Another great read by Paul Krugman. Obama's cautious approach to the economic crisis may lead the way for Democratic losses in 2010. Clearly the situation is better than it was a year ago though as we saw on Friday, employment is still lagging with limited chances of recovery before the mid term elections.
Administration officials would presumably argue that they were constrained by political realities, that a bolder policy couldn’t have passed Congress. But they never tested that assumption, and they also never gave any public indication that they were doing less than they wanted. The official line was that policy was just right, making it hard to explain now why more is needed.
And more is needed. Yes, the economy grew fairly fast in the third quarter — but not fast enough to make significant progress on jobs. And there’s little reason to expect things to look better going forward. The stimulus has already had its maximum effect on growth. Even Timothy Geithner, the Treasury secretary, admits that banks remain reluctant to lend. Many economists predict that the economy’s growth, such as it is, will fade out over the course of next year.
