Paul Krugman warned early on that Obama's "stimulus" was too small and would be seen as a failure.

[Better Believe It]

August 22, 2011, 12:35 pm
Early Stimulus Worries
By Paul Krugman

Some readers have asked for cites in which I warned early on that the Obama stimulus was too small and would end up being seen as a failure. Here’s my initial math. Here’s my reaction on the ARRA’s passage. And here’s my early take on the political economy.

I really wish I hadn’t been right.

http://krugman.blogs.nytimes.com/page/3/?8dpc

Click on the above article for links to the three articles cited.

Excerpts:

The Obama Gap
By PAUL KRUGMAN
Published: January 8, 2009

"I don't believe it's too late to change course, but it will be if we don't take dramatic action as soon as possible. If nothing is done, this recession could linger for years."

So declared President-elect Barack Obama on Thursday, explaining why the nation needs an extremely aggressive government response to the economic downturn. He's right. This is the most dangerous economic crisis since the Great Depression, and it could all too easily turn into a prolonged slump.

But Mr. Obama's prescription doesn't live up to his diagnosis. The economic plan he's offering isn't as strong as his language about the economic threat. In fact, it falls well short of what's needed.

Whatever the explanation, the Obama plan just doesn't look adequate to the economy's need. To be sure, a third of a loaf is better than none. But right now we seem to be facing two major economic gaps: the gap between the economy's potential and its likely performance, and the gap between Mr. Obama's stern economic rhetoric and his somewhat disappointing economic plan.


-------------------------------------------

Failure to Rise
By PAUL KRUGMAN
Published: February 12, 2009

By any normal political standards, this week's Congressional agreement on an economic stimulus package was a great victory for President Obama. He got more or less what he asked for: almost $800 billion to rescue the economy, with most of the money allocated to spending rather than tax cuts. Break out the Champagne!

Or maybe not. These aren't normal times, so normal political standards don't apply: Mr. Obama's victory feels more than a bit like defeat. The stimulus bill looks helpful but inadequate, especially when combined with a disappointing plan for rescuing the banks. And the politics of the stimulus fight have made nonsense of Mr. Obama's postpartisan dreams.

So far the Obama administration's response to the economic crisis is all too reminiscent of Japan in the 1990s: a fiscal expansion large enough to avert the worst, but not enough to kick-start recovery; support for the banking system, but a reluctance to force banks to face up to their losses. It's early days yet, but we're falling behind the curve.

And I don't know about you, but I've got a sick feeling in the pit of my stomach — a feeling that America just isn't rising to the greatest economic challenge in 70 years. The best may not lack all conviction, but they seem alarmingly willing to settle for half-measures. There's still time to turn this around. But Mr. Obama has to be stronger looking forward. Otherwise, the verdict on this crisis might be that no, we can't.


-------------------------------------------

Behind the Curve
By PAUL KRUGMAN
Published: March 8, 2009

.... many economists, myself included, actually argued that the (stimulus) plan was too small and too cautious. The latest data confirm those worries — and suggest that the Obama administration's economic policies are already falling behind the curve.

"Our belief and expectation is that we will get all the pillars in place for recovery this year," the president declared — a belief and expectation that isn't backed by any data or model I'm aware of. To be sure, leaders are supposed to sound calm and in control. But in the face of the dismal data, this remark sounded out of touch.

A real fix for the troubles of the banking system might help make up for the inadequate size of the stimulus plan, so it was good to hear that Mr. Obama spends at least an hour each day with his economic advisors, "talking through how we are approaching the financial markets." But he went on to dismiss calls for decisive action as coming from "blogs" (actually, they're coming from many other places, including at least one president of a Federal Reserve bank), and suggested that critics want to "nationalize all the banks" (something nobody is proposing).

As I read it, this dismissal — together with the continuing failure to announce any broad plans for bank restructuring — means that the White House has decided to muddle through on the financial front, relying on economic recovery to rescue the banks rather than the other way around. And with the stimulus plan too small to deliver an economic recovery ... well, you get the picture.

[Name removed]

1. Deleted message

Message removed by moderator. Click here to review the message board rules.

[banned from Kos]

3. But you live in Imagination Land where Congress is compliant

and ready to rubber-stamp Obama reforms.

[Better Believe It]

8. So when Democrats have the majority in the House and Senate, Republicans control Congress.

And when Republicans have a majority in the House and a minority in the Senate, Republicans control Congress.

OK

That makes sense!

:silly:

And please don't bring up the fake, pretend, phantom Republican procedural "filibusters" permitted by the Democratic leadership in the Senate.

As we all know now, they could be ended in a heartbeat!

