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Krugman and the Times: Stimulus Not Enough

By Big Tent Democrat, Section Economy
Posted on Fri Feb 13, 2009 at 08:13:00 AM EST
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A lot of people will be talking about Krugman's column:

Obama got more or less what he asked for, he almost certainly didn’t ask for enough. We’re probably facing the worst slump since the Great Depression. The Congressional Budget Office, not usually given to hyperbole, predicts that over the next three years there will be a $2.9 trillion gap between what the economy could produce and what it will actually produce. And $800 billion, while it sounds like a lot of money, isn’t nearly enough to bridge that chasm.

A Times editorial chimes in:

The bill is, for the most part, a step in the right direction. But political wrangling, including President Obama’s futile pursuit of bipartisanship, rendered it smaller and less focused than it needed to be.

It was especially lamentable that the stale politics of Washington ended up including $70 billion for relief from the alternative minimum tax. The relief is necessary, but it has nothing to do with stimulus or recovery. It is a perennial issue that Congress should have handled in another bill. To include it in the stimulus package — and stay beneath a self-imposed $800 billion spending limit — lawmakers had to ditch far more effective measures, such as aid to states for education and health care.

These, imo, accurate takes, are also important politically. It is clear that President Obama needs a Left flank pushing him to the right policies. He is a cautious politician, who will not champion bold policies. He needs champions from the progressive viewpoint to prod him to the boldness he needs to have.

Speaking for me only

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    Krugman and the Times: Stimulus Not Enough | 108 comments (108 topical)

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    View From Japan (5.00 / 1) (#10)
    by kidneystones on Fri Feb 13, 2009 at 08:03:08 AM EST
    Asian markets and Japanese bankers are either part of the anti-Obama conspiracy; or the stimulus package is a complete joke. The Asahi tribune, a left-leaning paper, questions why America is making precisely the same mistakes Japan did more than a decade ago. At what point do folks stop making excuses for 'too little, too late'? 500 nuclear plants and vouchers for a Prius built in America under license from Toyota by American workers would do more to stimulate the economy than the pork cobbled together in this disastrous bill.

    There's a price to be paid for sucking up to the ruling party. Some folks have forgotten that.

    Are you well read on (none / 0) (#16)
    by ThatOneVoter on Fri Feb 13, 2009 at 08:56:41 AM EST
    nuclear power? Is it really feasible to build so many nuclear plants? Besides the cost, I thought there were severe  limits on water availability for cooling.

    Parent
    Blowing the Moment ( um ) (none / 0) (#32)
    by kidneystones on Fri Feb 13, 2009 at 10:26:20 AM EST
    Fair point. No, to answer your question, I don't know much about nuclear technology, other than the fact that Sweden, Britain, and Japan already rely on nuclear energy for a lot of their power consumption. The administration following Bush had the mandate to do a lot. Just like the US had the mandate to pretty much rip up Afghanistan and parts of Pakistan getting to UBL. The world was ready to support the US in that endeavor and the US would get behind almost any meaningful big effort to stabilize the US economy, GOP be damned.

    Instead, we got precisely the sort of pork that breathed life into a moribund party that should have been dead on the mat. 50 nuclear power plants and some serious cash to help car-makers and owners transition to fuel-efficient technology, is what I'm talking about. Fair point.

    Parent

    BTD (5.00 / 1) (#12)
    by Ga6thDem on Fri Feb 13, 2009 at 08:16:24 AM EST
    how do you think you can prod him? Honestly, people failed to hold him accountable for things time and again and he's never listened to you or other "progs" about lots of things including FISA so why do you think he'll do it now?

    If I may try a metaphor (none / 0) (#61)
    by Faust on Fri Feb 13, 2009 at 11:48:16 AM EST
    Voices of dissent, voices in the wilderness, are like specks of dust in a hail storm. Under the right conditions they start to accumulate substantial weight and pretty soon they can get big enough to make people pay attention.

    Look at Nouriel Roubini. A couple of years ago he was just a nut job naysayer barking at the fringe. Now he's hailed as one of the few who saw what was comming and people pay quite a bit of attention to him.

    One doesn't stop fighting for a point of view because it's futile and it won't make a difference, one fights for a point of view in the hope that enough people will recognize the value of the position and join it. We aren't very far into the new presidency and I'm seeing a lot of intelligent dissent. Given that the economic situation in this country is only going to get worse, well stated positions need to be kept "live" so that when people finally pull their heads out of their a$$es they have well articulated positions to consider.

    Parent

    Well (none / 0) (#78)
    by Ga6thDem on Fri Feb 13, 2009 at 12:46:49 PM EST
    I agree on keeping the fight on. It's just that I've seen nothing from Obama that leads me to believe he'll listen. Judging from his behavior so far it's much more likely you'll get rolled under the bus and backed over than listened to. And by the time you reach critical mass he may be so isolated from reality like many presidents are that it won't have any effect. Did critical mass against the War in Iraq make W. change anything?

    Parent
    I don't think (none / 0) (#97)
    by Faust on Fri Feb 13, 2009 at 07:02:52 PM EST
    we ever reached critical mass as far as the war in Iraq was concerned. The collapse of the economy will motivate people FAR more than some abstract "war" with "people" "dying" somewhere "over there."

    Obama wants to be remembered as FDR not Carter. If nothing else that will motivate him to get things done on the economy. As for this torture business, I'm not confident he will listen, though I'm also not confident enough people care enough to make the stink necessary to shift it especially with the beltway media being part of the torture lobby.

    Parent

    Really? (none / 0) (#103)
    by Ga6thDem on Fri Feb 13, 2009 at 08:47:56 PM EST
    I get the impression that Obama wants to be Carter but somehow a successful Carter. I see nothing that makes me believe he wants to be an FDR. He doesn't have the boldness that's needed to be an FDR. He's acting more like Hoover with the half measures.

    Parent
    We'll see (none / 0) (#110)
    by Faust on Sat Feb 14, 2009 at 11:38:04 AM EST
    For all our sakes it would be good for him to be bold. And those who want boldness need to keep yelling.

    Parent
    Others agree (5.00 / 1) (#15)
    by jbindc on Fri Feb 13, 2009 at 08:32:17 AM EST
    Other economists, from both ends of the political spectrum agree that this plan won't actually "stimulate" anything.  

