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Krugman particularly worried about Obama's callous attitude toward those who say his stimulus is too small and his bank recovery plan is wrongheaded. Obama dismissed such criticisms as coming from "bloggers." First off, Bloggers are often rather well informed - depending on who they are of course - and secondly very serious economists - Krugman included - are major voices of this kind of criticism.
Krugman's worry is that Obama will need to come back to congress to ask for more stimulus, far more. But by then it may be that the American people and congress think stimulus has failed.
Krugan paints a bleak scenario unfolding as follows:
here’s the picture that scares me: It’s September 2009, the unemployment rate has passed 9 percent, and despite the early round of stimulus spending it’s still headed up. Mr. Obama finally concedes that a bigger stimulus is needed.
But he can’t get his new plan through Congress because approval for his economic policies has plummeted, partly because his policies are seen to have failed, partly because job-creation policies are conflated in the public mind with deeply unpopular bank bailouts. And as a result, the recession rages on, unchecked.
O.K., that’s a warning, not a prediction. But economic policy is falling behind
the curve, and there’s a real, growing danger that it will never catch up.
I have a horrifying suspicion that Krugman is right. If you listen to the media and to Republican politicians, the argument is that stimulus is too big, and that less government and more tax cuts are the way to go. If this stimulus is too small, and if the Bank plan is wrongheaded, it is very likely that congress - and maybe the American people - will buy into the wrong criticism, that the stimulus is too much; when in fact it is too little. If this happens . . . God help us all!
Posted March 9th, 2009 by mattwion
