It's not that the Obama Administration does not know what to do - I'm pretty sure they do - it is that they are unwilling to take the political risks to try and do it. Kevin Drum explains:
I imagine that no one in the administration will ever admit this, even off the record, but the main reason for inaction is almost certainly because they believe there's zero chance of getting any of this stuff done. Politically, then, there's nothing but downside here: yet another long, bruising battle with both Congress and the Fed, ending in total defeat. If everyone in the administration were utterly convinced that the economy was completely sunk otherwise, they might risk that. But no one in his right mind will risk it for anything less.
I imagine folks around FDR were telling hm the same thing. In fact, I know they were. See Morganthau, Henry. A LEADER and a genius politician would know that there is no choice but to try. And if you fail, try something else. In any event, I always get mad at the attempts to prop up Obama at Bill Clinton's expense. Therefore, once again, I will remind folks what Bill Clinton, he of the 43% mandate, did in 1993:
I have written about this before, but in 1993, Bill Clinton pushed through the most progressive legislation the US has had since the Johnson Administration. It was called, prosaically, the Omnibus Budget Reconciliation Act. What did it do?
It created 36 percent and 39.6 income tax rates for individuals. [up from 33% top rate]
It created a 35 percent income tax rate for corporations. [up from 28%]
The cap on Medicare taxes was repealed. [Making it less regressive.]
Transportation fuels taxes were raised by 4.3 cents per gallon.
[Helpful for the environment.]
The taxable portion of Social Security benefits was raised.[Making wealthier seniors pay more in taxes.]
The phase-out of the personal exemption and limit on itemized deductions were permanently extended. [Again, making wealthier Americans pay more in taxes.]
Part IV Section 14131: Expansion of the Earned Income Tax Credit and added inflation adjustments [In essence eliminating taxes for the working poor.]
Clinton's initiative passed by the barest of margins - 218-216 in the House and with a tiebreaking vote from Vice President Al Gore in the Senate.
What was the effect of Clinton's initiative? You know the usual litany - 8 years of economic expansion, the creation of 22 million jobs, etc.
How about a little of that now in 2009?
Speaking for me only