    Get used to this (5.00 / 1) (#17)
    by ricosuave on Fri Feb 13, 2009 at 09:05:18 AM EST
    This is the Obama way.  He never takes hard stands and always looks for the middle ground.  We can expect the next 4-8 years of halfway measures, watered-down "compromises", and little or no bold action.  

    I want to believe that Obama will choose a signature issue where he goes all-out and tries something really bold--something he will really fight for.  But I can't even imagine what issue that would be.  It's not health care coverage (unless he regrets having watered it down and killed it in Illinois) or Iraq.  He has never shown a willingness to go after wall street and has too many financial ties to them.  Does he have a signature issue?

    He has passed up opportuntiies to be bold on Iraq and to be bold on the economic recovery right out of the gate.  It sounds like he is passing on the opportunity to make bold changes in the TARP program (but who knows?).  When will we start hearing Millard Fillmore comparisons instead of Lincoln?

    The comparison is Hoover (5.00 / 0) (#41)
    by Cream City on Fri Feb 13, 2009 at 10:58:12 AM EST
    not FDR.  Hoover did try halfway measures, too.  

    And that came after a series of elections that made his party look unbeatable, too.

    Parent

    Does he have a signature issue? (none / 0) (#59)
    by Spamlet on Fri Feb 13, 2009 at 11:36:15 AM EST
    Yes. He is Teh Awesome.

    Parent
    This gave me pause (5.00 / 1) (#21)
    by jbindc on Fri Feb 13, 2009 at 09:37:08 AM EST
    Interesting poll up at Ras

    Forty-nine percent (49%) of U.S. voters trust their own judgment more than President Obama's when it comes to the economic issues affecting the nation.

    Thirty-nine percent (39%) trust the president more in a new Rasmussen Reports national telephone survey. Twelve percent (12%) are not sure whose judgment is better.

    But voters clearly regard Obama as more of an economic whiz than Congress. Two-thirds of voters (67%) have more confidence in their own judgment in dealing with the nation's economic problems than they do in the average member of Congress.

    Voters are closely divided on the president's insistence that "an economy that is already in crisis will be faced with catastrophe" if Congress does not quickly pass an economic stimulus plan. But 62% say Obama's characterization of the economy is about right.

    Twenty-six percent (26%) of voters believe the president is being too negative, while nine percent (9%) say he is being too positive. Three percent (3%) are not sure.

    So, should Krugman be writing columns about me?  And you?  And you?  And you?

    pep talk (none / 0) (#25)
    by jedimom on Fri Feb 13, 2009 at 09:47:55 AM EST
    now the attempt at a TOTAL REVERSAL form Team O, CNBC Harwood says his address to the business council, covered in the wh as a presser, is a pep talk to say I have my stim now everyone be happy and spend!!

    good uck with that,it was IMO a HUGE mistake to selll the stimulus with fear, the world is ending act right now, we may NEVER come out of the recession, he said that! to sell something that is a half axxed fix, only to flip and say spend america SPEND! hire ceos hire!

    after ginning up the i hate ceo machine all the past two weeks..

    a joke really..

    now americans are more scared than ever we arent gonna buy a new washer, I know I need one!, and trhe ceos are afraid and not going tohire

    CAT just publicly called Obama wrong on them rehiring, there isnt enough CONSTRIUCTION in the stim to help CAT rehire....

    now when he comes back for more Americans will say NO

    Parent

    It seems to me (5.00 / 5) (#30)
    by Steve M on Fri Feb 13, 2009 at 10:07:44 AM EST
    that Krugman still gets a lot of angst from the left that is based on nothing more than lingering resentment from the primaries.

    Now, maybe this is the wrong site to bring this up, because it's not clear the primary is necessarily over around here.  But I've yet to see Krugman offer anything beyond good-faith, substantive critiques, and I sure wish people could just agree or disagree without thinking that it still has something to do with Hillary Clinton.

    The primaries are definitely over (5.00 / 2) (#36)
    by sj on Fri Feb 13, 2009 at 10:43:38 AM EST
    as far as I can see.  

    The trouble is that many of those with the strongest reservations have not yet seen anything to alleviate their fears.  That's different than saying "Hillary was robbed".

    But when you watch your fears being played out as you expected, you kind of hearken back to what you thought the "solution" was.  Granted, that's always going to be conjecture, but I think it's understandable.

    Having said that, I agree regarding the nature of Krugman's critiques.  Now I don't read him all that regularly, but it also seems to me that his critiques and recommendations generally have a starting point of the present.  He doesn't do the hearkening back.  He looks back at the past for causation not in wistfulness.

    Parent

    Well put. It's not about anyone (5.00 / 2) (#42)
    by Cream City on Fri Feb 13, 2009 at 10:59:01 AM EST
    but Obama.

    Parent
    I would never expect (5.00 / 2) (#52)
    by Steve M on Fri Feb 13, 2009 at 11:25:09 AM EST
    anyone to abandon their legitimate concerns, or their substantive critiques, simply because an election occurs.  That would be silly.

    I like how people around here tend to remain substantive and issue-based.  I think you might agree with me that there are a couple of exceptions!  But really I was just making an offhanded comment.

    Frankly, if anything, I think the primary left us with more sore winners than sore losers.

    Parent

    Welll (5.00 / 1) (#37)
    by Big Tent Democrat on Fri Feb 13, 2009 at 10:49:30 AM EST
    at this site, during the primaries, I delivered good faith substantive critiques. Not at all sure what you mean by "at this site . . .,"

    Parent
    I refer, of course (5.00 / 1) (#46)
    by Steve M on Fri Feb 13, 2009 at 11:12:15 AM EST
    to that select group of commentors who don't seem to be able to get past certain slights and affronts from the primary that are no longer relevant to anything.

    The authors at this site, as well as the majority of commentors in my estimation, remain consistently focused on the right things, moreso in my view than the vast majority of the progressive blogosphere.  But while I don't go around playing PUMA police and calling people out, it's pretty clear to me that there are still a few dead-enders!

