Insufficiently stimulated

I wonder if Ezra will get yelled at too. Somehow I doubt it.

Ezra Klein:

[F]or stimulus, a dollar that's spent, say, building a museum about Woodstock is as good as a dollar spent building a bridge to get people to a museum about Woodstock. From a stimulus perspective, waste happens when a dollar is saved rather than spent, as that dollar doesn't immediately stimulate the economy. That's why tax cuts are often ineffective: If you give a middle-class worker a tax break at a time when he's not unable to pay the bills but is trying to replenish his gutted 401(k), he'll save it. And that, from the stimulus's perspective, is waste.

One of the failures of the stimulus was that it included an enormous amount of tax breaks. Roughly a third of the total, in fact. And some of those breaks, like the $70 billion AMT patch, were not effective stimulus under any definition of the term. But they were there to get votes, and to show Obama was being bipartisan in his construction (though in Jon Alter's book "The Promise," Obama says that giving these breaks up-front rather than negotiating with the Republicans for them was a massive mistake). The problem is that they made the stimulus less effective than it could've been, and that made it easier for Republicans to attack down the road.

As we've written before, the stimulus wasn't big enough, the President knew it, but for some unknown reason he caved out the gate and agreed to a much less stimulating bill than was necessary.

(There's the argument that the President "knew" he couldn't get the votes by asking for a larger bill. Really? Did he try? The nation was on the verge of another Great Depression and there was one antidote, the stimulus bill. Did the President make an Oval Office address explaining this to the country, demanding that all 535 members of Congress join him in supporting the full legislation to stave off complete economic collapse? No he didn't. He simply did a vote count, saw that he didn't yet have the votes for the full stimulus that was needed, so he caved and didn't try to get them at all.)

Then he caved on the tax cuts, cutting the stimulative aspects of the bill even further, so that the bill ended up being about 25% of what it needed to be to make up the $2 trillion of GDP lost in the could-have-been-depression.

Let's not forget, this wasn't just another proposal. It was a proposal meant to stop another Great Depression. Who caves out the gate on how much you know will be needed to stave off that Depression? Calling it a mistake is putting it lightly. Every single Democrat is paying for that mistake, in terms of the higher unemployment rate they're having to defend going into re-election.