What Went Wrong


The real story of this election, then, is that of an economic policy that failed to deliver. Why? Because it was greatly inadequate to the task.

Could the stimulus have been made more effective? David Corn:

The "original sin of the Obama administration," says former labor secretary Robert Reich, "was to make the stimulus too small while giving out too much of it as tax breaks to businesses." [. . .] White House aidesóand my colleague Kevin Drumówill say that Obama obtained the biggest stimulus he could, given GOP opposition. But the president need not have accommodated his foes so readily. "He could've demanded more, and settled for less," says a senior Senate Democratic strategist. That would have at least established a useful story line: For more recovery, we need to do more. Instead, Obama was left hailing a stimulus that didn't do enough.

And Obama got what he asked for:

[JOHN] HARWOOD: If it's correct that, as your aides have said, the danger is doing too little rather than doing too much [. . .] why stop at $775 billion? Why not go to the $1.2 trillion that some economists have recommended? Is that because you think that the political figure of a trillion dollars is too politically charged to get over? Is it because you think more spending would be pork rather than stimulus? Or do you think you've figured out exactly the right amount of stimulus that's needed?

Pres.-elect OBAMA: [. . .] We've seen ranges from 800 to 1.3 trillion and our attitude was that given the legislative process, if we start towards the low end of that, we'll see how it develops.

(Emphasis supplied.) The inadequacy of the stimulus falls upon the Obama Administration. The political debacle coming in November does as well. That's what went wrong.

Speaking for me only

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    i keep hearing the weak argument (5.00 / 4) (#1)
    by Turkana on Mon Oct 25, 2010 at 09:45:23 AM EST
    that we didn't have the votes. that's the standard excuse for everything obama didn't fight for. and not only does it ignore the concept of creating the votes, it also ignores the politics of being seen fighting the good fight. even if you don't succeed, people at least know you're trying.

    Yes, and as Professor Krugman asks (5.00 / 2) (#2)
    by KeysDan on Mon Oct 25, 2010 at 09:54:18 AM EST
    in the referenced article, "Could the administration have gotten a bigger stimulus through Congress? Even if it couldn't, would it have been better off making the case for a bigger plan, rather than pretending that what it got was just right?"

    I think what happened is (5.00 / 1) (#3)
    by Big Tent Democrat on Mon Oct 25, 2010 at 09:59:10 AM EST
    the Obama Administration thought the low number would go up "through the Congressional process."

    I have to believe Rahmbo gave that advice. And it was fatal advice.


    I agree that Rahmbo likely gave that advice (5.00 / 1) (#5)
    by sj on Mon Oct 25, 2010 at 10:05:58 AM EST
    But I also believe that is advice he was very comfortable hearing.  And if he thought the low number would up "through the Congressional process", maybe he should have spent more time there and learned how it worked.

    Or even read the papers to gauge the sentiment (none / 0) (#11)
    by ruffian on Mon Oct 25, 2010 at 11:15:00 AM EST
    about government spending, coming on the heels of TARP.

    Yes, (5.00 / 2) (#6)
    by Ga6thDem on Mon Oct 25, 2010 at 10:13:53 AM EST
    and that's the problem he has. He doesn't have the experience, knowledge or wherewithal to know good advice from bad advice much like Bush in that regard.

    putting it on congress... (none / 0) (#4)
    by Turkana on Mon Oct 25, 2010 at 10:03:57 AM EST
    has been a bit of a recurring theme.

    but even after the stimulus was passed- within months- they could have started talking about the need for a second one. instead, they ended up buying into the deficit hawk garbage. and, of course, we now see that the stimulus actually reduced the deficit, year-to-year, partially due to rising tax revenues. it's almost as if keynesianism works, or something. wish someone in power would make that case...


    To you have any links to support this? (none / 0) (#7)
    by BTAL on Mon Oct 25, 2010 at 10:33:48 AM EST
    we now see that the stimulus actually reduced the deficit

    right here (5.00 / 1) (#8)
    by Turkana on Mon Oct 25, 2010 at 10:46:09 AM EST
    Smoke and mirrors (none / 0) (#9)
    by BTAL on Mon Oct 25, 2010 at 10:52:03 AM EST
    Take out the massive Census hiring and revenues drop significantly.  

    The stimulus did not increase revenues, specifically in relation/proportion to the costs.

