Christina Romer and Jared Bernstein, incoming CEA Chair and incoming economic adviser to Joe Biden, have released a briefing report on what they think the Obama stimulus proposal will do. In a single graph:
The obvious question looking at this is: Why not try for more? But I’m just a humble blogger. Paul Krugman, however, is both a humble blogger and a Nobel Prize winning economist and he wonders why not try for more?
From a political point of view, there are too things I like about this release. One is that it doesn’t overpromise. One of the biggest risks facing progressive politics at the moment is that we inherit a deteriorating situation, take action that ensures things get “bad” rather than “terrible,” and that get blamed by the public and the right for creating a bad situation. To that end, it’s important not to make unrealistic promises about what you’re proposing. Romer and Bernstein are clearly saying he that even if this works, we’re going to get to a bad place.
The other is the impact of this on congressional politics. Tim Fernholtz says: “one thing I do expect is for Democratic members of congress to look at that graph above, consider their reelection prospects, and wonder if maybe they ought to make the bill just a bit bigger so that unemployment line will drop just a bit lower as voters head to the polls.”
I’d say that’s a good thing and not necessarily something the Obama camp is opposed to. Nothing I’ve heard on the record or off the record from the Transition indicates that they have some kind of dogmatic opposition to a larger stimulus. What they have is a proposal. A proposal made up of a number of component sub-ideas. And they’ve said—repeatedly—that they’re open to additional ideas for more things to do from congress or from outside.