Krugman on the Stimulus Package: It's Too Little. Will Obama Realize This Too Late?

by Damozel  On Saturday, I commented on the Media Matters piece regarding the lack of media coverage of the real problem that economists see with the stimulus package, which is not that it is "massive," but that it doesn't go nearly far enough. 

Today, Krugman picks up the theme once more in "Behind the Curve."

Watching the news, you might have thought that the only question was whether the plan was too big, too ambitious....Yet many economists, myself included, actually argued that the plan was too small and too cautious. The latest data confirm those worries — and suggest that the Obama administration’s economic policies are already falling behind the curve....

There are now three big questions about economic policy. First, does the administration realize that it isn’t doing enough? Second, is it prepared to do more? Third, will Congress go along with stronger policies?

On the first two questions, I found Mr. Obama’s latest interview with The Times anything but reassuring.

“Our belief and expectation is that we will get all the pillars in place for recovery this year,” the president declared — a belief and expectation that isn’t backed by any data or model I’m aware of. To be sure, leaders are supposed to sound calm and in control. But in the face of the dismal data, this remark sounded out of touch.

And there was no hint in the interview of readiness to do more.  (NYT)

To make your blood run cold, read Krugman's predictions about what will happen if Obama doesn't act much more speedily than it looks as if he's planning to do.

I don't understand an administration which, in a time of crisis, listens only to the same set of economic advisers.  Surely Obama should take notice of the comments of some of those -- e.g., though not limited to, the Nobel-winning economist Krugman -- who are on his side?  Because I'm afraid that's what we're going to see if he doesn't pull up his socks?

Meanwhile, he really ought to kick Geithner to the curb.  As Atrios says, "Timmeh still doesn't know how to find the pony in the shitpile."  But he'll dig to the earth's core trying to find one!

Somehow Obama's smiling, mildly deprecating dismissiveness of the view from outside his Inner Circle doesn't play so well when it's directed against people who are actually on his side.

A real fix for the troubles of the banking system might help make up for the inadequate size of the stimulus plan, so it was good to hear that Mr. Obama spends at least an hour each day with his economic advisors, “talking through how we are approaching the financial markets.” But he went on to dismiss calls for decisive action as coming from “blogs” (actually, they’re coming from many other places, including at least one president of a Federal Reserve bank), and suggested that critics want to “nationalize all the banks” (something nobody is proposing). (NYT; emphasis added)

Yeah, because no blogs are written by internationally recognized economists with a track record of being right such as Krugman or Brad DeLong.  And none are written by "unusually prescient bloggers who are economists" such as Atrios.  And Free Marketeer Supreme Alan Greenspan himself didn't suggest that nationalizing some banks (temporarily) might be the only option.

“It may be necessary to temporarily nationalize some banks in order to facilitate a swift and orderly restructuring,” former Fed chairman Alan Greenspan told the Financial Times. “I understand that once in a hundred years this is what you do.”(Think Progress)

If Obama carries on "employing the rhetorical trick of attributing any views you wish to marginalize as coming from bloggers" (Atrios again), I am going to fall out with him. 

Because blogs or no blogs, I expect the national media will eventually catch on to the fact that Obama's stimulus package wasn't massive enough...right about the time it becomes clear that it's too late to do anything about it's having been too little.

With the worst-case scenario hoving into sight, it's going to take real political courage -- to hell with "pragmatism"; there's no middle ground when it comes to this crisis -- for Obama to push past the opposition and do what needs to be done. 

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