    The bottom line on Krugman is that he has a specific view on how to achieve political goals in a partisan environment, which is spelled out at length in his most recent book.  During the primaries, he made clear that he supported Clinton over Obama because she adhered more closely to his views on the issue of partisanship.

    The election is now over, but Krugman's critique of Obama's bipartisan instincts remains operative, of course.  To the extent he believes Obama's political style is getting in the way of achieving progressive goals, he's going to say so, as we all should feel free to express our opinions.  If people who liked Obama from day one believe that Obama has it right and Krugman has it wrong, they have every right to that opinion, but the degree of anger at Krugman for simply holding a different opinion (an opinion which, not for nothing, used to be the default on the progressive blogs) is pretty out of control.

    Parent

    I reject the shorthand (none / 0) (#56)
    by Big Tent Democrat on Fri Feb 13, 2009 at 11:33:51 AM EST
    "TalkLeft" or "Daily kos" (I use this example specifically because I painted daily kos a certain during the primaries BECAUSE the ENTIRE SITE, from FPers to the Community, completely lost their mind in that period - at other times it was just the community and I distinguished between the 2) should, first refer to the principal writers.

    Parent
    It is always disappointing (5.00 / 3) (#67)
    by Steve M on Fri Feb 13, 2009 at 12:14:06 PM EST
    to read an excellent critique from you, and then to come upon a comment section that looks like it was written by a bunch of escapees from NoQuarter.

    On most days the TL community is better than that.

    Parent

    Ha. You are so very meta-ish today. (5.00 / 2) (#80)
    by oculus on Fri Feb 13, 2009 at 12:52:36 PM EST


    Parent
    I knew (5.00 / 1) (#83)
    by Steve M on Fri Feb 13, 2009 at 12:57:54 PM EST
    that I should never have gone there!!!  But I am human, and weak.

    Parent
    I'm thinking there will be an edict (5.00 / 1) (#84)
    by oculus on Fri Feb 13, 2009 at 12:58:58 PM EST
    from on high very soon.  

    Parent
    It must be nice (5.00 / 2) (#75)
    by Steve M on Fri Feb 13, 2009 at 12:40:41 PM EST
    to believe that only Obama supporters could be tired at this point of hearing ad nauseum how Hillary would have been better.

    Similarly, it must be nice to believe that no one supported Obama for legitimate, non-trivial reasons.

    What I'm not so clear on is why, if it's so nice being you and believing these stories you appear to believe, you're so angry all the time.  I sure wish you could have used the new nick as an excuse to be a little more pleasant in your comments.

    Parent

    So wait (none / 0) (#89)
    by Socraticsilence on Fri Feb 13, 2009 at 01:19:01 PM EST
    basically, all of the good things Obama did count for nothing since they're what Hillary would have done and all of the compromises are bad because your hypothetical president would have done better? That's fair- hey I think we should bave chosen Jerry Brown in 1992 he would have forged a more progressive 1990s, veto DOMA and stopped Welfare Reform with a brilliant alternative- what's that, its ludicrous to assume a hypothetical alternative would have been an improvement on the reality of Bill Clinton? Because I can only assume that you either see the absurdity of arguing Brown would have been better than Clinton in 1992 is very similar to arguing the same about Clinton contra Obama in 2009 or that you simply refuse to use logic in this case.

    Parent
    I dunno dude (none / 0) (#91)
    by Steve M on Fri Feb 13, 2009 at 01:47:34 PM EST
    but until I get banned for making anti-semitic comments, I don't think you'll have much success in suggesting an equivalence between us.

    Parent
    Amen (none / 0) (#33)
    by CST on Fri Feb 13, 2009 at 10:35:35 AM EST
    I've yet to see anything from him that doesn't make sense.  Even when I disagree (which is pretty rare) I can see where he's coming from.

    Which is a lot more than I can say about most of his detracters.

    P.S. What do you mean TL isn't over the primaries? It's been at least 30 seconds since someone brought it up :)

    Parent

    Typical comment (5.00 / 1) (#34)
    by Steve M on Fri Feb 13, 2009 at 10:36:29 AM EST
    from a mindless Obot like yourself!!!!!

    Parent
    And Steve is proven right (none / 0) (#74)
    by Socraticsilence on Fri Feb 13, 2009 at 12:39:20 PM EST
    Seriously, its very easy to argue that a hypothetical person who we have absolutely no evidence for would be better than an actual individual.

    To address yur argumetn specifically, its also ture that Hillary supporters used a alot of silly reasons- she was a woman, it was time for a woman president, Obama was "elitist", etc, etc- don't act like non-substantive arguments had home in only one camp, its that sort of disingenuous reasoning that turned so many people off last year.  A lot people choose Obama for good reasons- be it the fact that he was clearly more reasoned and rational on foreign policy (see: Iran, cluster bomb ban, etc., etc.) or that he had an ability to communicate which led people to believe he could actually win (Hillary being of the Gore/Kerry technocrat sans extraordinary charisma mode that cost us in 2000 and 2004), to pretend that all rational people were on oneside is both intellectually dishonest, and factually unsupportable.

    Parent

    IMHO, Socratic (none / 0) (#87)
    by gyrfalcon on Fri Feb 13, 2009 at 01:15:23 PM EST
    Your comment here proves Intrepid's point.

    Parent
    Wait (none / 0) (#90)
    by Socraticsilence on Fri Feb 13, 2009 at 01:22:58 PM EST
    How does my comment prove Intrepid's point- He/She basically postulates a non-provable alternative history- "Hillary would have been better" its like  arguing that Jerry Brown would have been better than Bill Clinton in 1992 because he wouldn't have signed DOMA or supported Welfare Reform- its a patently ludicrous argument. Then Intrepid follows it up with a frankly insulting suggestion "there was no rational reason to support Obama over Hillary" something which if I argued the converse was true would I would be rightly derided for assuming- both canidates had reasonable cases for support.

    Parent
    Oh Yeah, those silly arguments (none / 0) (#98)
    by Militarytracy on Fri Feb 13, 2009 at 07:14:51 PM EST
    were floating all over this blog.....Not

    Parent
    It is clear that (none / 0) (#88)
    by JThomas on Fri Feb 13, 2009 at 01:16:59 PM EST
    Krugman favored HRC in the primary and has never embraced President Obama and it did bother me at times, but this column did not bother me. It seems a bit more balanced in that at least he mentions the GOP as being delusional and a force that the President must deal with in fashioning this bill.

