correctly, that the stimulus was never expected to have its full impact this summer, or even this year…
What Mr. Obama needs to do is level with the American people. He needs to admit that he may not have done enough on the first try. He needs to remind the country that he’s trying to steer the country through a severe economic storm, and that some course adjustments — including, quite possibly, another round of stimulus — may be necessary.
What he needs, in short, is to do for economic policy what he’s already done for race relations and foreign policy — talk to Americans like adults.
This has been kind of hard for me. Two of my favorite celebrities – Paul Krugman and Barack Obama – pitted against each other. From the start, Krugman has been saying "not enough!" and I’ve agreed. On the other side of the fence, the Republicans have screamed bloody murder about Communism and Socialism and everything else. I don’t know if Obama could’ve brought off what Krugman proposes. The opposition point is insane – running up the debt, tax increases, etc. They are in no position to scream about the debt or tax increases, however, they have a point – even if their reason for making it stinks. If the Stimulus fails, it’s a disaster. And now we’re beginning to hear Hoover analogies [Barack Hoover Obama]. Truth be told, Herbert Hoover took the hit for Calvin Coolidge, who was the problem in the first place. And I’ve always doubted that F.D.R. could’ve done what he did until things got so bad that there was no choice.So, I’ve hoped that the truth lies between my two heros – Paul Krugman and Barack Obama. That Obama undershot out of necessity and that Krugman is too Keynesian and overshot his estimate. And that there’s a broad middle that will be the end result.
My fear, however, is that the excesses of the Reagan/Bush/Clinton/Bush years have caught up with us, and that the argument between Paul Krugman and Barack Obama is moot. It’s time for America to pay for her mistakes, and there really is no "fix" at this point. Sorry, but that’s both my intuition and my fear [though hope springs eternal]…
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