Obama advisor suggests need for second stimulus

The second stimulus package that the administration has pooh-poohed twice in the last two weeks is now on the table, as I suggested it would need to be. It was dismissed as unnecessary as recently as last weekend, and the previous week David Axelrod shrugged it off as well.

As John has posted previously, the administration hasn’t done a very good job of defending the stimulus package that already passed, and in the face of relentless GOP criticism, public support for the first stimulus package has been dropping. That’s only going to make passage of the second package that much harder. (Fortunately, some of that GOP criticism is being refuted.)

It’s frustrating to watch. I want Obama to succeed, and Joelle and I were ecstatic the night he won the election. But it seems there is sometimes an arrogance to this administration that makes policy making more difficult than it needs to be. The GOP has done a much better job at raising questions about the stimulus and eroding support for it than Obama has done to promote it. A second stimulus is needed, and quite frankly the first stimulus should have been larger in the first place. (Krugman was screaming about this to anyone who would listen all the way back in January).

Unique times call for unique responses, and muddling through a watered down plan was foolish and naive. It’s now going to make passing a second much-needed plan that much harder. I know we’ve been critical of the Obama administration, a lot, lately. But there are very real consequences to the mistakes they’re making.

This once again raises the serious question of who President Obama is listening to about the economy. ABC’s Jake Tapper just interviewed the president in Russia. Obama told Tapper that no one could have predicted that the economy was so bad that we needed a larger stimulus:

[T]he President said that when Vice President Joe Biden recently told ABC News’ George Stephanopoulos that the White House “misread” the economy when planning the stimulus package in January, the president said that “what Vice President Biden was referring to was simply the fact that when we passed he stimulus, we hadn’t gotten the full report of the first quarter contractions in the economy that turned out to be way worse than anybody had anticipated.”

Krugman anticipated it. So did Stiglitz. But the president’s economic team refused to listen.

Obama’s team was in the thick of the credit crisis during the Bush years. Unless they were a crazy outsider during the build up, it’s doubtful they will have any strong ideas about working outside the business-as-usual model. Reuters:

The United States should be planning for a possible second round of fiscal stimulus to further prop up the economy after the $787 billion rescue package launched in February, an adviser to President Barack Obama said.

“We should be planning on a contingency basis for a second round of stimulus,” Laura D’Andrea Tyson, a member of the panel advising President Barack Obama on tackling the economic crisis, said on Tuesday.

Addressing a seminar in Singapore, Tyson said she felt the first round of stimulus aimed to prop up the economy had been slightly smaller than she would have liked and that a possible second round should be directed at infrastructure investment.

It would have been far easier to come clean with the American people in December, January and February, and simply tell them that we were going to need $2 trillion in stimulus spending to save the economy — and that that might mean a second bill. Yes, a second stimulus package would add to the Bush deficit. But we had no choice if we wanted to save our economy. Now, instead, the administration has to explain to the American people why they thought the first bill would be enough, and why they were wrong. While admitting you got it wrong is better than sticking with a bad course, such admissions do not instill confidence, and only make it that much harder to pass the second much-needed package. The president needs to figure out who got it wrong in his administration, and make sure it never happens again.

An American in Paris, France. BA in History & Political Science from Ohio State. Provided consulting services to US software startups, launching new business overseas that have both IPO’d and sold to well-known global software companies. Currently launching a new cloud-based startup. Full bio here.

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