Why the Hole was not Filled

From an article in the New Yorker by Ryan Lizza that looks at Obama's economic team and how they handled the transition to power in the face of a catastrophic economic crisis:

The most important question facing Obama that day was how large the stimulus should be. Since the election, as the economy continued to worsen, the consensus among economists kept rising. A hundred-billion-dollar stimulus had seemed prudent earlier in the year. Congress now appeared receptive to something on the order of five hundred billion. Joseph Stiglitz, the Nobel laureate, was calling for a trillion. Romer had run simulations of the effects of stimulus packages of varying sizes: six hundred billion dollars, eight hundred billion dollars, and $1.2 trillion. The best estimate for the output gap was some two trillion dollars over 2009 and 2010. Because of the multiplier effect, filling that gap didn’t require two trillion dollars of government spending, but Romer’s analysis, deeply informed by her work on the Depression, suggested that the package should probably be more than $1.2 trillion. The memo to Obama, however, detailed only two packages: a five-hundred-and-fifty-billion-dollar stimulus and an eight-hundred-and-ninety-billion-dollar stimulus. Summers did not include Romer’s $1.2-trillion projection. The memo argued that the stimulus should not be used to fill the entire output gap; rather, it was “an insurance package against catastrophic failure.” At the meeting, according to one participant, “there was no serious discussion to going above a trillion dollars.”

So the "stab in the back" came from Larry Sumers. He refused to forward to Obama the key recommendations for a $1.2 trillion stimulus despite a number of very bright economists saying "this is what is needed". You can blame Sumers for the long lingering recession because of this idiotic decision of his. You can also blame Sumers for creating the disaster because he was one of the architects of de-regulation. In my mind, this economic "genius" is a true villain of our times. He should be banished from power.