Binyamin Applebaum and Helen Cooper summarize the state of thinking about economic policy inside the administration:
Obama’s senior adviser, David Plouffe, and his chief of staff, William M. Daley, want him to maintain a pragmatic strategy of appealing to independent voters by advocating ideas that can pass Congress, even if they may not have much economic impact. [...] Gene Sperling, Mr. Obama’s chief economic adviser, say public anger over the debt ceiling debate has weakened Republicans and created an opening for bigger ideas [...] Pfeiffer, the White House director of communications, said that there was no internal debate [...] Obama and his aides are skeptical that voters will reward bold proposals if those ideas do not pass Congress. It is their judgment that moderate voters want tangible results rather than speeches. [...] wide range of economists say the administration should call for a new round of stimulus spending [...] A series of departures has left few economists among Mr. Obama’s senior advisers [...] Mr. Plouffe and Mr. Daley share the view that a focus on deficit reduction is an economic and political imperative [...] As part of this appeal to centrist voters, the president intends to continue his push for a so-called grand bargain on deficit reduction [...] Administration officials say that their focus is on a number of smaller programs that could benefit the economy.
I see this debate as reflecting the pathologies of collective decision-making process. What you really have is one group of people, mostly economists, who think the economy needs a big new stimulus. Then you have a second group of people, mostly professional political operatives, who think that picking a public fight with congressional Republicans about a big new stimulus package would be a political loser. These are both sensible views, in my opinion. But Group I can try to strengthen its hand by arguing that the political strategists are wrong on political strategy. And Group II can try to strengthen its hand by arguing that the economists are wrong on economic policy. That sounds like a recipe for confusion to me.
The important thing to remember is that if you have an idea that can be implemented and that works, it doesn’t matter whether the initial public response to it is good or not. A President governing during a labor market recession and faced with a hostile congress needs his economists to huddle with some lawyers to devise the best possible unilateral courses of action. They shouldn’t be fighting with political strategists about the alleged desirability of having a big picture public argument about macroeconomic stabilization policy. The truth is that what Obama says will matter much less than what he does. And anything he does will either have to be things he doesn’t need congressional approval for, or else will be things that aren’t that big a deal. .