Obama made a key point about the stimulus today.

[ProSense]

Obama made a key statement:

The American Recovery and Reinvestment Act was not expected to restore the economy to full health on its own but to provide the boost necessary to stop the free fall. So far, it has done that. It was, from the start, a two-year program, and it will steadily save and create jobs as it ramps up over this summer and fall. We must let it work the way it's supposed to, with the understanding that in any recession, unemployment tends to recover more slowly than other measures of economic activity.

It was virtually impossible to pass a bill and simply dump the money onto states and institutions. It's inevitable that spending will pick up, which is important given the argument: "people don't have two years to wait." The people who lost their homes two years ago couldn't wait two years either. Every month since this crisis began, someone crossed that two-year mark. The problem exists and no amount of wishing is going to to turn it around faster than possible. I doubt those calling for more stimilus actually believed that more meant the problem would have been resolved by now. It's going to take time, no matter what, and again, no one should have expected the bill to pass and the money simply dumped onto states. Priorities and appropriate projects had to be identified and approved, and they are still being identified and approved.

Found this comment to a post at Brad DeLong's blog:

First, the right move is to accelerate existing stimulus spending, especially in energy, by changing the oversight methodology currently in place. Second, pass the energy bill quickly,since its Green Bank and other measures actually constitute large additional stimulus and job creation measures (the cap portion doesn't kick in for several years). Third, make sure the annual budget is front-end loaded and is passed very very quickly. Fourth, pass health care quickly with emphasis on spending first and savings just a little later in time. These measures are more practical than a new, second stimulus that would in fact distract from these steps.

Agree, this is most likely how it will unfold.


Edited typos, missing comma.

[MannyGoldstein]

1. How About We Back Take Some of the $13 Trillion Banker Bailout Tax Loot

And spend it on Main Street? Virtually everyone not being paid by bankers, from Nobel Prize winners to Warren Buffet, agree that the bankers are getting way too much, and Main Street way too little.

Obama said that this little stimulus would keep unemployment from going past 8.5%. That freight train's now at 9.5%, and doesn't seem to be losing speed.

[grantcart]

2. It is accumulative

ironically it will be a lot more visible 16 months from now during the mid term.

[ChimpersMcSmirkers]

3. Yeppers.

On a related note, people seem to forget just how close we came to a complete melt-down only a few months ago. Now it's all about Obama not fixing things fast enough. Quite amazing really. In a weird way I think that it's a positive sign.

[ProSense]

5. Yeah, and let's not forget

that some were claiming the crisis wasn't real or urgent.

That was bizarre!

[Peacetrain]

6. That is what is going in place like bricks on top of bricks..

But it will take a while to see that everything is getting rebuilt. you are right about that

[Oregone]

8. So is the decline in the GDP

So between the cumulative effects of both, you gotta hope the former can negate the later.

[paulk]

15. I don't thnk it's "ironic"

I think that was the plan...

[Cha]

4. I can see this..especially getting the health care revision

Recovery in place.

"..Third, make sure the annual budget is front-end loaded and is passed very very quickly. Fourth, pass health care quickly with emphasis on spending first and savings just a little later in time. These measures are more practical than a new, second stimulus that would in fact distract from these steps."

[Oregone]

7. Krugman: "I’m not too happy with the policy justifications we’re getting from the administration."

"I’m not too happy with the policy justifications we’re getting from the administration. It’s perfectly clear that the stimulus was too small; I think they know that too. But they’ve made a political judgment that (a) they can’t push another round through and (b) the thing to do right now is defend the policy they already have.

...

But I still think that Obama’s greatest strength is precisely his obvious intelligence and ability to talk to Americans like adults; it’s a shame to see him and his advisers saying something they have to know isn’t quite right."





1....2....3



"KRUGMAN IS DEAD TO ME!"

[ProSense]

9. Krugman: Maybe they’re right. (w/link)

Maybe they’re right. But it does bring back unpleasant echoes of what I thought of as the Bush administration’s Vegematic approach to tax cuts: it slices, it dices, it purees! In other words, whatever policy they had been advocating in the past was still the perfect answer to whatever problems the economy faces now.

To be fair, Obama is nothing like Bush; the stimulus was designed to solve a real problem, and the Obamanites, unlike the Bushies, don’t go around inventing crises to solve. But I still think that Obama’s greatest strength is precisely his obvious intelligence and ability to talk to Americans like adults; it’s a shame to see him and his advisers saying something they have to know isn’t quite right.

link

Krugman was right there with the other doomsayers predicting the stimulus would fail because it was too small. He now qualifies his statements.

