Well, New Republic senior editor Noam Scheiber is coming out with a book criticizing the Obama administration’s handling of the recovery, and one of the apparent revelations is that Christina Romer, chair of the president’s Council of Economic Advisers, wanted a much bigger stimulus than they recommended. This is a bit interesting because this isn’t new information. Romer admitted in interviews when she left the White House that she wanted a bigger stimulus; the economic team simply didn’t think Obama would accept a stimulus package that big.
While I haven’t read Scheiber’s book, given he writes for TNR, I’m betting he thinks the $1.8 trillion upper bound Romer really wanted to recommend (about the size Paul Krugman was pushing at the same time) would have pulled the economy out of recession faster. If only politics didn’t get in the way, then perhaps . . . While he admits in his TNR article that the larger number wasn’t going to be adopted, nothing in the tone or discussion even hints at the ineffectiveness of the $800 billion that was spent to no avail.
It should be pretty clear to most practical economists that the $800 billion stimulus didn’t work, and the reason it didn’t work wasn’t because it wasn’t big enough. The spending side of the stimulus equation was designed to expand government and lock state and local governments into higher long-term spending, either by funding new government jobs or expanding programs like Medicaid. The stimulus failed because it was the wrong policy directed at the wrong problems and siphoned through an inept mechanism for implementing anything — government. (See Veronique de Rugy’s critique here and mine here.) Even Obama admitted that nothing was really shovel-ready in government.
The lesson from the failed stimulus is that the economy is not a set of levers that technicians simply need to pull to get the machine rolling again. It doesn’t matter if their name is Krugman, Summers, Romer, or Friedman. The economy is simply too complex to expect that a massive dumping of cash into its gears is going to set everything right again.