Falling Short on the Stimulus

Paul Krugman writes a post on his blog that looks at The New Yorker article by Ryan Lizza on the Obama administrations deliberations about the stimulus:

So Christy Romer’s math looked similar to mine: even given what we knew last December, the straight economics said that we should have a stimulus much bigger than the Obama administration’s initial proposal. And given what happened to that proposal in the Senate — we actually ended up with only about $600 billion of actual stimulus — what we eventually got was half of what seemed appropriate in December. And the actual news on the economy since then has been worse than was expected back then, so that the stimulus now looks way short of what we need.

Maybe that was all that could have been done, politically. But it does not sound, from the Lizza article, as if either the economic team or the political team thought much about the risks of finding themselves where we are now — with the economy still failing to deliver job growth despite the stimulus — even though those risks were completely apparent at the time.

The tragedy is that Obama is too cautious, too conciliatory. Sadly, these are traits that fired his meteoric rise in politics, but now that leadership is needed, these aren't the traits that will make a historic difference. Obama wants to be the Lincoln of his time, but he has the wrong temperament. I didn't realize this. Most people didn't realize this. This is the tragedy of history. To paraphrase Donald Rumsfeld, you have to fight political wars with the politicians you have, not the ones you want or need. Of course Rumsfeld was an idiot and an incompetent. But sadly, history is a harsh mistress and on this point, Obama is falling short.

I think it is ironic that Krugman is talking about miscalculating risk. Yes, Wall Street miscalculated risk and destroyed the economy. And here's the Obama administration miscalculating risk and unnecessarily prolonging the recovery. Maybe "risk assessment" needs to be introduced into the elementary school education so that we don't have as many risk illiterates running around wrecking things for the rest of us?