    I do not mind Krugman stating his objections to the end product as long as he does not get personal toward the President and he acknowledges that there is political realities involved in getting legislation passed in our current divided congress.

    Parent

    Krugman is an economist (none / 0) (#93)
    by Militarytracy on Fri Feb 13, 2009 at 06:02:59 PM EST
    It is his job to be an economist and our job as voters and citizens to acknowledge whatever political realities exist, don't exist, shouldn't exist, and are dooming us all to a depression.  Krugman is a nobel award winning economist though, he is not a political hack or political analyst, and he's not your soothing bedtime stories momma.

    Parent
    He runs into (none / 0) (#96)
    by JThomas on Fri Feb 13, 2009 at 06:58:43 PM EST
    problems when he tries to be political..or play strategist...he is not good at it.


    Parent
    Where is he trying to BE political? (none / 0) (#99)
    by Militarytracy on Fri Feb 13, 2009 at 07:18:19 PM EST
    Where is he trying to be strategic?

    Parent
    Not on this (none / 0) (#100)
    by JThomas on Fri Feb 13, 2009 at 07:42:03 PM EST
    column..but in some past columns he seems to ignore that the President actually needs at least 2 GOP votes in the senate to get anything passed right now. Sad,but true.

    But I have no problem with this column.He is obviously entitled to his opinions and is an expert in his field.

    Parent

    How is "ignoring the politics" (none / 0) (#101)
    by Militarytracy on Fri Feb 13, 2009 at 08:17:35 PM EST
    of an economic issue BEING political?  How is it being strategic?  You aren't making sense to me.  The dude is an economist.  He is telling you about economic reality.  It is your job if you should choose to do so as a voter, activist, member of society, to take part in the political discourse and you may want to consider the facts he provides you with in how you apply yourself to shaping that or not.

    Parent
    It is fine (none / 0) (#102)
    by JThomas on Fri Feb 13, 2009 at 08:40:16 PM EST
    when he makes his prescription for the economy known but when he claims that the President does not have the conviction to do the right thing as he has in the past; that is ignoring that the President is not a dictator who can ignore that he needs 60 votes to pass legislation.

    Parent
    Show me where he says the (none / 0) (#104)
    by Militarytracy on Fri Feb 13, 2009 at 08:59:13 PM EST
    President doesn't have the conviction to do the right thing?

    Parent
    I mean spare me (none / 0) (#105)
    by Militarytracy on Fri Feb 13, 2009 at 09:02:50 PM EST
    Obama essentially got what he asked for.  We can't say that he asked for what we needed and the Republicans fillibustered for three days straight and now we have to negotiate for less.  Obama got just about what he asked for and it isn't what we need.

    Parent
    In todays column (none / 0) (#106)
    by JThomas on Fri Feb 13, 2009 at 10:56:33 PM EST
    he says he following
    '' the best(re.Obama) may not lack all conviction''

    So ok, he implies that maybe Obama is not totally bereft of conviction..just mostly.

    And really, as I said...no big deal..he has been much more harsh in earlier columns.
    I am pleased that we took the first step today toward the bigger stimulus that Krugman wants..even he admitted today on MSNBC that it will be very helpful.

    Parent

    Then provide these (none / 0) (#109)
    by Militarytracy on Sat Feb 14, 2009 at 10:21:47 AM EST
    earlier Krugman having BDS columns please.

    Parent
    DemfromCt at DKos proving himself (4.00 / 4) (#1)
    by Big Tent Democrat on Fri Feb 13, 2009 at 07:06:25 AM EST
    a blind Obama sycophant, reduces Krugman to this "Paul Krugman: Turning victory into defeat. And I never did like Obama, anyway."

    We know for sure that there will be no progressive pressure from that quarter on Obama, who is perfect in their eyes.

    Krugman had BDS too, early on. (none / 0) (#2)
    by ThatOneVoter on Fri Feb 13, 2009 at 07:23:23 AM EST


    Parent
    I disagree about BDS (5.00 / 2) (#5)
    by BernieO on Fri Feb 13, 2009 at 07:49:13 AM EST
    I think Krugan's thinking was more like BTD's. He based his support for Obama on reasons - reasons that I disagreed with, but reasons, not emotional bias. And Krugman has always been willing to criticise Obama.

    I always thought Obama was too green and could never understand why the party didn't decide to back the more experienced Hillary giving Obama time to get more experience - maybe even as VP. I get the concern about CDS but if the party had wanted to they could have fought it. Of course, it was not unreasonable to figure they wouldn't have done so, after watching them stand by and let Gore get savaged in 2000.


    Parent

    B for Bush (none / 0) (#6)
    by Big Tent Democrat on Fri Feb 13, 2009 at 07:53:28 AM EST
    See my post below.

    Parent
    "He based his support for Obama" (none / 0) (#107)
    by NYShooter on Sat Feb 14, 2009 at 05:57:05 AM EST
    Like there was another choice?

    Some stimulus is better than no stimulus; some health care is better than no health care; some concern for the middle class................

    "If the party had wanted to they could have fought it (CDS)"

    What? The party INVENTED CDS!

    Parent

    Precisely (none / 0) (#3)
    by Big Tent Democrat on Fri Feb 13, 2009 at 07:27:28 AM EST
    DemfromCt sounds like a Bush sycophant.

    Parent
    Evidence of some kind please (none / 0) (#94)
    by Militarytracy on Fri Feb 13, 2009 at 06:24:19 PM EST
    links......anything of substance?

    Parent
    Good for Krugman! (none / 0) (#4)
    by dk on Fri Feb 13, 2009 at 07:40:51 AM EST
    My concern is with this statement:

    And it's widely believed that political considerations led to a plan that was weaker and contains more tax cuts than it should have -- that Mr. Obama compromised in advance in the hope of gaining broad bipartisan support.

    I understand that this is the conventional wisdom (i.e. it is "widely believed"), as well as gospel truth for the Obama sycophants.  But based upon his campaign (both the substance and the tactics), count me skeptical at this point as to how much Obama really compromised in advance.  I guess time will tell.  Certainly, I don't see any hard and fast evidence to show that he compromised what he really wanted.

