One reason that Summers and Obama might not have pushed for a bigger stimulus in 2009

by Andrew Gelman on March 6, 2013 · 13 comments

in Political Economy

Miles Kimball (link from Tyler Cowen; see also Paul Krugman and Noah Smith) writes:

So the fact that Barack did not push for a bigger stimulus package really is an indictment of his economic leadership. According to the reported statement by Larry Summers, it was a political judgement that a bigger stimulus was not politically feasible. I am not at all convinced that a bigger stimulus was politically impossible. It would not have been easy, I’ll grant that, but I was amazed that Barack managed to get Obamacare through. If, instead, Barack had used his political capital and the control the Democrats had over both branches of Congress during his first two years for a bigger stimulus, couldn’t he have done more?

This reminds me of my pet theory (expressed, among other places, in my article, “2010: What Happened?”) that Summers (and, by extension, Obama) had mixed feelings about the stimulus: yes, they wanted to take the economy out of recession, but they didn’t want to do more stimulus than was appropriate. In particular, they didn’t want to overheat the economy in a way that would lead to a mini-boom in 2010 followed by a bust in 2012. They wanted to go Reagan-style (economy goes down, then up, then reelection) not Carter-style (up, then down, then out).

My speculations in this regard are not based on any macroeconomics but rather on my reading of how Summers might have read the political science research of Hibbs (pre-election-year economy predicts the presidential election) and Bartels (Democratic presidents tend to stimulate the economy in years 1 and 2, Republicans in years 3 and 4).

Related to this is my theory that Republicans think like Democrats and Democrats think like Republicans. Republicans opposed the stimulus because they were afraid it would work and allow Obama to essentially buy reelection. Democrats didn’t want too much stimulus because they didn’t think it was sustainable.

Of course this is all an oversimplification but I think there’s something to this view of the political calculations on both sides.

{ 13 comments }

JC March 6, 2013 at 10:41 pm

If this is true then I think Obama and Summers were right. Democrats were only able to get the stimulus passed by pledging to keep its total cost under $900 billion. Otherwise moderate Democrats in Congress would have sunk the package.

Andrew Gelman March 6, 2013 at 11:29 pm

JC:

Yes, I (speculatively) discuss that in my 2010 post linked above.

RobC March 7, 2013 at 12:11 am

The biggest surprise to me, and I concede that this is entirely tangential, is that Miles Kimball refers to the President as Barack. Michelle Obama does this in public, but I’m not aware of anyone else who does, even those who work in his Administration or are close friends. (I have some recollection that Jesse Jackson or Al Sharpton may have done so, but they don’t run the risk that a white boy like Kimball does, of appearing to treat the African-American president in the diminutive way that racists have so long employed.)

More power to Kimball, I say, anything that subtracts from the imperial presidency is fine in my book, but I sure wouldn’t myself have been so bold.

Andrew Gelman March 7, 2013 at 8:42 am

Yeah, that struck me too–I just couldn’t find a way to work it into the blog post. Somehow, if Obama’s being referred to by his first name, I expect to see “Barry,” not “Barack.”

Andrew Rudalevige March 7, 2013 at 10:04 am

For what it’s worth, according to David Remnick’s 2010 book The Bridge (p. 103 of the paperback edition), “there was no single moment when Obama declared an end to ‘Barry’ … but by the time he left Occidental [in 1981]… he no longer introduced himself in the same way. He was coming to see himself as – to insist upon – ‘Barack Obama.’”

I’m with RobC in hoping to reduce the imperial presidency, but I do think use of his first name in this instance is only distracting; he was acting as president, not as “Barack.”

matt w March 8, 2013 at 10:15 am

Even more tangential, but I think it would be unfortunate if the movement to diminish the imperial presidency by referring to the president by his first name began with the first black president.

Chris Mealy March 7, 2013 at 2:32 am

“they didn’t want to overheat the economy in a way that would lead to a mini-boom in 2010 followed by a bust in 2012″

If Larry Summers is the genius everybody says he is, then he could figure out how to keep the spending going in 2010, 2011, and 2012. And what does “overheat” mean here? 3% unemployment? 4% inflation?

Andrew Gelman March 7, 2013 at 8:41 am

Chris:

Even if Summers has great intellectual capacities, that doesn’t mean he can singlehandedly control the economy. Economic policy tools are not precision instruments. And, yes, I suspect that Summers would view 3% unemployment and 4% inflation as overheating.

Chris Mealy March 7, 2013 at 5:47 pm

Wait, is Summers’s defense that he was more worried about 4% inflation than years of 8%+ unemployment? That’s more like an indictment.

Andrew Gelman March 7, 2013 at 9:39 pm

Chris:

Don’t get too mad at Summers here; this is just my completely uninformed guess at his reasoning. But, following Hibbs and Bartels, I could well believe that he wanted to “do a Reagan” rather than a “Carter.”

Aidan March 7, 2013 at 5:23 pm

Another zombie idea. Miles should read Mike Grunwald’s “The New New Deal.”

matt w March 8, 2013 at 10:22 am

“the control the Democrats had over both branches of Congress during his first two years”

This is a bit of a canard; given the Republicans’ filibuster-everything policy, Democrats only had operational control of the Senate for about six months, from when Al Franken was seated to when Scott Brown replaced Paul Kirk. Considering that Ted Kennedy was incapacitated before Franken was seated, it may be more like four months, while Kirk was serving in office.

One could perhaps argue that the Democrats could’ve used reconciliation, the way George and the Republicans did to get his tax cuts through, but there needs to be at least a nod to that.

Andrew Gelman March 8, 2013 at 1:32 pm

Matt:

I agree, and if you follow the link you’ll see my discussion of the motivations of the conservative Democratic senators.

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