The Politics Of More Stimulus
by Patrick Appel
Andrew Gelman checks the political incentives:
I suspect the Obama team knows about the research on the economy and election outcomes, and, more importantly, I think they knew about this in 2009 as well. That’s one reason they did the big stimulus last year, no? To put the economy on a better footing in the 2010 election year. And, according to many economists, the stimulus worked in that regard; in the absence of a stimulus, we might very well be in much worse economic shape (at least in the short term). But does Obama gain much by jump-starting the economy now, in July, 2010? At this point it might take too long for an additional stimulus to make much of a difference. And the last thing Obama wants is for a big improvement to come in 2011! On the contrary, the political logic suggested by the political-business-cycle work of Hibbs, Bartels, and others is to keep things mellow in 2011 and save the boom for 2012. Of course, the Republicans know this too . . .
I'm not sure this holds up to scrutiny. If Obama could create a "big improvement" in 2011, I'm pretty sure he'd do it.