One defense of the too-small stimulus is that it would have been impossible to get a bigger one through Congress. Atrios points out a bigger stimulus wasn’t even on the table:
The memo to Obama, however, detailed only two packages: a five-hundred-and-fifty-billion-dollar stimulus and an eight-hundred-and-ninety-billion-dollar stimulus. Summers did not include Romer’s $1.2-trillion projection. The memo argued that the stimulus should not be used to fill the entire output gap; rather, it was “an insurance package against catastrophic failure.” At the meeting, according to one participant, “there was no serious discussion to going above a trillion dollars.”
Why would Summers exclude the larger plan from consideration, given that Romer and Krugman and lots of other knowledgeable people wanted it?
Zifnab
Because Summers didn’t think it was necessary. Duh. I don’t think it was anything much past that. Summers didn’t consider the biggest package necessary, so he didn’t offer it up as an option.
Michael
Because it was a non-starter from moment 1 with “The party of No”.
Hell, the original TARP included a shload of weeping, wailing and teeth gnashing, and that was a GOP initiated event. There’s no way you’d get anything similar through now, and that involved catastrophic, economy-killing circumstances.
Zifnab
Also worth noting, the original Stimulus bill included billions to maintain tax cuts in the Alternative Minimum Tax. It’s worth remembering how much of the stimulus actually went to programs like food stamps, unemployment, and job creation.
scarshapedstar
Because if they’d have negotiated properly, it would have hurt the feelings of Nelson and Conrad and Landrieu and all the other Senatorial hemorrhoids.
Seriously, that seems to be the accepted explanation for this political malpractice.
Dave
Because Republicans and “moderate” Democrats are the biggest PITAs in the world. Seriously. You present anything with the word “trillion” to them that doesn’t involve blowing shit up or funneling cash to the elite and they act like you’re turning America into Malawi.
demo woman
Ezra has a decent post up about the stimulus
fasteddie9318
@Zifnab:
And specifically under “job creation,” how very little of that stimulus went toward filling the ~$2 trillion gap in the upkeep of our infrastructure.
The Moar You Know
Because us peons can survive just as well on cake as we can on bread.
Fucker.
El Cid
@demo woman: I’ve actually been thinking along these lines recently. I was just listening to various news & discussions of various other aid and investment bills or programs and I was thinking, these weren’t part of the “stimulus”.
Minor point — it was Dylan Matthews.
Face
$700 bill TARP must be exactly equal to the $700 billy stimulus. Bekauz $700 bill is the Majik Numbah, bitchez.
Shut up, that’s why.
calling all toasters
Because fuck liberals.
fasteddie9318
Why on Earth would a cultish Friedmanite not pass a trillion-plus dollar market intervention that would primarily help the Morlocks up the ladder to his boss for review? I just can’t fathom a reason.
Alwhite
Because everyone knows that K-tugs only solution for everything is tax increases?
Sorry, couldn’t resist.
Its just another example of how the current administration pisses on allies in order to ingratiate itself with the people that want to destroy it.
But I guess pointing that out make me a firebagger – sorry again
Dork
Summers is going to fall due to his failure to spring the economy back.
Sentient Puddle
Well, it all still depended on what congress felt was palatable. The White House could have offered up a $10 trillion proposal, and if Snowe and Collins said no more than $800 billion, then that higher starting point doesn’t make a damn bit of difference. I don’t know if this was the case or if the stimulus was pared down more as a way for Republicans to extract any sort of concession, but after hearing all the whining over the winter about how Obama should’ve used single payer as a starting point, I’m cynical of any sort of “He should’ve started higher!” rhetoric.
The other part, as I understand it, is that the economic team assumed that they’d get more chances at future stimulus. Yup, that sure didn’t work out.
BombIranForChrist
I guess I’m just a paranoid whack-job, but I think it’s weird that it wasn’t even offered for internal consideration. If anything, it would have helped Obama with the so-called deficit hawks if he was presented with a 1 trillion plus package and (erroneously) rejected it, so I have a problem accepting that it was not offered for political reasons.
My sense is that this had more to do with Summers trying to establish his power than anything substantive about the debate. He felt the need to swing his dick around, at the country’s expense.
To Obama: “Look at me, Obama, I am sensible and centrist, I won’t give you no wild-eyed crazy trillion dollar package like those hippies want!”
To the Other Advisors: “Suck it. I am the gate keeper”.
The Bearded Blogger
I guess thet saw a “trillion” as a psychological border… I know the negotiation climate was tough, but I can ‘t help but feel they could have gotten a better deal….
