Now that it’s undeniable that Obama’s economic policy has been a Titanic disaster, the apologists are left with nothing but the claim that True Stimulus™ did not fail because it was never tried. Is this really true, or is it the sad whine of a gaggle of failed policy wonks exposed as charlatans? Let’s take a brief look at the record, shall we?
Here’s a rough timeline of the transition from triumphalism to excuse-making for the disaster that is Obama’s fiscal policy:
Early in the game–August 6, 2009, to be precise– then-CEA Chair Christina Romer was ebullient:
In an unusually whimsical moment, I sent in as the title of my talk, “So, Is It Working?” Though it may destroy some of the suspense, I thought that given the provocative title, I should probably get straight to the answer: Absolutely.
It didn’t take long–by October 5, 2009– for Paul Krugman to perceive the wisdom of laying the foundation for a defense:
…the straight economics said that we should have a stimulus much bigger than the Obama administration’s initial proposal.
Almost a year later–on September 3, 2010–Romer was chastened but resolute:
I think it’s important to keep in mind just how big the American Recovery and Reinvestment Act was. It was the biggest fiscal stimulus we have ever done in this country. It has made a tremendous difference. And I am very proud that that action was taken.
By May 16, 2011, Larry Summers realized it was time to follow Krugman’s lead:
…the recovery probably would have proceeded more rapidly if the fiscal program had been larger.
Finally, a few days ago–August 5, 2011–Romer had this to say on Bill Maher’s alleged comedy show:
Policy would be better if we listened to the experts.
Pardon me for a second…
HAHAHAHAHAHAHAHAHAHAHA. Bill Maher has finally managed to find a funny guest!
Christina topped that last bit of hilarity with her first-ever foray into candor:
We’re darned fucked!*
*Gotta wonder what weird sense of propriety led dear Christina–who’s as clever as she is beautiful–to say “darned” instead of “damned” as a modifier for the sturdy Anglo-Saxonism that followed.
Here’s the bottom line: When the Obamanauts were trying to justify their deficit-spending binge, they justified it on the grounds that the “multiplier effect” would be large–something on the order of 1.5 to 2 times the size of the deficit. Now that it’s clear that there was no such boost, they’re claiming that their error was a failure to think big enough. That, my friends, is the ultimate in chutzpah.
Nowhere in these pathetic attempts at self-justification can we find any of these failures explaining exactly why they were wrong about the multiplier. One reason is that they failed to account for the utter toxicity of the administration’s other economic policies. No amount of stimulus can induce businesses to stop hoarding cash when they’re facing uncertainty in financial regulation, health-insurance mandates, environmental policy, and labor regulation.
The other reason they failed is, oddly enough, that they really did fail to “listen to the experts.” In particular, they completely ignored the warning of Harvard’s brilliant Robert Barro, published in the Wall Street Journal at the time of Obama’s inauguration. He summarized his research on multipliers in times of war and in times of peace, for which he estimated a wartime multiplier of only 0.8 and a peacetime multiplier of zero.
Keep this in mind when you’re being told what’s in “all the textbooks,” because anyone who says this is either lying about or–maybe worse, hasn’t read–Barro’s.