    The represented reduction in the deficit was also (as noted) due to some of the stimulus spending being wound down.

    If this was such a success, where are all the stump speeches touting the increased revenue and deficit reduction?


    right (none / 0) (#10)
    by Turkana on Mon Oct 25, 2010 at 11:09:54 AM EST
    the articles themselves specifically cite rising tax revenues. and that they're not publicizing the success of keynesianism was kinda my point.

    Do some further digging from the linked (none / 0) (#12)
    by BTAL on Mon Oct 25, 2010 at 11:20:59 AM EST
    rawstory.com article and you'll find Bloomberg laying out the revenue numbers.  Corporate tax revenues increased but no on the individual private sector jobs/tax revenues - those dropped.

    The $122B decrease in the deficit is not much more than a rounding error with talking in the $1.3T range.  Further projections are for at least $1T deficits for the next several years.  


    thank you for again making my point (none / 0) (#13)
    by Turkana on Mon Oct 25, 2010 at 11:24:39 AM EST
    the stimulus worked. now, it's running down. so, things will continue to deteriorate without further stimulus. and i wasn't aware we were splitting hairs over where the revenues came from. revenues increased. and no, it's not an accounting trick.

    Unemployment will not exceed 8% (none / 0) (#14)
    by BTAL on Mon Oct 25, 2010 at 11:37:22 AM EST
    ~ Barack Obama


    GDP has not grown beyond anemic low single digit rates.


    Consumer spending and confidence is not increasing.


    Just where is the success again?


    thank you (5.00 / 1) (#15)
    by Turkana on Mon Oct 25, 2010 at 11:40:19 AM EST
    for revealing yourself. i wasn't aware we were discussing unemployment. i wasn't aware we were engaging in gratuitous obama bashing.

    The subject matter is the stimulus and its (none / 0) (#16)
    by BTAL on Mon Oct 25, 2010 at 11:47:30 AM EST
    bogus claims of success.  Employment is part and parcel of the promises made to the American public.  It is also part and parcel to the status of the economy.  

    perhaps you missed it (none / 0) (#17)
    by Turkana on Mon Oct 25, 2010 at 11:53:02 AM EST
    but the stimulus saved a couple million jobs. things could actually be worse. the stimulus helped. it didn't help enough because it wasn't big enough. that's the point.

    Believe what you want but the facts don't (none / 0) (#18)
    by BTAL on Mon Oct 25, 2010 at 12:11:47 PM EST
    support the claim.  "Saved or created" was one of the biggest falsehoods that is coming home to roost.

    Economic models are just that, models.  The same modeling that are used to justify the "saved" jobs claims.  


    oookay (5.00 / 1) (#19)
    by Turkana on Mon Oct 25, 2010 at 12:40:07 PM EST
    so, now we're just going to disparage economics, altogether. enjoy.

    That and not imposing ... (none / 0) (#20)
    by FreakyBeaky on Tue Oct 26, 2010 at 12:53:48 AM EST
    ... a structured bankruptcy, like that imposed on GM, on the zombie banks.  Should have been MUCH tougher on them.  

    Add that to an off-year election with the President's party in the majority and you've got problems ...  

    Could have easily put the banks (none / 0) (#21)
    by BackFromOhio on Tue Oct 26, 2010 at 05:38:38 PM EST
    into FDIC conservatorship/receivership; all the rules and regs are there -- no need for creative bankruptcy.

    I thought since, say, Lehman ... (none / 0) (#22)
    by FreakyBeaky on Sun Oct 31, 2010 at 03:20:54 PM EST
    ... was an investment bank and not a commercial bank, that wasn't an option.

    Yes, to extent (none / 0) (#23)
    by BackFromOhio on Thu Nov 04, 2010 at 08:55:45 PM EST
    one is dealing with an investment bank, rather than a bank, you are right.

    So perhaps now ... (none / 0) (#24)
    by FreakyBeaky on Fri Nov 05, 2010 at 07:44:41 PM EST
    ... that the old iBanks have become commercial banks in order to slop at the TARP trough, if foreclosure fraud weakens them sufficiently ... FDIC here we come?  Bring it on!

    I think Goldman & Morgan Stanley (none / 0) (#25)
    by BackFromOhio on Sun Nov 07, 2010 at 11:25:03 AM EST
    applied & became bank holding companies last year; this makes deposit insurance available to them, among other things.  I don't know about other investment banks.