Bnut
People didn’t think the word “trillion” sounded well coming out of the lips of politicos on tv and went with a word “billion” that they knew the general public was not afraid of. In defense of the public, when you make shit for pay, it’s hard to know that much about such large sums of money, especially when half the people in power consistently lie to you about the matter.
Adam C
@Michael:
How to make sure you never, ever get a pony: tell your dad you’d be happy with a puppy.
Edit: And is it Summers’s job to decide what’s politically feasible, or to report on the damn economics?
demo woman
When I tried to highlight only the 1.156 trillion, it highlighted the entire post. Is there a way to highlight within block quotes? See my comment at #6.
El Cid, Thank you for the heads up about Dylan Matthews.
Bill Arnold
Reagan’s stimulus was $750 billion as well. Those 1981 dollars were bigger though. (About 1.75 trillion in 2009 dollars IIRC). (And I recall that part of the Reagan tax cuts were eventually rescinded.).
MMonides
Also because, under the original pre-HCR sucking up most of the legislative calendar plan, there would have been more in both the HCR and Energy (RIP) Bills.
And then the GOP went insane…
Cain
I miss Kain.
cain
Bob Loblaw
Because with the demographics of the 08 election win, the bigger priority was in locking up financial support for the party at large for 2010 mitigation efforts. It was a political loser to be seen helping poor people all over the place, even in a recession.
Of course, their plan didn’t work out this way, and now they’re men without a country. Some would say that’s karma for the administration. The 15 million unemployed in this country wouldn’t. They can’t really talk too much these days. They’d give their left legs to hear “you’re hired” for a change.
stuckinred
@BombIranForChrist: If it were offered for “internal” consideration you wouldn’t know it or it wouldn’t be internal now would it?
beltane
There are several reasons the stimulus was too small. One of them is that the timing was slightly off. The stimulus was passed before unemployed went through the roof. Senate moderates can only be motivated to get off their well-paid asses in the event of a sky-has-fallen type of crisis. They are either too stupid or too cowardly to prevent a crisis or to contain one that has already started.
Likewise, Larry Summers is an arrogant SOB who believed he would be able to do a little minor tweaking to re-inflate the housing bubble, thus kicking the can down the road a little further. The structural problems of our economy have been known and written about for at least a decade, it is a shame that the economists who were the most aware of these problems were not the ones brought in to fix them.
BombIranForChrist
@stuckinred:
Originally it was, wasn’t it? Offered for “internal” consideration? Or was this made public from day one?
kdaug
Why would Paulson, Rubin, Geithner, and Summers (all happy Streeters) ignore the advice from Krugman, Stiglitz, Ostram, and Williamson (all guys with some piece of shit medal from some “Nobel” committee – I mean, seriously, it’s not even from this country).
High school, writ large, playing the big stakes.
Us.
Omnes Omnibus
I tend to think that there was a belief that a stopgap would be sufficient and that by now things would be picking up. Obviously that belief was erroneous. Couple that with a group of fucksticks in the Senate who will not look past their own personal power over events and you get what we got.
El Cid
@Sentient Puddle: I don’t know, I think some right wing bowel evacuation when Obama announced a $10 trillion dollar stimulus plan might have been entertaining.
Turgidson
@Bnut:
They should have just said a “thousand billion” then.
Senators are jerks.
stuckinred
@BombIranForChrist: Beats me.
Steeplejack
@demo woman:
Testing . . . I just highlighted a phrase within this block. Let’s see if it worked.
ETA: It worked for me. I highlighted your entire quote, clicked “bquote” on the edit gizmos. Then I highlighted the smaller phrase and clicked “b”. It put in the HTML for “strong.”
You could also try putting in the bold manually: <b> in front and </b> after the snippet you want in bold.
The Bearded Blogger
@Adam C: Excellent point… ge tht economics right first, THEN figure out a way to sell it.
eemom
Reports confirming Ted Stevens died in the plane crash.
Silver
Maybe, just maybe, the boss didn’t want anything bigger?
Funny how Obama wiggles off the hook here…
daveNYC
Maybe, although showing up with $800B just means that Team Maine and whatnot will just take the opportunity to trim off even more fat (and muscle and bone). Showing up with a, say, $1.5T plan would at least have the White House coming out and saying “This is what needs to be done.”
Right now, K-Thug is right (as usual); Obama low-balled, the Republicans cut further, and now the story is that the initial, small stimulus didn’t work, and goign with a larger stimulus will lead to dogs and cats sleeping together.
