” . . . Why, then, didn’t we get the fiscal policy we should have had? There were, I’d say, multiple villains in the story.
First, we can argue whether the Obama administration could have gotten more; that’s a debate we’ll never see resolved. What is clear, however, is that at least some key Obama figures were actively opposed to giving the economy the support it needed. “Stimulus is sugar,” snapped Tim Geithner at Christina Romer, when she argued for a bigger plan.
Second, Very Serious People pivoted very early from concern about the unemployed — hey, they probably lacked the necessary skills — to hysteria over deficits. By 2011, unemployment was still over 9 percent, but all the Beltway crowd wanted to talk about was the menace of the debt.
Finally, Republicans blocked attempts to rescue the economy and tried to strangle government spending every step of the way. They claimed that this was because they cared about fiscal responsibility — but it was obvious to anyone paying attention (which unfortunately didn’t include almost anyone in the news media) that this was an insincere, bad-faith argument. As we’ve now seen, they don’t care at all about deficits as long as a Republican is in the White House and the deficits are the counterpart of tax cuts for the rich.
The end result was that policy moved quickly and fairly effectively to rescue banks, then turned its back on mass unemployment. It’s a story that’s both sad and nasty. And there’s every reason to believe that if we have another crisis, it will happen all over again.”
David Lindsay: It is all true. I remember when Obama became president, and Krugman spent the year after the melt down begging for a much bigger stimulus. He called for a second trillion ( or 800 billion) dollars of spending, to get the giant aircraft carrier which was the US economy moving again through the water.