DEGREES OF ACCURACY, DEGREES OF ERROR…. The debate over the efficacy of last year’s stimulus doesn’t produce two clear camps: supporters and critics. Paul Krugman and John Boehner may both offer scathing criticism of the Recovery Act, but for very different reasons, and with very different track records or credibility.
With that in mind, Krugman raises an important point today, responding to conservatives who may be tempted to use the fragile recovery as evidence to discredit progressive economic policy.
The way the right wants to tell the story — and, I’m afraid, the way it will play in November — is that the Obama team went all out for Keynesian policies, and they failed. So back to supply-side economics!
The point, of course, is that that is not at all what happened. A straight Keynesian analysis implied the need for a much bigger program, more oriented toward spending, than the administration proposed. And people like me said that at the time — we’re not talking about hindsight.
We’ve talked about this before, but in early 2009 there were basically four main approaches.
(1) Pass a massive, ambitious economic stimulus.
(2) Pass a trimmed down economic stimulus that could overcome a Republican filibuster.
(3) Do nothing.
(4) Pass a five-year spending freeze proposed by confused congressional Republicans at the time.
With the benefit of hindsight, we can safely say that (1) was the best option, but we ended up with (2). The policy was effective and worked as it was intended, but it was too small to generate a robust, sustained recovery.
But let’s be clear about this — the shortcomings of (2) doesn’t discredit (1). That’s actually backwards. For that matter, those who thought (4) was just a terrific idea — i.e., almost every single Republican serving in the United States Congress — aren’t in a position to complain about (2), since (2) was an infinitely superior approach to (3) and (4).
Some folks, at this point, get to say, “I told you so.” Every Republican critic of the stimulus isn’t in this group.