J.W. Hamner
The answer to Atrios’s question is in the very next paragraph:
This wasn’t economics it was politics.
Frank
Because enough Democrats in the senate were steadfast against it (we only had 59 at the time) plus all Republicans.
What would have been the point of submitting the larger plan just to go down in defeat? Obama had only been in office for a few weeks. Can you imagine the field day the MSM would have had with their narrative of an ineffective President who couldn’t even get a stimulus bill passed…
Marc
Am I the only one who remembers how bloody difficult it was to pass the stimulus at all? The “centrists” cut a lot of spending out of the proposed package because of sticker shock, and there is zero evidence that starting with more would have ended with more.
Can anyone explain to me why proposing more spending would have actually achieved more spending, given the troubles with an initially smaller program?
Sentient Puddle
@El Cid: No disagreements from me on that one.
Elizabelle
Anchorage Daily News/AP: family spokesman confirms Ted Stevens did not survive the flight.
No update yet on Sean O’Keefe.
http://www.adn.com/2010/08/10/1403280/five-believed-dead-in-crash-of.html
mr. whipple
I think they misjudged how fast and how long jobs were going to be lost(and this wasn’t just Summers and Timmy). And in fairness, I’m not sure anyone could say with certainty.
In hindsight, however, it would have been better to go bigger, but that begs the question of where the votes would have come from.
calling all toasters
@Sentient Puddle: Collins almost certainly didn’t have any set figure in mind. Her big move was to cut $100 billion from the penultimate bill so she could say “look, I saved us all some money.” All these narcissistic shits want is some applause for doing bad.
Some Guy
I understand what you mean, but the fact that it was withheld does not mean it might have had a chance. Aren’t these related but different issues? One is something we cannot really know, whether a bigger package could have passed if presented, the other we can: what the administration thinks is better policy. I judge them on the latter and judge them harshly.
wengler
Because Summers is a professional at destroying economies and making millions of dollars for his efforts.
Also everyone they know in DC is doing all right. Their families and extended families are also doing all right. All this unemployment is number junk. Real people need to adapt to the transformative, energetic, paradigm-shifting, 21st century economy. All this crap about pensions and healthcare are so last century.
You’re competing with your Chinese/Vietnamese/Cambodian/Indian counterpart now bitches! And he don’t complain about working 120 hours a week.
nightshift66
I agree with Sentient Puddle that a higher starting point in no way would have resulted in a larger final bill regarding a stimulus package. It’s even possible (though unknowable) that going large would have diminished WH credibility and resulted in a smaller final bill.
However, the political ramifications of the WH failing to even consider a larger plan are harmful to Democratic prospects in November, and O’s prospects in 2012. This news feeds directly into the perception by many on the Left that they’ve been sold out, or that the WH isn’t progressive. (I do not assert whether that’s a true or a false perception; I’m considering only political ramifications here.) Limiting GOP gains in November is crucial to whether or not anything gets done the next two years, and this is just the latest episode that further alienates a significant portion of the Democratic coalition.
kdaug
Not the fucking TARP, mate. Sailed right through on Bush’s watch, when the bankers went behind closed doors to lay out their economic apocolypse to the Senate Banking Committee.
Banks? Good to go!
Peeps? Get a damn job.
J.W. Hamner
@Frank:
And what happens to the economy if the GOP decides that “$1.2 trillion dollars of Obama socialism” polls really well, and this is their hill to die on? Are we so certain they couldn’t have derailed it completely or ended up with a modest package of only tax cuts?
I’m not sure why people think there was zero risk in going that high.
p.a.
All these comments on what I assumed was a rhetorical question! Remember this chestnut?: The Democrats are the party of the very rich and the Republicans are the party of the super rich.
(at the national level. things get complicated at the local level).
Frank Chow
Your answers are all in a wonderful Frontline piece called “The Warning” http://www.pbs.org/wgbh/pages/frontline/warning/view/
Summers doesn’t like little girls telling him what to do.
Davis X. Machina
Somewhere in the last week I read a stimulus-cum-Romer-departure tick-tock in which still-candidate Obama had had a still larger stimulus proposal with a $1.4T tag presented to him by still mere campaign advisor Romer back in October or November of ’08, though it was Taylor-rule spitballing and not a fleshed-out outline for legislation.
So it wasn’t like higher numbers weren’t circulating in Team Obama’s camp, and no one ever suggested anything north of the two figures Atrios mentions.
