Monday, January 18, 2010


A point many people make, somewhat in defense of the Obama administration, is that they don't run everything, they must deal with Congress, they have to worry about politics, etc. All of this is true. But that isn't a magical "not our fault" card to be played every time things don't go perfectly. The economic stimulus, at least, is one clear place where they were wrong, not just on the politics or what was possible, but wrong about what was needed and wrong about how bad unemployment was going to get. Krugman.

Why was the stimulus underpowered? A number of economists (myself included) called for a stimulus substantially bigger than the one the administration ended up proposing. According to The New Yorker’s Ryan Lizza, however, in December 2008 Mr. Obama’s top economic and political advisers concluded that a bigger stimulus was neither economically necessary nor politically feasible.

Their political judgment may or may not have been correct; their economic judgment obviously wasn’t. Whatever led to this misjudgment, however, it wasn’t failure to focus on the issue: in late 2008 and early 2009 the Obama team was focused on little else. The administration wasn’t distracted; it was just wrong.