Sunday, October 04, 2009

Do we need another stimulus?

The following is the full transcript of A Conscience of a Liberal of Oct. 3, 2009. Please read very carefully. Paul Krugman, the Nobel laureate, is not pleased with the latest unemployment report. What does the future hold?

Obama’s Anzio

I’m late on this, due to festschrifting. But another bad employment report yesterday. I’m feeling pretty bleak about this.

And the worst of it is that it was more or less predictable. I went back to my first blog post — January 6, 2009 — worrying that the Obama economic plan was too cautious. I wrote:

This really does look like a plan that falls well short of what advocates of strong stimulus were hoping for — and it seems as if that was done in order to win Republican votes. Yet even if the plan gets the hoped-for 80 votes in the Senate, which seems doubtful, responsibility for the plan’s perceived failure, if it’s spun that way, will be placed on Democrats.

I see the following scenario: a weak stimulus plan, perhaps even weaker than what we’re talking about now, is crafted to win those extra GOP votes. The plan limits the rise in unemployment, but things are still pretty bad, with the rate peaking at something like 9 percent and coming down only slowly. And then Mitch McConnell says “See, government spending doesn’t work.”

Let’s hope I’ve got this wrong.

Alas, I didn’t have it wrong — except that unemployment will, if we’re lucky, peak around 10 percent, not 9.

There was a lot of talk about health care being Obama’s Waterloo. It won’t, I think and hope. But stimulus is starting to look like Obama’s Anzio — the battle in which the American commander got himself into terrible trouble by being too cautious.

And right now Obama is pinned down in his too-small beachhead, taking heavy casualties.


Brian Keegan said...

I feel like the politics on this issue are much more complex than Krugman seems to be suggesting. I don't think this is a situation where President Obama can simply lay down the law and put forward a massively ambitious plan and expect that it will startle the republicans into agreement. At the same time I agree with Krugman that this failure will be a terrible blow to Obama's reputation and image of authority. I feel that what Obama needs to do is to deny any significant republican actions through his veto power until they either submit a plan worthy of discussion or allow Kennedy's bill to pass. Essentially I think its through action that he can flex his political muscles not by putting out a far reaching highly demanding plan.

Dan Trimarchi said...

I think brian captured my thoughts almost perfectly. It can be very difficult to find a way to make things work for everyone, especially in a political system that is as divided as our own. I believe that there are times when the president must do everything within his power to achieve what is necessary for his country. With the optimal unemployment rate being at around 4%, It's a big issue for the united states to be where it is at the moment. I believe that this is one of those situations, where the president should do what he thinks is right regardless of differing opinions from opposing political parties.

TK said...

Did you ever wonder why they call the stimulus plan a plan? Personally, I don't think it should be considered as a plan due to the failure of past stimulus packages. Instead, I think it should be called a package. The plan consists of Obama's overall thoughts on healing the economy. The stimulus package is only part of that plan. I definitely do agree that we need not one but several stimulus packages; however, there must be a different approach. We can't just keep throwing money at failing companies and simply hope that they'll recover. I'm aware that all plans need to be somewhat adjusted, but please Obama, have a well-organized plan first.

TK said...

The future can't be determined unless the present is taken care of first.

Justyna Sokol said...

I fully agree with all 3 boys, Brian, Dan and TK. This is a very tough situation for the president to be in. Bush deffinitely left Obama in a tough nook. TO have the United States be at an unemployment rate of 9%, in Michigan i think it was it peaked at around 9.6%. These numbers are truly scary and for the President to even think up a plan good enough to be considered is a great leap. Regardless of what he chooses to do there will be critics and people saying he did it wrong or something along the lines. However it is an attempt, everyone cannot just sit around and hope it gets better on its own because it won't. Obama is taking a chance with this stimulus plan. Its the best he can do.

Khari Linton said...

I totally agree with Brian on this one. People are expecting way too much of Obama within his first year. Things are only gonna get worse before they get better, and I expect everyone to know that. Even though Obama resembles the symbol of hope; it will not come right away. I still expect our economy to turnaround sooner rather than later, but we Americans are not going to escape this recession for a couple of more years. We're going to have to endure much longer before unemployment decreases and citizens feel comfortable to invest money in the market again. The stimulus plan is only a plan to help matters, the stimulus plan is not made to get America back on it's feet. Much more planning and other drastic measures is needed to go along with the stimulus in order for America to get back on it's feet sooner.

Katie Ford said...

I do not agree with Krugman at all first of all if he can sit here and say in jan. 2009 that all this negativity was going to come from this stimulus plan and then it was recently stated by the goverment that in june 2009 we were out of the recession, that sort of contradicts much of what he says. I seem to think that there is a possiblity that we might "double dip" but not because the stimulus packed failed but because it can only help get you so far and then you need to do more. Which i am sure they have planned ahead (hopefully) for anything in the future.But this is just pure opinion on this topic.

Nick Terp said...

Whether another stimulus package is the answer to the current economic predicament i have no idea. However what i do know is that when either GOP or Obama puts forth an economic recovery plan the other fights against it which produces water down results. The only way out of this bad economy is for political parties to stop being so short minded and put the good of the people first for a change. Personally i believe that another stimulus is needed but the money should be put into infrastructure to help create jobs and get this nation back on its feet

Abeer Ghani said...

I feel as if the the economic crisis the U.S faced was a little bit more than just black and white. It had intricacies which were not discussed in depth, areas that were untouched and problems that were unaddressed. Another stimulus plan should be enforced after doing a study of the history of past failed stimulus plans. In order for this plan to truly work, we must dissect it in terms of what is good for the community at large.