[Recursion]

9. Well, the point of that was a large enough minority has veto power in the Senate

So nobody "controls" it, but Republicans had a blocking power in 2009, which is the whole point people seem to love ignoring.

[Tesha]

24. Remind me again: How many votes does it take to change the rules of the Senate...

...when the Senate is first organizing itself for a term?

Tesha

[Recursion]

25. 50, which is more than Reid had who would do that

This is a body that still has spittoons on the floor despite having no members who chew tobacco (except Webb, who uses a dr pepper can; my point is there weren't 50 senators willing to go nuclear)

[Tesha]

28. Among the 59 caucusing votes, he couldn't get 50 votes?

That would rank him as a pretty pathetic party leader!

Tesha

[Recursion]

33. No, he couldn't, or he would have

Seriously, it's that simple.

[Tesha]

43. Well if that's the case, then we deserve what we got.

Frankly, I think it's just another proof point that Harry
Reid is a pathetic choice for Majority Leader.

Tesha

[banned from Kos]

2. Duhhh! of course $787 billion was too small - it was signed on Feb 17, 2009

before the Teabaggers were fully formed and with three Senate GOP votes.

One month of Teabag howling later Obama would not have gotten shit.


GDP went from -6.7% to positive in six months.

[Better Believe It]

6. He could have obtained a much bigger stimulus but let three Republican Senators write the bill.

And President Obama just didn't want a bigger job creation bill!

Period!

Wasn't he clear on that?

The bill didn't propose any big public works programs because President Obama is opposed to WPA and CCC type direct government jobs programs. And that's why President Obama refused to lift Ronald Reagan's executive order prohibiting direct government job creation.

You know about that .... right?

[Recursion]

12. Err.. how was he going to pass a stimulus without a Republican defection in the Senate?

It was as large a stimulus as Collins would allow. What was your idea? Remember this was before Specter's switch, and he only came to it after Collins & Snowe signed on.

[Liberal_Stalwart71]

16. ...and Blue Dog/DLCer noncompliance as well!! It was the Blue Dogs

and the corporatists who went along with the Republicans in the first place, only to have the Repukes vote against the stimulus en masse.

Yes, Paul Krugmann, we KNOW that you were right! The president and Vice President DO NOT disagree with you. They and many Democrats wanted a bigger stimulus, but it was the Republicans and corporatists who insisted on incorporating tax cuts and other non-stimulative junk in that bill.

[banned from Kos]

18. thank you Liberal Stalwart.

So reasonable and on-topic!

[Exilednight]

35. It doesn't take 60 votes to pass a bill. It only takes 51. n/t

[Recursion]

44. True, but it takes 60 to bring it up for a vote

You can pass it with 51, but you can't get it to the point where you can pass it with 51.

[Exilednight]

50. No it doesn't. You can force an actual filibuster and make them talk the whole

thing out. Once every Senator has their chance to speak their peace, then a vote can be taken. Force them talk and don't adjourn until they're done.

[Recursion]

53. Nope

That's just not true.

If you think it's true, name me the motion Reid could file that would *chuckle* "force a filibuster".

Waiting...

Still waiting... just asking for what the motion is. This isn't rocket science. You say Reid can "force a filibuster". What's the name of the parliamentary procedure?

[Exilednight]

57. Filibuster doesn't actually force a vote. Reid calls the bill to the floor and opens debate, once

he does so, Senators are then given the opportunity to speak, a filibuster is not a solid "no vote taken" exercise. It only extends debate. The Senate majority leader usually tables the bill instead of actually forcing another Senator from actually filibustering.

As a US citizen, you should know this, it's basic 8th grade US history material.

A filibuster can be defeated by the majority party if they leave the debated issue on the agenda indefinitely, without adding anything else. Indeed, Thurmond's attempt to filibuster the Civil Rights Act of 1957 was defeated when Senate Majority Leader Lyndon B. Johnson refused to refer any further business to the Senate, which required the filibuster to be kept up indefinitely. Instead, the opponents were all given a chance to speak, and the matter eventually was forced to a vote. Thurmond's aforementioned stall holds the record for the longest filibuster in U.S. Senate history at 24 hours, 18 minutes.<9>

Even if a filibuster attempt is unsuccessful, the process takes floor time. In recent years the majority has preferred to avoid filibusters by moving to other business when a filibuster is threatened and attempts to achieve cloture have failed{.

"If you think it's true, name me the motion Reid could file that would *chuckle* "force a filibuster"."

It's called opening up the floor for debate on bill _______________________.

By the way, I don't know what you're *chuckling* about. I would feel pretty ignorant if I were you and didn't know the basics of how the Senate works.