    When Obama had as one of his stated (5.00 / 4) (#13)
    by Anne on Fri Feb 13, 2009 at 08:17:30 AM EST
    goals that the bill be a bipartisan effort, he had, in fact, compromised in advance, even if the specifics of what he was going to give in on were not yet known.

    Republicans, on the other hand, believe that being bipartisan means that the Dems do all the conceding, while they remain firm in their demands; if Democrats - particularly Barack Obama - understood that, we could have had a much better bill.

    Sadly, I think the process we witnessed these last couple of weeks will be the blueprint for how every other issue of major importance will be addressed.

    That I - and many others - identified Obama as a never seeming to have any belief or principle or issue he would not be willing to sacrifice to compromise does not provide me with any satisfaction now that I am seeing it in practice in a way that will affect all of us.


    Parent

    He compromised in advance with (none / 0) (#7)
    by ThatOneVoter on Fri Feb 13, 2009 at 07:55:24 AM EST
    what Democrats would have voted for, though.

    Parent
    Well, that is different, (none / 0) (#8)
    by dk on Fri Feb 13, 2009 at 07:58:30 AM EST
    and more easily proven, IMO.  But the question I hope people become prepared to take seriously is whether Obama is being cautious, or whether his actual vision is more in lines with Nelson/Collins than with non-blue dog Democrats.

    Parent
    I still am not sure about Obama's (5.00 / 1) (#9)
    by ThatOneVoter on Fri Feb 13, 2009 at 07:59:16 AM EST
    political leanings.


    Parent
    i think obama (5.00 / 1) (#14)
    by sancho on Fri Feb 13, 2009 at 08:19:13 AM EST
    does not like to be on the losing side and thus is inclined to compromise and is "conservative" in orientation. i cant see him in a situation where he risks his media mojo. i also think he enjoys the trappings of power as much as bush did. where bush had an agenda that benefitted a select portion of society (the super-rich), obama may not have an obvious interest group or agneda other than preserving the loose coalition (made up of contrary interests) that put him in power. while he will do some good things (better than mccain or any republican) his actions are mostly concerned with the preservation of his own power. an obvious thing to say about a pol, but obama, unlike lbj or fdr, is not pressing a long-term social agenda.  he may mark the definite end of the lbj-fdr dem party.

    Parent
    The media have turned on him (none / 0) (#20)
    by sallywally on Fri Feb 13, 2009 at 09:28:50 AM EST
    IMO. This whole Gregg thing is repreatedly being played as weakness and naivete on his part - not that it isn't, but even when they say over and over that Gregg was being "hammered" a really semi-violent word, not a mild one, by the Repubs to back out, it is never played as vicious hyperpolitical Repubs, which is the real issue here.

    I don't think the Repubs could have declared partisan war any more strongly than they have, or showed their hand publicly any more strongly, but Obama still isn't dealing rationally with it, or with his so powerful position historically here. He's taking it as a kind of prod to try even harder to beat their intransigence. Very stupid.

    Parent

    if the media has turned on him (5.00 / 0) (#27)
    by sancho on Fri Feb 13, 2009 at 09:52:39 AM EST
    he will have a hard time knowing what to do, i think. i suspect he'd find it easier to govern with a republican majority and then play the charming underdog. i cant tell that the media  has turned in a vicious way--they seem still willing to grant him good intentions--but i'm often the last to know. and as long as he has the senators from maine and is perceived as disappointing that 'hater', paul krugman, he may still be able to claim he's resonable as opposed to liberal. but it doe seem at some near point he will either have to call the r's bluff or just come out as an eisenhower republican :).

    Parent
    But, but, but I read here (5.00 / 0) (#43)
    by Cream City on Fri Feb 13, 2009 at 11:00:49 AM EST
    that the Gregg debacle would not matter a whit!

    Parent
    FP at DK. (none / 0) (#79)
    by oculus on Fri Feb 13, 2009 at 12:49:20 PM EST


    Parent
    It doesn't (none / 0) (#81)
    by Big Tent Democrat on Fri Feb 13, 2009 at 12:56:06 PM EST
    Not a whit.

    Parent
    What role does the global... (none / 0) (#11)
    by EL seattle on Fri Feb 13, 2009 at 08:07:57 AM EST
    ... economy play in the success of this plan?

    We're correctly focused on this plan, and how it could have been better or should be made better, but I don't understand exactly how we'll be able to measure the results of this plan as it plays out in the worldwide economy.

    If the plan were better, would we really be able to tell, as long as there's an ongoing global crisis at play?  

    For instance, how would the impact of this plan (or another plan) compare with the impact of the colassal swing in oil prices that we saw over the past year?  There are so many wild cards and other variables in play right now.  

    This is a twisty curvy tunnel we're going through, and it's night outside.  We may not see the light at the end of the tunnel until a few miles after we've left it.

    Can someone explain... (none / 0) (#18)
    by Samuel on Fri Feb 13, 2009 at 09:12:59 AM EST
    potential GDP?

    If no one wants to invest in our current economy to achieve it's "potential" output doesn't that mean that this output is inefficient and would that not be a comment on the structure of our economy and the need for firms to liquidate and allow new models to take their place?

    Now I don't think the government can manage such a restructuring without responding directly to consumer demand - but say they can restructure the economy for the better - wouldn't krugman's calculation be entirely irrelevant in discerning how much to spend and where to spend it?

    I thought you were expert at economics? (none / 0) (#19)
    by Big Tent Democrat on Fri Feb 13, 2009 at 09:25:00 AM EST
    The concept of economic capacity shortfalls is not unknown to those, like you, well versed in eocnomic theory.

    Is there something different you are driving at?

    Parent

    I think you need to write that in (none / 0) (#22)
    by ThatOneVoter on Fri Feb 13, 2009 at 09:39:27 AM EST
    Austrian , for this guy.

