"The Stimulus Should Have Been Bigger,
But Obama Wimped Out."
Yes and no. While Republicans have been trashing the stimulus as big government run amok, more liberal critics led by New York Times columnist (and Nobel-winning economist) Paul Krugman have dissed it as ludicrously small. And it's true: More stimulus would have closed more of the output gap and replaced more of the 8 million jobs lost in the Great Recession. More tax cuts would have injected more money into the economic bloodstream. More public works would have created more jobs for laid-off construction workers. More aid to states would have prevented America's governors from offsetting the Recovery Act's impact by raising taxes, laying off teachers and other public employees, and slashing Medicaid and other services. Overall, their spending cuts and tax hikes pulled almost as much money out of the economy as the stimulus pushed in, and public-sector employment has shrunk during the Obama presidency.
Even so, the common belief among liberals that pumping inadequate stimulus into the economy was Obama's original sin is ahistoric and unfair. The Recovery Act was still massive -- the latest estimate is $831 billion, larger than the entire New Deal in constant dollars -- and it wasn't Obama's fault it wasn't bigger.
In September 2008, a mere $56 billion stimulus package died in the Senate, with two Democrats voting no. And after the wildly unpopular bank bailout, there was even less congressional appetite for big spending. By late November, as the market's death spiral created a grudging consensus that Congress needed to act, 387 predominantly left-leaning economists -- many of whom later trashed Obama for skimping on stimulus -- signed a letter calling for a package of just $300 billion to $400 billion. Even by January 2009, House Speaker Nancy Pelosi, the heroine of the left, was reluctant to approve anything above $600 billion. The president was way out in front of his Democratic blockers.
Presidents do not have magic wands, and Republicans had decided to oppose the Recovery Act en masse. So unless Obama wanted to start his presidency with an epic failure during an economic emergency, he needed to round up 60 votes in the Senate. Democrat Al Franken was still embroiled in a recount in Minnesota, so Obama needed at least two Republicans to support the stimulus. The three moderate GOP senators -- Olympia Snowe and Susan Collins of Maine, and Arlen Specter of Pennsylvania -- along with conservative Democrat Ben Nelson of Nebraska all agreed that none of them would vote yes unless all of them were satisfied. And all insisted that the stimulus had to be less than $800 billion. Congressional sources confirm that at least half a dozen additional centrist Democratic senators also drew an unpublicized line in the sand at $800 billion. Everyone who was in the room during the congressional horse-trading agrees that Obama got as much as he could have. "There simply wasn't any room for anything bigger," then-Senator Byron Dorgan, a Democrat from North Dakota, told me. "That's representative government."
Some of Obama's progressive critics acknowledge that he couldn't have gotten more stimulus in February 2009, but they complain that he should have gotten more out of Congress once it became clear the initial jolt wouldn't restore a vibrant economy. It's true that some of Obama's advisors vastly overestimated the ease with which they could go back to Capitol Hill. Even Summers, who doesn't make admissions like this often, acknowledged to me that he had been wrong and his rival Krugman, who had warned that inadequate stimulus would give stimulus a bad name, had been right. "At the time, I didn't agree," Summers said. "That was a mistake."
Obama did end up squeezing another $700 billion of stimulus out of an extremely reluctant Congress, through a dozen separate bills. It wasn't easy. Snowe and Collins were the only Republican senators to support an extension of unemployment benefits. Republicans also filibustered a bill to save teaching jobs; Snowe and Collins finally agreed to a shrunken version. (Specter did too, but he had already switched to the Democratic Party after GOP backlash over his stimulus vote.) It took more than two months for Obama to finagle two Republican votes for a $42 billion bill to cut taxes for small businesses. "What could be more Republican than that?" asks former Sen. George Voinovich, an Ohio Republican who defied his party leaders to back the bill. "Instead of doing what was right, partisan politics always came first."
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