Clive Crook tags into the second stimulus debate with this new column in the Atlantic's cousin, National Journal. Crook is a lucid economics writer and his diagnosis of the Democrats' problems from the first stimulus is on target. They made four mistakes:
For a start, if anything, the first stimulus was too small. Second, it was poorly designed: too complicated, insufficiently front-loaded, and too reliant on public spending and not reliant enough on tax cuts. Third, it was oversold: The administration set itself up for failure by promising to "save or create" too many jobs, and by defining success as a much milder rise in unemployment than has transpired.
I think that's just about right. The interesting thing about the tax cuts in the stimulus is that they were front-loaded (it's much easier to start handing out tax rebates than wait for shovel-ready public projects to organize) but they were also designed to be stealthy. The rebates were supposed to appear in workers' paychecks so that Americans would look at their bank statements, see more money than they expected, get a rush of consumerism to the brain and decide that that Pottery Barn table is affordable, after all. Whether it's really stoked demand is an open question that I sense analysts would answer negatively.
Crook is also dead on with this criticism of the administration's job-creation PR:
It will also be necessary to argue that further fiscal stimulus will boost employment -- just as the first one (despite its failings) almost certainly has. But you do not make that case by devoting an official website to the nakedly fraudulent counting of jobs supposedly secured by stimulus money. Those reports, drawn from sources with every reason to cook the books, both overstate and understate the employment effect. They overstate it by attributing jobs that would exist anyway to stimulus money, which invites ridicule. They understate it by ignoring the indirect effects of additional demand on employment. These are most likely large but dispersed throughout the economy and impossible to audit.
Again, 100 yes. But here's where he catches me off. Crook argues that the White House's aversion to speaking openly and honestly about the long-term deficit is spooking voters...
Even if the administration lacks for the moment a detailed plan, it needs, at the very least, to start talking about the tax increases and cuts in spending that will be required once the economy is back on its feet. At the moment, it is saying almost nothing on the subject. This, I think, is the biggest reason that its credibility with voters is running out.
Yes to everything except the last line. If Obama came out with a big
speech about the need to raise taxes and cut Medicare spending, I do
not foresee a bump in his polling. I foresee an electorate that would
respond something like this: (1) "No tax increases, you promised!" (2)
"Hands of my health care!" (3) "...and in the middle of a recession!"
Reagan didn't get much credit for his tax increases. Neither did
Clinton. Bush I arguably lost the election because of his tax bump. I
don't think the public is saving bonus points for the first
politician to talk about new taxes. But I could be wrong.