    Parent
    You are rude. (none / 0) (#23)
    by Samuel on Fri Feb 13, 2009 at 09:40:22 AM EST


    Parent
    If this makes sense... (none / 0) (#28)
    by Samuel on Fri Feb 13, 2009 at 09:57:03 AM EST
    Say I have the money for 12 eggs and a frying pan - well my economic potential that day could be seen as producing a dozen fried eggs.  I don't utilize this potential because - judging by consumer demand I do not forecast selling 12 eggs at satisfactory prices.

    An economist hears of my story and tells the government to tax/print/borrow money to fund me getting 12 eggs and a frying pan and producing the fried eggs.  I end up with 12 and as they are subsidized I do find 12 customers and turn a profit.  

    Ok.  Well the government stops subsidizing me after a bit and I'm left with a frying pan, eggs and no one willing to pay what I have to charge to profit.  Yea, the economy was going for a while there but now I have been left with an unprofitable business structure - and the burden of higher taxes in the future to fund this structure.

    This is a crude illustration of how it seems to me that encouraging investment to meet short-term potentials in GDP carries a risk of encouraging the government to spend any which way - and that we can't even expect them to do a good job under these circumstances because they seem to be much further removed from consumer demand than I was in the example.

    My final point was just a question of where Krugman gets these numbers and what allows him to assume a high level of homogeneity when it comes to "spending".  Investing is good but blind investing seems like an error ridden endeavor.

    Parent

    Interesting (none / 0) (#29)
    by Steve M on Fri Feb 13, 2009 at 10:04:22 AM EST
    I suppose it's not possible that your customers could get in the habit of buying your fried eggs.  If they weren't willing to pay a non-subsidized price for fried eggs on day one, apparently they will remain forever unwilling.

    This is why economic models will always remain an unsatisfying substitute for reality.  Sometimes subsidies do, in fact, allow a business to get off the ground and prosper.

    Parent

    What's a good example? (none / 0) (#31)
    by Samuel on Fri Feb 13, 2009 at 10:16:16 AM EST
    Subsidized government program that flourished after the removal of subsidy?  There may be a few but it's still very unlikely - not something to find comfort in as this spending moves forward.  

    "This is why economic models will always remain an unsatisfying substitute for reality.  Sometimes subsidies do, in fact, allow a business to get off the ground and prosper. " I'm not substituting a model for reality - I'm substituting a model for a model.

    At least that's how I look at it.

    Parent

    Speaking of reality (none / 0) (#35)
    by gyrfalcon on Fri Feb 13, 2009 at 10:42:23 AM EST
    What businesses are being directly subsidized in this bill the way your hypothetical egg-seller is being subsidized?

    Parent
    The distinction (none / 0) (#44)
    by Samuel on Fri Feb 13, 2009 at 11:04:09 AM EST
    is government investment vs private investment.  Private investment seems to be influenced by consumer demand - government investment is influenced by other factors more akin to central planning than demand led growth.  Now that's not to say all will suffer the fate of my egg business - I can understand the concept that perhaps the government will bridge some type of technological gap in an industry or build a road that will act as a technological improvement and facilitate more efficient business in the future but this is quite different than calculating giant numbers based on the gap between expected gdp and potential gdp.  

    To answer your question, anything the government spends money on is a demand subsidy.  Anything.  When government funding stops any investment they have made will have to remain profitable without the supplementary funds or we will see a loss of wealth in the dropping of asset values and liquidation of said investment's capital.

    Parent

    OK, in other words (none / 0) (#85)
    by gyrfalcon on Fri Feb 13, 2009 at 01:09:16 PM EST
    there are no businesses being subsidized directly by the government in the stimulus bill the way your "example" is.  That's what I thought.

    Parent
    French and Italian Wine. n/t (none / 0) (#49)
    by santarita on Fri Feb 13, 2009 at 11:18:27 AM EST


    Parent
    I don't follow. (none / 0) (#54)
    by Samuel on Fri Feb 13, 2009 at 11:29:19 AM EST
    What do you mean there?

    Parent
    french and Italian Wines are ... (none / 0) (#58)
    by santarita on Fri Feb 13, 2009 at 11:36:05 AM EST
    subsidized but do you think that if the subsidies were removed that demand would cease?  It might decrease because of pricing but people would still want fine bordeaux or brunello.  

    Parent
    Actually (none / 0) (#60)
    by Samuel on Fri Feb 13, 2009 at 11:47:03 AM EST
    It would definitely decrease due to the higher price.  How much so neither you or I know.  But think, if the prices goes from 20 to 30 dollars a bottle - and this cuts demand by 15% - that is 15% of capital which the owner must now find an alternate use/market for - this is inefficiency borne out of subsidy.  Now I'm sure transitioning the vineyard to another use or simply bottling more wine for future sales wouldn't be impossible - but the owner has structured his business around the subsidized model which gave false certainty and at some level produces an innefficiency in his capital investment.

    The level of inefficiency created will vary on the industry/market/size of the subsidy but the basic argument remains intact.  

    Do you disagree?

    Parent

    Good Managers Prosper, Bad Ones Don't... (none / 0) (#62)
    by santarita on Fri Feb 13, 2009 at 12:04:14 PM EST
    The good manager understands the market and adjusts production and pricing, sets up reserves etc.  Government subsidy, government regulation is a component of doing business.  The bad manager looks at a drop in demand and gets a bigger truck.

    Parent
    Just say yes. (none / 0) (#63)
    by Samuel on Fri Feb 13, 2009 at 12:09:45 PM EST
    You know you do!  The good manager is forced to liquidate a capital investment because the government introduced uncertainty - so is the bad!  Meanwhile the subsidy (at least in the US) will have to be recovered via taxes.

    "Government subsidy, government regulation is a component of doing business." Yea - and it's application should be nuanced, not part of a 3 trillion dollar jump to hit the "potential GDP" mark.  Let's make it easier for the economy to recover, not harder.  

    Parent

    What is the mathematical model (none / 0) (#64)
    by ThatOneVoter on Fri Feb 13, 2009 at 12:11:58 PM EST
    which supports your conclusion, elucidated by a credentialed economist?
    I thought it was clear decades ago that verbal gymnastics were useless in trying to decide economic issues.