Be damned if I can find it — Google-fu is weak, and the blogs on Google reader too numerous — but I’m looking.
Michael
@kdaug:
Fixted it.
kdaug
@Michael: Roger that.
ETA: And they wonder why there’s an “enthusiasm gap” btw Rs and Ds.
Tonal Crow
Because beginning negotiations by asking for more than you really want is like demanding flying unicorns that shit rainbows.
General Stuck
Why did Sue Ellen shoot JR. why? this has never been fully explained to me.
mr. whipple
Not really:
“First House vote, September 29
Just after midnight Sunday, September 28, leaders of the Senate and House, along with Treasury Secretary Paulson, announced a tentative deal had been reached to permit the government purchase of up to $700 billion in mortgage backed securities to provide liquidity to the security holders, and to stabilize U.S. financial firms and markets. The bill was made final later that Monday morning.[4][138] A debate and vote was scheduled for the House for Monday, September 29, to be followed by a Senate debate on Wednesday.[139] In an early morning news conference, on Monday September 29, President George W. Bush expressed confidence that the bill would pass Congress, and that it would provide relief to the U.S. economy. A number of House Republicans remained opposed to the deal and intended to vote against it.[140][141][142]
That same day, the legislation for the bailout was put before the United States House of Representatives and failed 205-228, with one not voting. Democrats voted 140 to 95 in favor of the legislation, while Republicans voted 133 to 65 against it.[143][144][145] During the legislative session, at the conclusion of the vote, the presiding chair declared the measure, HR3997, to be unfinished business. The bill is subject to additional legislative action.[146]”
When the vote failed, the market lost 777 points that day.
lol
Obey has said that the administration initially came to him with a $1.4 trillion stimulus.
Just because negotiation doesn’t happen in front of a camera or on a blog doesn’t mean it doesn’t happen.
kdaug
@mr. whipple: And then what happened?????
mr. whipple
@kdaug: ?
Betsy
Gee, Obama hires someone known for publicly stating that lady-brains just aren’t wired for mathiness, and then that person disregards the recommendation of the lady economist.
As they say around these here parts, “Hoocoodanode?”
General Stuck
Man, the bullshit around here is piling up so fast you have to grow wings to stay above it.
Corner Stone
@wengler:
That’s probably right. The interesting thing is that they have official reported unemployment in DC of 10.5% in June 2010.
Kind of an odd juxtaposition if you ask me.
Davis X. Machina
@lol: That‘s where I got the figure….
Rep. Obey, Fiscal Times, 7/16/10<
Treasury — the evil Geithner — and other economic people — the virtuous Romer — working together?
Unpossible.
The political people (i.e. Rahm), not Treasury, not CEA, not NEC, whittled it back, based on a judgment on what would fly.
Corner Stone
If a runaway train is steaming down the tracks toward a community do you calculate the force needed to give you the best shot to resolve the issue, or do you halfway it and hope for maybe more measures down the line.
Because although no one in DC seems to want to admit it, long term official unemployment north of 9%+ is going to be every bit as destructive to this society.
Hugin & Munin
CS: Is that DC Metro Area or just the city? Also, a breakout of the numbers by race would help, too.
nepat
@kdaug:
Another reason why a larger stimulus would have been pushing a rock up a hill – it came on the heels of TARP 1 and TARP 2. Too much do-re-mi for folks to comfortably fathom all at once.
cmorenc
A key aspect beyond just the choice of stimulus size itself (and political calculations of what was salable to Congress) is that it reflects just how quickly and successfully Summers and Geithner managed to cut Romer out of the loop of direct discussion or input with President Obama on such a vitally central economic issue. Since Romer’s job was to be “Chair of Obama’s Council of Economic Advisors”, and she had an office in the White House itself, this is on its face a rather aggressive piece of Machiavellian bureaucratic maneuvering by Summers, though it’s not all that surprising, given his controlling, self-impressed, arrogant character.
QUERY: Why would Obama have not directly consulted Romer somewhere along the way to making a decision about the size of the stimulus package, instead of allowing Summers and Geithner to insert themselves as gatekeepers limiting her access? THAT is what is especially surprising for him, given his deliberative, thorough style in approaching issues.
Corner Stone
@Hugin & Munin: What am I, the BLS?
Civilian labor force and unemployment by state and metropolitan area
Comrade Luke
@General Stuck:
Coming from the guy who took a sarcastic post from DougJ as an opportunity to bash liberals.