[Recursion]

59. Nope. He already opened debate on the bill

This is a common misconception around here for some reason. Debate had already begun, and he didn't have the votes to end it.

Now, I suppose you're right, he could have brought all other Senate business to a halt. But then again Republicans would have loved that, so I'm not sure what the upside of that is for Reid or us. Why do you think that would have been a good idea?

[Exilednight]

60. Fist, I'm not "technically right" - I am right. There's two ways to end debate. You can have a

cloture vote, or you can force them to go through with the threat.

The upside: It would eventually have to come to a vote. If Reid opened the Senate, opened debate and held all other legislation at bay, then a vote would eventually have to be taken.

[Recursion]

63. How does it "evenetually have to come to a vote"?

What motion does he file that makes it "eventually have to come to a vote" once debate has begun?

What is the "threat" they have to "follow up" on? Are you of the common but still wrong opinion that a filibuster is something other than what the Republicans actually did?

[Exilednight]

64. Easy, they have to talk and no one person can talk forever. He can keep the Senate open for

as long as he likes continuously. It might take two months to get through with the filibuster, but eventually they have to stop talking.

[Recursion]

65. No, they don't

That doesn't have to happen. Why are you convinced it does? The Strom Thurmond thing only happens when a single Senator wants to block a motion that has enough votes to end debate.

[Recursion]

4. Oddly enough, so did Obama

Funny how he doesn't get any credit for prescience from some corners...

[PurityOfEssence]

32. Really? How is that odd? He seems to agree with everyone, especially those who disagree with him

He's a most agreeable type.

He's on your side. Trust me. I say that with complete sincerity, not even knowing what side you're on.

[Recursion]

45. Except he was explicit that he wanted it bigger

He didn't hedge about that. He said "I want a bigger bill than this".

[hifiguy]

5. Nouriel Roubini, Joseph Stiglitz,

James Galbraith, Robert Reich and Krugman have been pretty much right about everything significant in the economy for the last ten years. Which is of course why the Current Occupant wants nothing to do with their willingness to challenge the corporatist "consensus."

[Recursion]

7. You know Obama himself said it was too small, right?

You do know that, I assume?

[trumad]

10. Right---

OK--- so what's his stance now? Oh that's right---best not to bring up another stimulous....don't want to upset the Tea Party.

[Recursion]

11. It's best not to push unpopular legislation that can't pass

Pushing popular legislation that can't pass can be a good idea.
Pushing unpopular legislation that can pass can be a good idea.

Stimulus spending is neither popular nor possible to pass. What's the upside of pushing for it?

[trumad]

13. Right---and how did it become unpopular?

because the WH allowed the Repubs to frame the argument that Stimulus was bad.

The Bully Pulpit is nonexistent in this WH?

[Recursion]

14. I don't think stimulus spending has ever been popular

At least I've never seen polling on it over the past 20 years that's above 35% or so.

And, yes, the bully pulpit in this White House and all White Houses is non-existent. There's never been any sign whatsoever that Presidential rhetoric is particularly effective at moving public opinion.

[trumad]

15. Again---it's not popular because it is not framed right.

It works and puts people back to work.

Obama's speech is supposed to include infrastructure spending---- which is the best form of stimulus.

He's need to hammer this to the American people and keep hammering it.

[Selatius]

41. It's not. If you simply call it "deficit spending," you will be annihilated.

If you tried to copy FDR and called it a jobs program or a public works program with the goal of putting people back to work, you'd become as popular as FDR was during the Great Depression, assuming you have enough left-wing Democrats in the House and Senate to pass such legislation. Polling over the last 20 years misses the fact that quite a lot of people who lived through the 1930s are already dead, so the memory is gone.

[eridani]

39. Wrong. Stimulus spending is extremely popular among people

--just not among elite politicians.

[Recursion]

46. No, every recession it polls in the mid 30s

It's just not a popular idea, even though it's a good one.

[girl gone mad]

17. He could have and should have pushed for something much bigger and better designed.

We talked about this on DU quite a bit at the time. The stimulus was weak, full of unstimulative tax cuts and and boondoggle spending.

The debt ceiling debate was another lost opportunity, and probably represents the last chance Obama had to turn the economy around before the election. Instead of taking strong actions which would reduce our debt without decreasing the money supply, Obama punted and once again adopted the false and ridiculous right wing framing of deficits. In the process, the President allowed a handful of teabaggers to dominate the conversation and nearly cause unnecessary default. What a joke!

[woo me with science]

21. Thank you. nt

[JoePhilly]

48. There would have been no stimulus, and parts of DU would be complaining about that.

And we would have defaulted, and the same parts of DU would complain about that.

