Obama and the Stimulus
Obama inherited and economy in the worst free fall in 80 years. In three weeks he passed a stimulus bill as much as Bush spent on the Iraq war. It may well have prevented a full-scale depression.
Conservatives would have preferred spending cuts, government layoffs and cancellations of private-sector contracts (see US Economy). But this section is about progressive complaints.
Jonathan Chait brilliantly takes on the political reality that the left forgets:
- Before Obama, Pelosi's House Democrats proposed a smaller stimulus.
- The deficit was headed past $1 trillion, before the stimulus.
- It was considered "huge," "massive," and "sticker shock"-ing.
- Progressives him max out the stimulus and pass all their other programs.
What Krugman really said when the stimulus bill was passed.
- Nov. 10, 2008, Krugman suggests a $600B stimulus.
- Dec. 16, 2008, Obama is presented with two plans $550B and $890 billion and told that over $1,000B is completely out of the question due to politics.
- Jan. 6, 2009, Krugman estimate's Obama's $775B stimulus will lower the peak unemployment rate from 9% to 7.3%
- Jan. 20, Obama takes office and the House passes the stimulus bill on Jan. 28.
- Feb. 4, Krugman complains that Obama compromised and all House Republicans still voted against the House bill.
- Feb. 6, Krugman realizes that the bill needs one Republican vote to avoid a filibuster. He commends Obama for warning of catastrophe.
- Feb. 7, Krugman says "So the original $800 billion plan was too small, ... The plan should have been at least 50% larger."
- Feb. 17, Obama signs the stimulus bill.
- Feb. 25, Krugman says "The stimulus bill is OK, though not big enough."
- Get the full story here.
Buy the time the House had passed the bill, Krugman appeared to believe, based on his reaction to the Romer-Bernstein graph (below), that with the stimulus, unemployment would peak at around 8% and that by 2012 election, it would be under 6% and heading down fairly quickly. He though Romer was a bit too pessimistic about the effect of the stimulus, but between Jan. 6 and 10th he because more pessimistic then her regarding the peak unemployment without the stimulus. In fact unemployment peaked at 10%.