Based on the point in the OP, Krugman has a point: Obama could be right.

[Oregone]

10. "Maybe they’re right. But it does bring back unpleasant echoes of what I thought of as the Bush"

His word isn't the word of God. Thats merely his opinion and he seems he knows it.

I tend to feel anyone who thinks this stimulus is the proper size to restore production levels has their head seriously high up in their colon. There is actually no rational reason this arbitrary size will do that (especially after miscasting the unemployment so much), so why do they cling to it so?

[ProSense]

11. "has their head seriously high up in their colon." Who:

people who think a second stimulus is going to pass in this climate or that a larger one could have been passed earlier?

Oh, and on edit: "His word isn't the word of God."

I think that was implied in my point.

[Oregone]

12. The fear of failure is no excuse for not trying to do the right thing.

And there is the other extreme I mention of people who cling to the finite number/focus like a pack of Jehovah Witnesses trying to get to heaven, in defense of their man. People are truly in denial about needing a corrective adjustment based on the real numbers compared to predictions. And Obama's statement only solidifies this mindset. Thats not healthy

[ProSense]

13. What? That makes no sense.

Failure was not an option (at least to anyone other than Repubs), but you seem to believe it was. Where would the country be now if a stimulus package had failed to pass in February?

[Oregone]

14. "who think a second stimulus is going to pass in this climate or that a larger one could have been"

That resonates as a fear of failure (legislative failure). These are reasons given to not pursue more funds than those that have been allocated, because it wont pass.

BTW, one of the arguments for the piddly stimulus earlier was that a larger one could be passed later when needed. That one sure washed out.

[ProSense]

16. No, that resonates

as fighting to get a bill passed. Your pessimism is based on nothing but speculation, you have no idea if the stimulus will achieve the objectives Obama laid out.

[Oregone]

17. Whats the arbitrary numbers & allocations the stimulus bill is based on?

Ill give you a firm clue: they were based on a predictions, including that we would see a mere 8% peak unemployment.

So, maybe I have something more than pessimism to go on. To each their own.

[Oregone]

19. "as fighting to get a bill passed"

BTW, such "urgency" to get a bill passed then lends no firm credence to the argument that we should not pursue more now. It only suggests that in such an urgent rush, greater error could have happened.

[ProSense]

20. Please reread the OP,

you seemed to have missed the entire point, as evidenced by this statement

BTW, such "urgency" to get a bill passed then lends no firm credence to the argument that we should not pursue more now.

[Oregone]

21. When in a corner, scuttle back to the start of the circle

[ProSense]

22. Circles don't have corners, and

you did miss the point.

[Oregone]

23. Apparently yours does. Its the flip side of the starting arrow.

But, I digress. Hope, believe, and pray for what you might.

[ProSense]

24. Yeah, and you enjoy

speculating doom.

[uponit7771]

18. ***REAL DANGER IS CONSUMER SPENDING AND NUMBER OF HOURS WORKED***

People are paying off dept and have a savings rate of around 7%, that means people aren't buying and this economy is ran 70% off the consumer.

Things will get worse if the number of hours worked continue to fall and those with jobs start earning less.

I'm sure the Obama econ team is looking at all of this I'm a little taken back at the fact that they don't recognize our current issues as structural and haven't didn't see the impact in unemployment U6 rate at first.

They're smart, we'll get outtah this thing just fine

[ProSense]

25. Second Stimulus Debate: Geithner vs. Krugman and Delong

Second Stimulus Debate: Geithner vs. Krugman and Delong

From Paul Krugman: Vegematic policy advocacy

Like Brad, I’m not too happy with the policy justifications we’re getting from the administration. It’s perfectly clear that the stimulus was too small; I think they know that too. But they’ve made a political judgment that (a) they can’t push another round through and (b) the thing to do right now is defend the policy they already have.

Maybe they’re right.

My guess is another stimulus package is coming - but the Obama Administration is in a political bind and they will have to wait a few more months. The second package will probably be introduced after the third quarter - or once the unemployment rate reaches 10% - and my guess is it will be about half the size of the package proposed by Dr. Delong.

Yeah, either the Obama administration and Democrats are setting themselves up to be blamed for economic disaster or "maybe they're right."