More Congressional Democrats voiced concerns today about the pace of the economic recovery, but the White House is holding firm against the idea of a second major stimulus intervention. Two administration officials say the President will wait at least six months before deciding whether to support a second stimulus package. Still, some administration officials and allies concede that two tactical errors were committed during the stimulus battle, although they were perhaps unavoidable. As the Vice President said this weekend, White House economists underestimated how bad things were (as did everyone else, of course, aside from a privileged few.) Secondly, and perhaps more pertinent to today's debate, officials arguably oversold the stimulus package's inherent efficiency. Their words and deeds differed; the administration was careful to say that the economic recovery wouldn't be instantaneous, but, at the same time, it was politically critical to sell the stimulus by highlighting how quickly certain monies would be spent. ("Shovel ready" conjures up a picture of a worker, with a shovel in hand, waiting for the green light. The reality is more prosaic.)
That said, there is no appetite at the White House for a second bite at the apple. The government cannot handle any more money...federal employees are working as fast as they can to get the money out. When it comes to effective spending with a multiplier effect, there aren't that many projects that are underfunded. More spending would create a bottleneck, unless the White House endorsed direct transfer payments to people, either in the form of welfare, tax cuts, or both. Congressional liberals could stomach the deficit fight, but Congress can't, and the White House won't.
Perception drives reality: including the industry bailouts and the 2009 omnibus budget bill, the federal government has acted to stimulate to the economy no less than thrice. The administration agrees with Megan McArdle: passing a health care bill
is tantamount to a "second" (or fifth) intervention.
Whether they sustain this position will test Obama's ironclad commitment to hold steady in the face of regular congressional (and even public) panics. And lest you wonder, White House officials are very much watching the new statewide polling data showing a drop in support among independent voters.