The New Republic

I read an article in the Globe about it and while Obama's policies are not at fault, his economic stimulus should have been bolder. Where are the public transportation projects they promised, especially rapid rail systems? "I don’t mean to shift the entire burden to President Bush. But it certainly isn’t Obama’s either." Well, Bush's policies did put us in a hole economically speaking. He is more at fault than Obama is. The Democrats need to make this case more vociferously.

- jdyer

September 16, 2010 at 3:23pm

Polling suggests that large majorities still blame the Bush era for current troubles more than Obama, and lately Dems have been more vociferous, so I don't think that's a problem. I agree about infrastructure, not nearly as bold as I'd thought it would be, a shame.

- mmathog

September 16, 2010 at 6:04pm

Paul Krugman has an interesting article on the economic recession and its causes: “The Slump Goes On: Why?” By Paul Krugman and Robin Wells http://www.nybooks.com/articles/archives/2010/sep/30/slump-goes-why/ “In Koo’s analysis, simultaneous attempts by many private players to pay down their debts lead to a “fallacy of composition” that’s closely related to the famous (but too often overlooked) “paradox of thrift.” Each individual corporation or household cuts back on spending in an effort to reduce debt; but these spending cuts reduce everyone’s income and keep the economy persistently depressed.” Krugman call this the Minsky effect. He goes on, “These broader problems of debt and deleveraging arguably explain why the successful stabilization of the financial industry has done no more than pull the economy back from the brink, without producing a strong recovery. The economy is hamstrung—still crippled by a debt overhang. That is, the simultaneous efforts of so many people to pay down debt at the same time are keeping the economy depressed. So what’s the answer? In the short run, the only way to avoid a deep slump when almost everyone in the private sector is trying to pay down debt simultaneously is for the government to move in the opposite direction—to become, in effect, the borrower of last resort, issuing debt and continuing to spend as the private sector pulls back. In the heat of a Minsky moment, budget deficits are not only good, they are necessary. Indeed, the surge in budget deficits around the world between 2007 and 2009 was arguably even more important than the financial rescue in keeping the real estate bust from triggering a full replay of the Great Depression. This surge in budget deficits, by the way, wasn’t mainly the result of deliberate efforts to stimulate the economy. Instead, the main factors were a collapse in tax receipts as economies slumped, and secondarily a rise in automatic payments like unemployment insurance benefits. In the United States, the two-year federal deficit over 2009–2010 will be around $2.5 trillion; the Obama stimulus plan accounts for less than a quarter of the total. So budget deficits kept us from falling into the abyss. But how will the economy recover? This will be the subject of a second article” http://www.nybooks.com/articles/archives/2010/sep/30/slump-goes-why/

- jdyer

September 16, 2010 at 7:40pm

You can certainly blame the crash of the stock market on Bush. Because he gave the short-sellers the keys, by revoking the no-uptick rule (via the worst SEC chairman in history, Christopher Cox who was nothing but a shrill politician). Once the short sellers were armed, the investment banks and crooked hedge funds were off to the races in looting the retirement funds and 401Ks.

- OscarPeck

September 16, 2010 at 8:42pm

yeah, I read that krugman piece, good stuff. I think the economy will recover when savings finally pile up some and the the markets sort themselves out. Of course, a better safety net and strong infrastructure spending (using cheap borrowed money) would be a wonderful palliative on the way to recovery.

- mmathog

September 16, 2010 at 8:50pm

"I think the economy will recover when savings finally pile up some and the the markets sort themselves out. Of course, a better safety net and strong infrastructure spending (using cheap borrowed money) would be a wonderful palliative on the way to recovery." Long term, I agree. However, I hope our economy doesn't take the years it took the Japanese economy to recover.

- jdyer

September 16, 2010 at 8:56pm

The Democrats in the House are the target, and Obama can not help them. Pelosi's House is being blamed for 2010. Why? The failure to really focus on a stimulus bill that was too small and not front-loaded to boost private sector confidence in 2009. You guys really underestimate how angry people are about lost jobs and the obsession with health care reform in 2009 because no one knew what to do about industrial and construction jobs. The stimulus funds for high speed rail were not meant to be spent until late 2010-2011. The funds for infrastructure were always too low to be meaningful. The job losses were highly skewed in housing and related finance because almost all of the job creation during Bush43 was in that sector. August 2010 just set a new record for foreclosures. No comeback for housing and you would not believe how the new rules since December 2009 have tightened the mortgage and home equity loan requirements if you need to refi or want to buy in 2010. It took 30 years to de-industrialize America, and even the NYT included Senator Schumer as the Senator FOR Wall Street in their series "The Reckoning" on the causes of the very bipartisan meltdown recession. The original stimulus correctly propped up the states, but that meant public sector employees were the main beneficiaries, in preserving jobs. And many states are once again in deep trouble, notably states run by Democrats like New York. There was a reason why Jon Corzine lost to Chris Christie in New Jersey.

- K2K

September 16, 2010 at 9:09pm

I agree K2K that that stimulus bill was terrible, and Obama's biggest mistake. It was the most important action in his presidency, and he handed it to Pelosi and fell asleep.

- OscarPeck

September 17, 2010 at 12:57am

best wishes to Peretz in weathering the civil war at Harvard over the next week. Thanks OscarPeck - Just to clarify - the Dems knew they only had one big stimulus shot, and Obama should NOT have handed it to Pelosi and her chairs who loaded in a lot of worthy longterm programs at the expense of the targeted and timely job-creating stimulus that was promised, let alone promise that unemployment would peak at 8%. As Yogi Berra said, 'never forecast anything, especially the future'. It is not that the stimulus bill failed. It just did not achieve the promises for the economy to be on the road to recovery in jobs and housing by mid-2010, which was what one COULD forecast at the time it was passed in 2009. example: the homeowner's tax credit should have been available to all, not just first-time buyers, and be in place for at least 18 continuous months instead of the two short time frames that wound up distorting the whole market instead of reviving it. As Jon Stewart's sign said last night: "Got Competence?"

- K2K

September 17, 2010 at 11:51am