Fiscal Stimulus IIInstead of acting the statesman and standing up for Americans and demanding that the politicians rally to the cause. Obama has played the cool calculating politician with an eye to "finessing" the economic problem. But he has been too clever by far. He has fiddled and now Rome has burned. Obama is so inept he hasn't even thrown any Christians to the lions. Instead, he plays Nero in a chariot racing around proclaiming his love of the people and his prowess in making sure the embers are tamped down and it is safe to return to the burned out city.
by Brad DeLong
Josh Green today:A Second Stimulus: It goes without saying--doesn't it?--that this morning's news that the White House will push a $200 billion plan for business tax cuts, coupled with its $50 billion proposal for research and development tax credits, $50 billion for infrastructure, and its $30 billion plan for small businesses, amounts to calling for a second stimulus... without, of course, using the dread term "stimulus."Josh Green last July:
Seems to me that this brings a few small advantages. It will, in theory, offer some help to an economy in desperate need of a boost. Adopting the pu pu platter approach seems to have had the effect of broadening the coverage: rather than one big story about a second stimulus, this morning's Wall Street Journal devotes separate stories to each component.... And I suppose that not calling it a "stimulus" makes it marginally less easy to attack.
But mainly it seems like an enormous--again implicit--admission of error on the administration's part, and rolling it out piecemeal, on balance, a losing strategy. First, these measures come far too late. Had the White House put forward a unified package in the spring, as it considered doing, some version might have already passed...Why the Stimulus Ran Out of Steam: This came as no surprise. Earlier this year, the White House considered calling for reinforcements. But political caution again took precedence, and any further stimulus initiative was deemed unfeasible on the grounds that it wouldn't pass Congress and that the public would recoil at the added size of the deficit. The president kept quiet. The strategy adopted was to pass a series of small measures -- a $50 billion unemployment bill, a $40 billion tax extenders bill, a $30 billion small business bill -- that they judged should collectively produce a big effect. That approach clearly hasn't worked, economically or politically. Only the unemployment bill has passed, and that at half the size. Meanwhile, caution has failed to translate into more effective politics, leaving the president in the awkward position of having to campaign for puny bills plainly inadequate to the larger problem. It's hard to imagine the clamor over the deficit being any louder, and easy to believe that it might have been quieter had a stronger stimulus lifted the economy to a healthier state, for all the long-term costs.
The White House insists that it could not have gotten a larger stimulus through Congress, a debatable claim. But by twice neglecting to try, it has staked its fortunes on a policy that has visibly fallen short on the issue of greatest concern, the economy. Because of the divide between the experts and the strategists, nothing is happening. Given the weak state of the economy, the White House cannot claim that the stimulus it settled for has sufficed. Unwilling to call for another one, it is left to look on silently and helplessly.
The people elected Obama to protect the city, not to allow it to burn to the ground. They expected him to use his cleverness to invent programs to wrench the economy out of the rut, not play cute with the facts and dawdle while the hooligans were running from site to site with flaming brands in hand. They thought they had elected somebody about petty politics but they discover that their "leader" is more in love with the idea of "political compromise" than in action. Eager to talk himself into defective "compromised" legislation than in effective legislation.
Playing the game of "tax cuts" to avoid using the word "stimulus" is the latest version of this too-little-too-late game of Obama's. What the US economy needs is money in the hands of people who will spend it in one or two weeks and the economy needs jobs. Instead Obama's come up with yet another Rube Goldberg legislative contraption that will put money into the hands of businesses (which are sitting on $2 trillion in profits) in an attempt to cajole them into investing in new equipment (labour-saving devices in the midst of 14 million unemployed?). This is too cute by far. It boggles the mind that Obama can't come up with the straight answer and insists on complications and indirection layered on top of complications and indirection. Nutty!