On 2010-11-11, at 1:10 PM, Alan Rudy wrote:
> That's a good point…
>
>>
>> For what it's worth, his administration projected that unemployment would
>> max out at 8%, with stimulus. Without stimulus, they projected a maximum of
>> 9%, falling to 6% by the end of 2012.
>>
>> http://otrans.3cdn.net/ee40602f9a7d8172b8_ozm6bt5oi.pdf
The administration, however, chose to ignore the advice of liberal economists like Krugman and Stiglitz that its unemployment forecast would prove too optimistic, that the long-term unemployed would begin to run out of jobless benefits, and that the stimulus was disproportionately tilted towards tax cuts and aid to states and municipalities at the expense of direct job creation. More to the point, they argued that the Obama administration would not likely have the opportunity to inject almost certain further stimulus because the Republicans would have stoked public fears of runaway spending and higher taxation, so that a margin of safety was consequently required. The critics were, in retrospect, right on all counts.
The Obama administration crafted the legislation not for maximum economic impact but to attract Republican votes, in the naive belief it could persuade the Republicans to take ownership of a bipartisan bill and refrain from criticism.
The Republicans,, of course, voted virtually unanimously against the Recovery Act in both Houses - only the marginal northeastern senators Snowe, Collins, and Spector breaking ranks - and went on to make the "ineffective" stimulus the centrepiece of their triumphant campaign against the "dangerously freespending" Democrats.
Another case of the administration doing just enough to arouse the fierce opposition of the right in lieu of using its congressional majority to ram through legislation of more immediate value to Americans seeking jobs, affordable healthcare, mortgage relief, and tougher action against the banks.