Reply #239: Different deal

[zipplewrath]

There are two possibilities, one that we could have gotten a "bigger" deal. We'll never know on that one. The other is we could have gotten a "different" deal. Predominately less tax cuts and more support to state and local governments. Alternately fewer tax cuts and more direct spending. Either would have been preferable and we now see (and the argument that Krugman is making) would have been more effective. The tax cuts went predominately to paying down debt. The support of states "saved" jobs, and direct spending "creates" them. (It is probably splitting hairs about whether it is better to "save" existing jobs or "create" new jobs). They chose the way they did because of an unsupportable fear of inflation (well among other reasons, they were also hoping to get alot of GOP support with the tax cuts. They didn't get it.)

And whether they could have gotten a larger plan or not, they undermined themselves by not declaring and explaining at the time that it was too small. They ran around selling the plan as something to keep unemployment below 8%, and it didn't. That both prevents them from now asking for more, and from even taking credit for what success they did achieve with it, which was to keep unemployment around 10% instead of the 13-15% it would have been. They set the bar too high and failed to clear it. They've got no one to blame but themselves.