    Parent
    But that's the only thing you have. (none / 0) (#66)
    by Samuel on Fri Feb 13, 2009 at 12:13:31 PM EST


    Parent
    I'm not taking a position---I'm asking you (none / 0) (#68)
    by ThatOneVoter on Fri Feb 13, 2009 at 12:14:48 PM EST
    to support your arguments with something more than sophomoric analogies.
    Apparently you can't.


    Parent
    And to answer... (none / 0) (#69)
    by Samuel on Fri Feb 13, 2009 at 12:16:12 PM EST
    http://en.wikipedia.org/wiki/Effect_of_taxes_and_subsidies_on_price#Subsidy_impact

    That one paragraph is a commonly accepted model illustrating the point.  It's a graph of supply and demand.

    Parent

    Never mind. (5.00 / 1) (#70)
    by ThatOneVoter on Fri Feb 13, 2009 at 12:19:09 PM EST
    There are plenty of good economic blogs.
    Try posting at Angry Bear or Delong if you want this type of "argument".

    Parent
    Thanks! (none / 0) (#71)
    by Samuel on Fri Feb 13, 2009 at 12:20:27 PM EST
    I hope I answered your question.

    Parent
    Do I disagreed that government ... (none / 0) (#73)
    by santarita on Fri Feb 13, 2009 at 12:38:32 PM EST
    subsidies influence supply and/or demand and hence, business decisions?  Do I contend that government intervention, or the possibility of such intervention in any form introduces uncertainty. Nope.

    Does this make government subsidies or intervention per se bad for business? Nope.  

    Looking at only short term economic effects excludes larger social policy issues.  For example, one justification for agricultural subsidies is that it is in  the national interest of being self-sufficient in terms of food.  Now in a perfect world with rational actors one may argue that government subsidies are not necessary are inefficient.  But we don't live in a perfect world with rational actors.

    Parent

    Power, Internet, Post Office. (none / 0) (#72)
    by Radix on Fri Feb 13, 2009 at 12:37:24 PM EST
    I suppose there are others, all these things were subsidized or paid for by the taxpayer/Government.

    Parent
    Well ok... (none / 0) (#77)
    by Samuel on Fri Feb 13, 2009 at 12:45:42 PM EST
    Post-Office Operates at a loss (subsidy has never been removed or it would cease to exist).  FedEx and UPS when finally allowed to compete have supplanted the post-office in all things but standard letters (I believe it's legally prohibited.)

    Energy - Typically this a compulsory public monopoly that isn't as much subsidized as protected by law to it's monopolistic position.  That said, third party gas and electric supply delivered on the government distribution systems is insanely cheaper.  

    Internet - Research was government funded yes - breakthroughs were private entities however.  Maybe this is an example where gov spending bridges a gap faster than usual resulting in a net positive.

    Parent

    Infant industry theory (none / 0) (#39)
    by Big Tent Democrat on Fri Feb 13, 2009 at 10:52:05 AM EST
    is an important part of developmental economics.

    Brazil was a virtual laboratory for it after WWII.

    Parent

    I agree to an extent. (none / 0) (#48)
    by Samuel on Fri Feb 13, 2009 at 11:13:23 AM EST
    This approach becomes valid when domestic producers are in competition with subsidized foreign producers.   The big example is US farming vs 3rd World or subsidized powdered milk in Jamaica.

    Note this is a reaction to coercive market manipulation arising outside of the domestic economy.  

    Now maybe government subsidy accompanied with some type insulated time frame will allow a business to get off the ground in one of these countries - but this example is similar to a business making large investments upfront, selling goods at an initial loss, knowing that their costs will eventually drop - except for the fact that if government planned, no one spending the money is spending their own money and their focus may be less on efficiency and more on retaining their power.

    Parent

    US Farming is Subsidized. n/t (none / 0) (#50)
    by santarita on Fri Feb 13, 2009 at 11:20:22 AM EST


    Parent
    That was the point. (none / 0) (#53)
    by Samuel on Fri Feb 13, 2009 at 11:28:47 AM EST


    Parent
    Private demand is currently low (none / 0) (#47)
    by Democratic Cat on Fri Feb 13, 2009 at 11:12:29 AM EST
    Because people are less willing to buy due to joblessness, uncertainty about the future, or lack of credit.  And firms are less willing to invest because they are uncertain about the future or cannot get credit to finance capital expenditures. As confidence and jobs return, private demand returns and government demand (deficit spending) can be reduced.  (Indeed it is wise to reduce government demand as private demand recovers or else the economy will overheat.)

    In your example, there never is any private demand for those eggs so the government creates artifical demand. In the real world, however, people like their omelettes and will buy eggs again once they get past the low of the business cycle.

    Parent

    What causes the return in confidence? (none / 0) (#51)
    by Samuel on Fri Feb 13, 2009 at 11:24:30 AM EST
    At some future point the increased debt will reduce future spending as taxes will have to be increased.  How do we get a good that must be subsidized at present to sell in a future environment in which taxes are higher and subsidization is gone?  I admit, maybe solar panels or something that can have a dramatic reduction in cost due to tech can pull this off.

    It seems to me that the argument assumes the stimulus will cause a recovery and that this recovery is why the stimulus will work.  I admit, there's a lot of moving pieces so I don't know anything for certain.

    Parent

    Animal spirits (none / 0) (#57)
    by Democratic Cat on Fri Feb 13, 2009 at 11:34:47 AM EST


    Parent
    Times editorial (none / 0) (#24)
    by jedimom on Fri Feb 13, 2009 at 09:42:29 AM EST
    sadly hilarious seeing the people who decried Hillarys polarization and lauded Obamas mythical ability to bring people together, now say he shouldnt have wasted his time on the GOP

    which most of us knew all along, anyway two more things they got right in that editorial and I hope team Obama is reading:

    They need not, and should not, wait to start a foreclosure-prevention effort, but it's not clear whether Mr. Obama's team understands the scale of the effort required. Earlier this week, Treasury Secretary Timothy Geithner suggested that some $50 billion from the bank-bailout funds may be used on foreclosure prevention. That is the low end of the estimate that had been floated.

    The administration also appears to be waffling in its support for passing new legislation that would allow bankrupt homeowners to have their mortgages modified under court protection. To be powerful, an anti-foreclosure effort must include both carrots, like interest-rate subsidies that would make it easier for lenders and borrowers to agree on modified loan terms, and sticks, including the option for a bankruptcy court judge to impose a settlement on lenders who aren't doing enough to prevent unnecessary foreclosures.



