There are two ideologically opposite criticisms of the stimulus package, which was proposed by President Obama, then shaped and reduced in size by so-called Senate “moderates” (who never seem to have to take responsibility for their legislative handiwork.)
The liberal criticism is that while it was the right idea, it did not have enough public investment to meet the gap in the demand, it had too many ineffective tax cuts, and therefore additional public investment is needed before it’s too late to make an impact.
The conservative criticism — to the extent that a coherent argument was ever made — was that anything involving government spending is a wasteful boondoggle, and more tax cuts are needed (always ignoring the tax cuts that were part of the package.)
Who was right? Let’s defer to Republican Sen. John Ensign.
In February, when passage of the stimulus was imminent, MSNBC asked him how long should people wait before judging the stimulus.
The stimulus was designed as a two-year program, steadily pumping stimulus throughout that period. As Paul Krugman noted, the Obama Administration by their own projections did not design the program to achieve an instantaneous increase in jobs in the first three months. You can’t accuse them of failing to do something they never said they were going to do.
So Sen. Ensign was correct. No honest assessment can be made at this point whether or not the fundamental stimulus strategy is working.
The new information that we have is not the effectiveness of the Obama administration, but the severity of the recession. The loss of jobs and drop in demand is bigger than projected four months ago. Per Krugman: “the problem … is that the hole the stimulus needs to fill is much bigger than predicted. That — coupled with the fact that yes, stimulus takes time to work — is the reason for a second round, ASAP.”
If you still believe in the strategic direction of the Obama Administration, the proper response is to do more of it.
If you never believed in it in the first place, then the new economic data won’t change your view. But it is simply inaccurate to say the conditions reflected in the new economic data are the fault of the stimulus package.