There is no way the folks who endless scream "Obama hasn't done enough" would suddenly support him if he never got anything done.

[Major Hogwash]

19. What does Krugman think President Obama should do now?

As in 2011.

[Better Believe It]

20. Obama has two options. He can present a plan to put America back to work or

he can present a bi-partisan austerity economic plan that might be acceptable to some Republicans in Congress and which would result in a deeper economic crisis for working people.

Which option do you think President Obama should choose?

[Major Hogwash]

22. Is that what Krugman said?

I'm still reeling from seeing a Democratic advisor named Krystal Ball on teevee the other day.

[Recursion]

26. Krugman's idea is that Obama should give more press conferences

Outlining Republican obstructionism. Economically there isn't much daylight between Krugman and Obama; Krugman supports a different political strategy than Obama has chosen.

[Better Believe It]

30. No. That's what I wrote. If you want to read Krugman's current views you can read his articles.

Do you know how to find his articles in the New York Times?

[Selatius]

42. You've got to be joking. An advisor to Obama named Krystal Ball? Serious? nt

[woo me with science]

23. K&R nt

[EFerrari]

27. Krugman and 299 other economists.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x1691700

[Better Believe It]

34. Ya. What the hell do they know anyway?

[QC]

37. Those 300 leading economists never really loved him!

:cry:

[EFerrari]

38. And the little one said, roll over!

lol

[BlueCheese]

29. A catastrophic failure...

Because the administration asserted that the stimulus was the right size and would be the solution to our economic problems, it has now discredited the idea of stimulus altogether. Plenty of Americans have been convinced that stimulus has been tried and failed. The ludicrous focus on the deficit the last few months made the problem much worse. Basically, from a position of tremendous strength in January 2009, we've managed not only to not fix the economy, but convince everyone that our ideas were wrong from the beginning.

Awesome.

[Exilednight]

36. It could have worked, had it been better planned out. He stimulated Wall Street and forgot about

Main Street.

[Recursion]

47. Really? What portion of the stimulus went to wall street?

I'm dying to hear this one.

[Exilednight]

49. $282 Billion of the stimulus was compromised of tax cuts for the top earners. n/t

[Recursion]

52. So, slightly more than a quarter went to top earners

And are you saying "top earners" and "wall street" are interchangeable?

[Exilednight]

56. It was more than a third, 282 billion out of slightly over 700 billion. And yes, they are

interchangeable when you consider most of those tax breaks went to corporations in an effort to stimulate hiring that instead went to feeding their bottom lines and boosting their stock prices.

[Creideiki]

31. Only Obama is smrt.

Krugman is evil because he doesn't trust Obama like smrt people.

[rucky]

40. While I agree the stimulus wasn't enough, in the back of my mind...

I wonder what our expectations were for fixing the economy.

Are we fixing it to return to the unsustainable bubble economy? Are we fixing it to restore confidence for speculators?

The stimulus was successful in moving the trajectory back upwards - or at least leveling off the dramatic downward dip.

But can we really return to days when our economy was booming, when it's been based on nothing tangible for so long? It's ruled by perception and that's the flimsiest foundation possible.

[Better Believe It]

51. We can provide useful and important work for everyone who needs a job, with government support.

[hulka38]

54. Yes he did

and the problem that causes is it undermines the credibility of Keynesian economics in this situation because he went weak. It makes harder to introduce a real stimulus plan now, which is the only way forward.

[zipplewrath]

55. Absolutely

He promised way too much and gave up way too much. He should have signed it with LOUD complaints that it was too small. Instead he bragged about how "hard" it had been to do the stimulus.

[blindpig]

58. The money thrown at the financial sector should have gone to....

a massive WPA type program. People could have saved their homes, spending would have stimulated the capitalists to hire, they'd really have no choice in accordance with the workings of capitalism. But our capitalists do not like having 'their' money filtered through the working class, oh no, they will only have it the other way around.

So we see who is running the show.

[livetohike]

61. So??? The point is what?

Krugman wins points for calling this a couple of years ago?? Wow, that is so helpful to today's situation :sarcasm:.

[krispos42]

62. Kick for historical value n/t

[evilDonkey]

66. Krugman is wrong

No amount of stimulus will re-inflate our bubble economy.

When Reagan deregulated the banks in the 1980s our economy became based on consumer debt. Then in the 1990s it switched to an economy based on mass immigration and home building. As we now know that was COMPLETELY unsustainable from an environmental and economic point of view.

Our economy needs to be centered around production like Germany. If we can't reorganize our economy around manufacturing and engineering no amount of "stimulus" will save us.