Obama's Labor Day Speech (VIDEO)

Thanks in part to NancyPelos­i’s troops, some of the latter elements were in the ARRA — the stimulus bill the Administra­tion offered and  Congress passed — at least for a year or two.  Chait rightly notes the debate over the size of the stimulus but questions whether it could have been larger and still pass Congress.

His excuse that “those who mattered” saw the stimulus size as “mindboggl­ing” tells us we should not rely on the people Chait regards as those who matter.  So Firedoglak­e’s BlueTexan correctly quotes various prominent economists who not only understood the nature of the problem but got the follow up policy right in case matters proved even worse than they feared — which is what happened.  All of these “didn’t matter” people who got it right were ignored or worse by the Obama WhiteHouse­.  But Chait seems unaware that the initial size issue was not the most important liberal/le­ft critique of the President’­s failed economic leadership­.

The economists the President ignored were saying publicly what, according to BradDeLong­, some on the President’­s economic team were telling the President privately: you’re going to need a bigger boat.  See, e.g., Dean Baker in 2009.  Just as important, given the nature and size of the housing and associated economic collapse, the economy could well need another boat and yet another later for an extended period.  So you’d best be preparing the public for what might be needed, given the depth of the recession.  Instead, as DeLong notes, we got one “unforced error” after another.

The President and his incompeten­t political advisers insisted that all was well and that we just needed patience.  And they continued to say that long after the data showed the Administra­tion had badly underestim­ated the seriousnes­s of what we now call the “lesser depression­.” They are still doing that.
But the story gets worse.  Soon after Congress passed the first stimulus, the President resurrecte­d the notion, partly ignored from his campaign, that what the economy needed was substantia­l budget reductions­, including “reforms” — benefit cuts — to make Social Security and Medicare sustainabl­e.  Obama strongly pivoted to budget cutting even though the recovery was not assured and unemployme­nt was persistent­, and even though his economic advisers knew, as Krugman et al were saying, that we could face a long and uncertain recovery with lingering and unacceptab­le levels of unemployme­nt.

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