    CLARIFY (none / 0) (#26)
    by jedimom on Fri Feb 13, 2009 at 09:48:30 AM EST
    to be clear I refer to the NYT editorial board...

    Parent
    RE clarify then (none / 0) (#38)
    by Big Tent Democrat on Fri Feb 13, 2009 at 10:50:32 AM EST
    NYTimes endorsed Hillary Clinton for President.

    Parent
    Interesting that more than a year ago (none / 0) (#45)
    by Cream City on Fri Feb 13, 2009 at 11:08:41 AM EST
    the NYT, in its endorsement, described Obama as "the incandescent if still undefined senator from Illinois" -- and that, despite all the time elapsed since and the intensity of the campaign, the description still applies.  

    Let's hope he remembers how to again turn that incandescence into inspiration.  Yes, he can.  

    Parent

    Correct (none / 0) (#108)
    by NYShooter on Sat Feb 14, 2009 at 06:20:57 AM EST
    and that gave them the cover to pound her unmercifully till the day she conceded.

    Parent
    Christina Romer (none / 0) (#40)
    by gyrfalcon on Fri Feb 13, 2009 at 10:55:02 AM EST
    head of Obama's Council of Economic Advisers (and also an expert, apparently, on the Great Depression) said cheerfully on TV the other night that the Obama administration wanted a "balance" of stimulus and tax cuts in the bill because they didn't want to put all their eggs in one basket, so to speak, and if one didn't work so well, the other one might.

    Another moment for me of sitting there with my mouth hanging open in disbelief.

    It's actually more important to fix the financial system than provide economic stimulus, and since this stimulus looks to be wholly inadequate, everything now rests on Geithner doing the right thing with the financial system, seems to me.

    I'm hopeful that he'll be able to, and I'm one who's actually a bit heartened by his vagueness about his intentions so far because I think there's a very good chance that he's planning very drastic action he dare not telegraph too clearly in advance.

    I think there's an excellent chance that the auditors who are right now swarming over the books of Citi and the other big banks as they carry out the "stress test" are going to find that they're not viable and that big chunks of the financial system are going to suddenly get nationalized.  I honestly think Geithner's being so coy because that's what he expects to have to do.

    We'll see.  I certainly have more hope for Geithner than for Obama or the Dems.  Or President Collins.

    Politically Astute of Ms. Romer, I think... (none / 0) (#55)
    by santarita on Fri Feb 13, 2009 at 11:32:03 AM EST
    I think that we are just seeing a lot of Kabuki Theater here.  Ms. Romer, Summers, Geithner etc didn't just fall off the turnip truck.  I think that they all know that this first go-round is not adequate.  It's just the first installment.  But the American people are still too caught up in Republican mantras like "tax and spend", "Government is the problem", etc. to accept the big pills that need to be swallowed.  As long as the Republicans appear to the mass media (and hence to the masses) as anything other than the extremists that they are, the government can't muster the support that it needs for what it has to do:  more stimulus and shutting down or nationalizing some big banks, while spending a whole lot more money.  I'm disappointed that Obama didn't come up with a comprehensive stimulus plan with a theme.  He missed the boat.  But the boats are going to be leaving every hour on the hour for a long time.

    Parent
    I'm afraid I'm in the camp (none / 0) (#86)
    by gyrfalcon on Fri Feb 13, 2009 at 01:12:53 PM EST
    that thinks Obama got pretty close to exactly what he wanted.

    I think passing this bill essentially precludes them from coming back to do a bigger, better stimulus later.  The overwhelming assumption will be that because this one didn't work, more wouldn't work either.


    Parent

    The problem I think (none / 0) (#76)
    by Socraticsilence on Fri Feb 13, 2009 at 12:42:03 PM EST
    Is that a Krugmanesque plan wouold not have been politically feasible.

    While we stare a second (none / 0) (#95)
    by Militarytracy on Fri Feb 13, 2009 at 06:26:39 PM EST
    Great Depression in the face, in Obama's political world when will a Krugmanesque plan be politically feasible?  Or do we all just need to get used to the idea that we will implode soon?

    Parent
    I don't believe a word (none / 0) (#111)
    by dontletemfoolya on Tue Feb 17, 2009 at 05:26:59 PM EST
    I don't trust what the gov't tells us or what financial experts tell us: 'Stay the course' and all that crap.
    have a good look....a really good in depth look at this website and tell me they're completely wrong. Frankly, I see far worse things happening to this country than what we are led to believe. Can anyone say, "LEMMINGS" :~)   www.leap2020.eu

    Here's an excerpt I found interesting, if not downright scary:

    As we already explained in GEAB N°28, the crisis will affect in different ways the different regions of the world. However, and LEAP/E2020 wishes to be very clear on that aspect, contrary to the dominant stance today (coming from those experts who denied the fact that a crisis was coming up three years ago, who denied that it was global two years ago, and who denied the fact that it was systemic six months ago), we anticipate that the minimum duration of the decanting phase of the crisis is 3 years (1). It shall be finished neither in spring 2009, nor in summer 2009, nor at the beginning of 2010. It is only towards the end of 2010 that the situation will start stabilizing again and improving a little in some regions of the world, i.e. Asia and the Eurozone, as well as in countries producing energy, mineral and food commodities (2). Elsewhere, it will continue; in particular in the US and UK, and in all the countries depending on their economy, were the duration could approximate a decade. In fact these countries should not expect any real return to growth before 2018
    Moreover no one should imagine that the improvement at the end of 2010 will correspond to a return of high growth. The recovery will take long. For instance, stock markets will take a decade to return to levels comparable to 2007, if they ever return to that. Remember that it took twenty years before Wall Street resumed its 1920 levels. Well, according to LEAP/E2020, the present crisis is deeper and longer than in the 1930s. The general public will gradually become aware of the long-term aspect of this crisis in the coming three months and this situation will immediately trigger two tendencies carrying with them socio-economic instability: fear of the future and enhanced criticism towards leaders.
    Krugman and the Times: Stimulus Not Enough | 108 comments (108 topical)

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