In retrospect, what would have happened had Obama just gone for the full stimulus, all $2 trillion?




The President, along with Democrats in Congress, got all wee-wee’d up when it came time at the beginning of last year to pass the stimulus bill.

Top Democratic economists, like Krugman and Stiglitz, said the stimulus was far less than we needed (Krugman talked at the time about needing at least $2 trillion, and lots of other top economists said it wasn’t nearly enough). But the Republicans complained, they said that the economy was doing fine and no one was feeling any pain, so the President and Dems in Congress decided to cut back the stimulus from the $2 trillion that was needed, to a little less than $800 billion. But the Republicans complained again, so they converted around 35% of the stimulus into nearly useless tax cuts, lowering the real impact of the legislation to around $500 billion, instead of the $2 trillion we really needed.

Next, three predictable things happened.

1. Even though we only passed 1/4 of the stimulus we needed, and gave the GOP 35% of the bill in tax cuts, Republicans still eviscerated Democrats for out of control, wasteful spending;

2. The bill wasn’t enough to turn the economy around and start producing significant number of jobs, fast; and

3. Because the bill wasn’t big enough, and Democrats didn’t defend it enough, Republicans were able to convince the public (wrongly) that the stimulus package was a waste of money, thus precluding any future stimulus plans.

So let’s summarize. President Obama and the Democrats didn’t pass the stimulus that was really needed, out of fear that the Republicans would criticize them for being wasteful. But in the end, the Republicans still criticized them for being wasteful, the criticism stuck and hurt Democrats in the recent election, and the stimulus bill itself was so paltry that it didn’t create enough jobs fast enough, so Democrats are also being blamed for not doing enough to help the economy. And now that the Democrats need a new stimulus bill to kick-start jobs before the November election – Stiglitz says the new plan needs to be at least as big as the old one, nearly $800 billion – they have a much harder sell. All because they caved in the face of what they knew they needed to do a year ago.

So by caving, repeatedly, Democrats in Congress and the White House ended up shooting themselves in the foot. Sound familiar? They got the same amount of blame they’d have gotten had they passed a real, full stimulus bill the first time last February. And at the same time, by not passing the full bill that was needed, they helped ensure that the economy wouldn’t recover sufficiently, giving them that much more blame now and in the future. Had they passed what was needed last February, the GOP would have criticized them just as much for wasteful spending, but we’d have a robust recovery with far more new jobs to rub in their faces.

And the really annoying thing is that numerous people predicted that this was exactly what would happen.


CyberDisobedience on Substack | @aravosis | Facebook | Instagram | LinkedIn. John Aravosis is the Executive Editor of AMERICAblog, which he founded in 2004. He has a joint law degree (JD) and masters in Foreign Service from Georgetown; and has worked in the US Senate, World Bank, Children's Defense Fund, the United Nations Development Programme, and as a stringer for the Economist. He is a frequent TV pundit, having appeared on the O'Reilly Factor, Hardball, World News Tonight, Nightline, AM Joy & Reliable Sources, among others. John lives in Washington, DC. .

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