Nellcote
@Davis X. Machina:
Thank you. I thought I was the only one who remembered such talk.
horatius
@calling all toasters:
This is a new version of Hoocoodanode. RIP Tanta.
Brachiator
Because Krugman is neither the president, nor an official advisor, nor even the most important economist ever (Nobel Prize notwithstanding). So that left Romer as the primary voice arguing for a larger stimulus.
Also, the way that the stimulus was implemented, mainly through a small tax rebate, a few new credits, and expansions to the Earned Income and Child Tax Credits, along with some direct flows to states, there is little chance that it could ever have the impact that people want to insist that it would have, even had it been larger.
Because of the large loss of jobs and decline in wages, the stimulus has helped prevent the economy from falling further, but has not jump started the economy by boosting consumption. Economist Chris Thornberg, who was one of the few voices cautioning against the housing bubble in 2005, recently spoke about why the stimulus did not do more during a recent interview on KPCC’s Air Talk.
However, some further government action may be necessary because some government credits and individual tax breaks will have expired by 2012 or 2013 and things still look weak.
catclub
Why would it be impossible to get a $1.2Trillion stimulus that is based on things getting really bad (10.0% unemployment), but if things don’t get that bad (8.5% unemployment), cancelling some of that?
fasteddie9318
I wonder also too how much of Romer’s $1.2 trillion proposal was actual stimulus spending. What we got out of the $700 billion “stimulus” package was maybe half stimulus and half tax tweaks and other assorted bullshit to win over a couple of Republican votes. That bullshit was necessary politically, but when we talk about getting $700 billion versus $1.2 trillion, that may be understating the gap between the two proposals.
mai naem
@nightshift66: Then perhaps the spokesman for el presidente shouldn’t come out and diss the “professional” lefties.
@Corner Stone: Those numbers are for the colored folks and those people don’t really count.
nightshift66
@ mai naem: Agreed. There’s a reason why “punch a hippie” is widely considered to be the WH’s favorite pastime: there is evidence to support it. Personally, I would advise the admin to steal a page from Reagan’s book: do what you think best and give lots of lip service to your out-from-the-center wing.
I understand why people further to the left than the administration are disappointed in it. It hasn’t delivered much of what they want with huge numerical majorities in both houses, and some of what it has promoted isn’t liberal at all (esp. foreign policy and security issues). But I don’t understand the sense of betrayal that many exhibit. It was always my impression of O since 2007 that he was basically another Bill Clinton with better control of his zipper. That is, a center-left, somewhat corporate guy. I’ve disagreed with him on many things, but can only express disappointment in his failure to curtail the Surveillence State. That, he expressed campaigned against.
General Stuck
@Comrade Luke:
I was spoofed by the world master. There are very few here that can claim virgin on that front. Where have you been? I’ve missed your dull whit.
muddy
Because Summers is just evil, and you can tell just by looking at his face.
Donald
As Atrios would say, Summers is a Very Serious person. And it’s not Serious at all to give away over a trillion dollars of hardworking Americans’ money to, um, hardworking Americans, just because it would work.
It’s far more Serious to propose some number that’s halfway in between what would work and nothing, which was the Republican version of what would work. Because splitting the difference = moderate = centrist = Serious = FTW!
Nylund
It was stupid from day one. Obama has always used as his opening bid an already compromised deal. The first rule of bidding is bit not what you think they will agree to, and not what you actually want, but beyond that as well so that when the bidding is over, you end up someplace you want to be, not well below it.
FlipYrWhig
[Reposting .. I said the s-word!]
@Nylund: Do we have to go through this every damn time? If you’re selling a house, and you want $300K for it, what happens if you list it at $999K? If you’re at a job interview at a nonprofit and they ask you what your salary requirements are, what happens if you ask for $250K?
The “first rule of bidding” is figuring out what the parameters are in the first place. You don’t just ask for the moon, because the other side can always just walk.
@J.W. Hamner:
Or for that matter, what happens politically if the conservative Democrats decide that $1.2 trillion of Obama socia1ism polls really well, and this is _their_ hill to die on, and thus your very first big initiative collapses because of your own party’s jackass brigade?
Everything starts out looking like a compromise because it _is_ a compromise, a compromise between the liberals and the conservatives _among Democrats_. Because that’s the cost of doing business: running the gauntlet of the Democrats who would just as soon run as stalwart anti-liberals themselves and who hence have to be persuaded to do anything remotely liberal or costly over and over and over again.